Banks step up Agri-Agra compliance amid ESG push

Banks in the Philippines are showing stronger adherence to Agri-Agra lending requirements, driven in part by the government’s push for environmental, social, and governance (ESG) policies, a Bangko Sentral ng Pilipinas official said.

BSP Assistant Governor Pia Roman-Tayag noted that more financial institutions are now meeting lending mandates and integrating ESG principles to manage governance and operational risks. “More banks are now integrating ESG in their governance and their risk management system,” she said.

A 2023 BSP survey indicated that 71.5 percent of banks consider sustainable financing highly important, up from 70 percent previously, and 90.3 percent plan to extend financing to sustainable projects, up from 85 percent earlier. 

To support adoption, the BSP offers incentives such as additional single borrower limits and a zero-percent reserve requirement for sustainable finance counted toward Agri-Agra compliance.

Under the Agri-Agra law, banks must allocate at least 25 percent of total loanable funds to agriculture and fisheries, including a minimum 10 percent for agrarian reform beneficiaries. Roman-Tayag added that the BSP’s sustainable finance taxonomy guides banks in making ESG-aligned investment decisions.

Meanwhile, Philippine Stock Exchange COO Roel Refran said the country’s carbon credit market requires stronger legislative support to reach its potential, noting current reliance on the International Sustainability Standards Board for sustainability reporting.