The Philippine Sustainable Finance Taxonomy Guidelines (SFTG) was developed under the auspices of the Financial Sector Forum (FSF) following the recommendations in the Philippine Sustainable Finance Roadmap released by the Inter-agency Technical Working Group for Sustainable Finance (or the Green Force) in October 2021.
The SFTG serves as a tool to classify whether an economic activity is environmentally and socially sustainable and guides different stakeholders in making informed investment and financing decisions. The SFTG aims to direct, accelerate, and increase capital flows to economic activities that promote sustainability objectives. including reduction of greenhouse gas (GHG) emissions and building climate resilience. It likewise promotes transparency and credibility by minimizing the risk of greenwashing and supports a just transition to a sustainable economy. Banks shall use the SFrG when extending credit. making investment decisions, or designing sustainable financial products and services, among others.
In issuing sustainable bonds, banks shall comply with the regulatory requirements articulated in the relevantsustainable bonds standards or guidelines issued by the Securities and Exchange Commission (SEC). While the SEC Guidelines provide lists of eligible green and social project categories. the issuing bank may voluntarily apply the principles under the respective components of the SFTG to assess if such bond issuance is aligned with the Taxonomy. In addition. the considerations for the environmental objectives could provide additional guidance in assessing eligible green project and in determining substantial contribution to an environmental objective). There are decision trees and guiding questions provided for climate change adaptation and mitigation.
