##tly exercising these principles, yet many are also struggling to do so. nevertheless, the bsp remains confident that our cg - related regulations will continue to guide the banks toward full compliance, further strengthening and enabling them to serve a wider market. environmental, social governance and risk management let me now move on to my second point. risk governance may be influenced by other dimensions, for example shared value3, which refers to ways of doing business that gain competitive advantage, while also improving social, environmental and economic conditions, to achieve the double bottomline of profitability and social responsibility. this is when esg, the set of standards that promote sustainability ; and esrm, a risk management tool that promotes sustainable finance, usually get factored in. and these are areas that we need to explore deeper. sustainable finance is any form of financial service that integrates esg criteria into business decisions to benefit the environment and society at large4. regulators and banks in emerging markets like indonesia, bangladesh and mongolia5 are openly promoting sustainable finance through esg standards. around the world, there is increasing evidence that integrating esg and esrm in business practices result to positive returns, those that get reflected on financial statements, client retention and organizational reputation. equally significant, banks also feel good as they contribute to socio - economic and environmental well - being of the communities in which they operate. the bsp believes that ecological sustainability is a key pillar of inclusive growth, and sustainable finance promises to support this objective. it is consistent with the bsp ’ s drive to establish a responsive, responsible and inclusive financial system that delivers a high quality of life for all filipinos. while bsp policies and regulations already promote shared value through financial inclusion, we feel the need to deepen our understanding of sustainable finance. we have to bridge the gap between what we know about financing and corporate governance, and how or when esg should be integrated. hence in 2013, we began taking baby steps to understand esg and esrm. we became a member of the sustainable banking network ( sbn ) with support from the international finance 2 / 4 bis central bankers'speeches corporation ( ifc ). sbn is a knowledge sharing network of banking regulators, industry associations and esg specialists. we continue to learn and share experiences with like - minded peers and industry players already practicing sustainable finance in other jurisdictions. in 2015, again with ifc support, we completed a scoping study on the extent of industry experience and interest in adopting es

##rm. study results showed moderate awareness, very limited experience, and mixed perceptions about the business case of esrm adoption among local banks. still, many believed that practicing sustainable finance can enhance their institutional reputation as good corporate citizens, and may eventually affect their business bottomline. understandably, profit maximization thru viable opportunities remains the driver for banks to scale - up green investments, and influence their client firms to be more environment - friendly. banks need to see financial viability and attractive risk - return profiles of green projects and unbundle the mainstream perception of high transaction and compliance costs. in other words, banks, and even regulators like the bsp, need to fast - track learning curves in the area of esg and esrm. 6 this now brings me to my third point, and the reason why we are all here today. cg and esg : the need for continued capacity building the principles of cg and esg may be constant and universal, but situations and contexts in which they are applied are varied and mutable, and new lessons arise from each application. as markets, regulations and institutions evolve, it is necessary for cg and esg practitioners to deepen knowledge and continue building capacities. the board and management, employees and the entire organization should not only adopt good governance policies – they need to continuously adapt, upgrade and improve to remain relevant and effective. this is the primary intent of the bsp - ifc agreement which we will sign today, with everyone here as witnesses, and maybe even future partners. ifc will support the bsp in improving its assessment tools to ensure good governance and proper risk management in the banking system. ifc will train and advise the bsp and bsp - supervised financial institutions on a proportionate legal and regulatory framework that enhances corporate governance. in addition, ifc and bsp shall continue to conduct awareness campaigns, capacity - building and peer learning events to deepen the industry ’ s understanding of esg and esrm. in this area, we are mindful that in the philippines, there is a spectrum of big and small banks with varied capacities, business models and risk appetites. some will see value in esg and esrm ; while some will simply not have the right capacity and resources to deal with these standards … for now. for those who can, and are willing, we look forward to further working with you. today, we have lined - up international and local speakers to jumpstart the knowledge sharing