there when you need them positioning yourselves as bffs in your respective communities leverages on your core strength of being a trusted and close banking partner. you have institutionalized sustainable systems and processes to bring about life - changing “ bff ” experiences to those whom you serve. thus, you are a powerful force attracting more filipinos into the banking system. through your services, you have allowed families and small businesses to grow, to become more productive, and to reach their dreams. the numbers affirm rbap ’ s adherence to your mission of promoting financial inclusion and the general welfare of rural communities : • almost 97 percent of the industry ’ s network is based in rural areas providing rural banks with a deeper and more holistic understanding of the distinctive characteristics, conditions and needs of rural clients. • a 2015 report from the philippine statistics authority ( psa ) shows that 9 regions of the country posted poverty incidence among families at levels significantly higher than the national average of 16. 5 percent. bsp data shows that rural banking offices in these regions are quite significant, with 3 of these regions having rbs as their primary banking presence. • the industry ’ s commitment to promoting financial access is evident. the number of deposit accounts amounting to p10, 000 or less make up 70. 6 percent of the banking system deposit accounts. this set of small deposits make up 87. 1 percent of your deposit accounts. • almost half of your loans ( 47 percent ) are extended to assist agriculture and micro, small and medium enterprises ( msmes ). in the process, you are the “ go - to ” partners of rural borrowers and msmes. in fact, rbs exposures to the agricultural sector and msmes far exceed that of the total banking system ’ s over - all compliance with these 2 / 5 bis central bankers'speeches requirements. trust builds relationships relationships are often tested, and when relationships survive potential and actual threats, they rise nearer and nearer to the level of bff status. right now, the industry is facing rising competition from large banks, foreign banks and even non - banks. this will impact the way you price your loans and deposit products, and ultimately affect your accustomed net margins. these challenges can and should be met by more determined adherence to sound corporate governance and risk management practices. to earn and keep trust in this business, good governance should emanate from the top, permeate across the organization, and manifest in the actions of all officers and staff. the entire

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