benjamin e diokno : integrating sustainability in corporate strategy bsp sustainable finance framework speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the institute of corporate directors ( icd ) corporate governance advocacy webinar “ pilipinas : aspire, rise, sustain series ”, 28 october 2020. * * * deputy speaker loren legarda, icd chairman rex drilon, chief executive officer leonardo jose berba, ladies and gentlemen, good afternoon! on behalf of the bangko sentral, i would like to thank the institute of corporate directors for the opportunity to share the bsp ’ s strategy and initiatives in advancing the country ’ s goals on sustainable development. indeed, the covid - 19 pandemic has highlighted sustainability issues. and while the worst of the pandemic is over for the philippines, we need to embrace sustainability as our guidepost in rebuilding the “ new economy ”. as such, it is crucial that sustainability principles be part of how institutions are governed. we should think not only climate change, but also the broader environmental, social and governance issues that could test the resilience of the financial system. allow me to backtrack and recall the bsp ’ s governance reform agenda that lead to the “ maturity ” of our supervised financial institutions. we first focused on strengthening the “ fit and proper ” requirements for the board of directors and senior management. this was reinforced with the issuance of standards for checks and balances systems, as well as a series of policy reforms geared towards ensuring strengthened risk governance in the financial sector. the existing principle - based governance and risk management guidelines provide financial institutions with the flexibility to develop corporate strategies and risk management processes that integrate sustainability principles. particularly, the credit and operational risk management frameworks paved the way for strengthening of climate risk governance and provide guidance for supervised financial institutions to consider environmental factors in the conduct of stress testing exercises and in the business continuity arrangements. this governance agenda has set the stage for the issuance of the bsp ’ s sustainable finance framework in pursuit of corporate sustainability. the board of directors ’ and senior management ’ s commitment and understanding of these principles is critical in the pursuit of corporate sustainability in your institutions. the board can set the appropriate tone that would guide the business activities and work practices of personnel across the organization. in fact, corporate governance has been shifting from a compliance - centered approach to

and put in place cohesive reforms to safeguard the philippine financial system from the impact of climate change and other environment and social risks. indeed, the financial sector holds a unique position in advancing the sustainability agenda. clearly, we can no longer afford to ignore climate change or sustainability issues as a governance priority. by deciding to finance sustainable projects, you create more value for the company ’ s stakeholders while preserving the environment and humanity. the current covid - 19 pandemic also offers a window of opportunity for re - shaping the industry ’ s 3 / 4 bis central bankers'speeches future. let ’ s not put this crisis to waste and build a climate - resilient, green, and sustainable economy. thank you and good afternoon! 4 / 4 bis central bankers'speeches