The Bangko Sentral ng Pilipinas (BSP) said it is committed to becoming an internationally-recognized central bank at the forefront of green and sustainable policies and practices. Driven by its core mandates of price and financial stability, the BSP has embraced Sustainable Central Banking, positioning itself as an enabler, mobilizer, and active participant in promoting sustainability within the Philippine financial system.
Recognizing the urgency of addressing climate change and social inequality, the BSP integrated sustainable finance into its core operations. Sustainable finance, defined as “any form of financial product or service which integrates environmental, social and governance criteria into business decisions that support economic growth,” paves the way for long-term, sustainable economic projects.
A significant milestone in this journey is the 2024 approval of the Philippines’ Sustainable Finance Taxonomy Guidelines (SFTG) for banks by the BSP’s Monetary Board. The SFTG is designed to direct, accelerate, and increase capital flows toward economic activities that demonstrably promote sustainability.
Utilizing a clear “traffic light system,” the SFTG classifies bank activities: “Green” for activities aligned with the taxonomy, “Amber” for partially aligned activities, and “Red” for non-aligned activities. The initial version focuses on climate change mitigation and adaptation, with future iterations planned to incorporate biodiversity and the circular economy. Notably, the taxonomy offers a simplified approach for assessing the economic activities of micro, small, and medium enterprises (MSMEs).
“The issuance of a taxonomy is a crucial step in our sustainability journey,” said BSP Governor and Monetary Board chairman Eli Remolona Jr. “It provides high-level guidance in determining the greenness of an investment. But this is just the first step to what I expect will be a long iterative process of calibrating the document to fully capture the conditions of the Philippine economy.”
Beyond financial frameworks, the BSP’s commitment to sustainability is also evident in its adoption of polymer banknotes. These notes incorporate advanced security features, including a flora clear window, vertical clear window, embossed mirrored denomination, and iridescent figure, enhancing security and reducing counterfeiting risks.
A 2023 study commissioned by the BSP and conducted by De La Salle University’s Center for Engineering and Sustainable Development Research revealed that the 1,000-piso polymer banknote has a 38.36 percent lower global warming potential (GWP) compared to its paper counterpart. This reduced GWP is largely attributed to the extended lifespan of polymer banknotes, which minimizes resource consumption (such as electricity) throughout their lifecycle. These findings align with research conducted by other central banks, including the Bank of England, Bank of Canada and Banco de Mexico.
The smooth, non-absorbent surfaces of polymer banknotes make them more resistant to damage and dirt from water, oil, and other substances. They can also be sanitized with less risk of damage, a finding corroborated by the Department of Health following an evidence review that included data gathered during the COVID-19 pandemic.
BSP research indicates that polymer banknotes have a lifespan of up to 7.5 years, significantly longer than the 1.5-year lifespan of paper banknotes. Similar results have been reported in other countries, with polymer notes lasting 4.8 times longer in New Zealand and 2.5 times longer in Canada.
The BSP also reports a lower incidence of worn-out polymer banknotes compared to paper banknotes. From 2022 to November 2024, only 0.08% (689,571 pieces) of the issued 1,000-piso polymer banknotes were returned as worn-out or damaged, resulting in significant cost savings on replacements.
More than 40 countries worldwide utilize polymer banknotes, underscoring the growing global trend toward sustainable currency practices. Through its multifaceted approach, encompassing financial regulations, technological innovation and a long-term vision, the BSP is paving the way for a more sustainable finance and a brighter future for the Philippines.
