ING Bank sees more sustainability bond issuances
15 May 2024
Reading time: 3 min
In BusinessWorld, Jun Palanca, country manager for ING Philippines, expects a rise in sustainability bond issuances in 2024, driven by stronger lender and corporate demand, BSP’s push for green finance, and new taxonomy guidelines. He reaffirms ING’s support through innovative products and advisory solutions.
ING BANK N.V. Manila expects more issuances of sustainability bonds from lenders and corporates this year, partly driven by the Bangko Sentral ng Pilipinas’ (BSP) push for this type of financing.
“I think everyone’s trying to explore how they can approach it. When I talk about sustainability, it’s not just environmental or green — we also refer to social aspects. For example, social can mean low-cost housing… We’re also helping to encourage our partners in that direction,” said ING Bank Philippines country manager Jun Palanca in an interview with BusinessWorld last week.
“We’re seeing quite a bit more now, at least in the pipeline. So, assuming all of those deals close this year, I believe there will be more,” Mr Palanca said.
He added that the central bank’s push for sustainable financing has made lenders more inclined to issue these types of bonds.
“That’s a priority for the BSP, especially with the taxonomy guidelines they released in February. They’re encouraging banks to participate. For the banking sector, issuing a sustainability bond also affects your reserve requirement,” he added.
In February, the BSP issued Circular No. 1187, which amended the Manual of Regulations for Banks to adopt the Philippine Sustainable Finance Taxonomy Guidelines (SFTG).
The Philippine SFTG was developed with support from the Financial Sector Forum—an interagency body comprising the BSP, Securities and Exchange Commission, Insurance Commission, and the Philippine Deposit Insurance Corporation—as part of the financial sector supervisors’ commitment under the Philippine Sustainable Finance Roadmap.
The guidelines serve as a tool to determine whether an economic activity is environmentally or socially sustainable, providing stakeholders with a reference for investment or financing decisions.
“The SFTG aims to direct, accelerate, and increase capital flows to economic activities that promote sustainability objectives, including reducing greenhouse gas (GHG) emissions and building climate resilience. It also promotes transparency and credibility by minimising the risk of greenwashing and supports a just transition to a sustainable economy,” the central bank stated.
“Banks shall use the SFTG when extending credit, making investment decisions, or designing sustainable financial products and services, among other activities. When issuing sustainable bonds, banks must comply with the regulatory requirements outlined in the relevant sustainable bond standards or guidelines issued by the Securities and Exchange Commission,” it added.
Last week, the BSP announced that banks have until the end of this year to comply with the SFTG.
At the end of last year, the central bank also approved temporary measures to incentivise banks through increased lending capacity and reduced reserve requirement rates for sustainable bonds issued by banks.
Mr Palanca noted that the growing number of renewable energy projects presents opportunities for banks and other firms to expand their sustainable financing portfolios.
“If you’re a bank or a corporate, you’d want to tap into that. You can broaden your investor pool, which ultimately benefits your share price,” he said.
However, these planned sustainability bond issuances could be delayed or adjusted if the BSP’s easing cycle does not commence this year as anticipated, Mr Palanca said.
“Nonetheless, I think several banks are still heading to market. What they’re doing is shortening the tenor. Instead of three or five years, they’ll opt for two, for example,” he said.
ING Bank Manila will also continue to encourage banks to adopt more sustainable practices by introducing related products, Mr Palanca said.
“Sustainability is at the heart of ING as a whole, and that’s what we want to be recognised for… We’ve been working on new products not just on the lending side, but also in financial markets and advisory services, where we can support our clients or encourage them on their journey towards greater sustainability,” he said.
“In addition, we’re also thought leaders in helping our clients through more structured solutions to achieve their goals with a sustainability focus,” Mr Palanca added.
Originally published in Business World: Opens in a new tabhttps://www.bworldonline.com/banking-finance/2024/05/15/595034/ing-bank-sees-more-sustainability-bond-issuances/