The BIS’ green bond fund initiative aims to help central banks incorporate environmental sustainability objectives in the management of their reserves.

The Bangko Sentral ng Pilipinas (BSP) has invested $150 million in so-called green bonds issued by the Bank for International Settlements (BIS) which will fund projects and infrastructure that are environmentally sustainable.

“The BSP is proud to be a member of the advisory committee created by the BIS to give guidance on the objectives of the initiative and the features of the fund, which is designed to help central banks incorporate environmental sustainability objectives in reserve management,” the BSP said.

According to the BSP, the investments were taken out of its foreign currency reserves, a portion of which is normally invested in securities as part of optimizing or managing the funds.

BSP Governor Benjamin Diokno also said the investment in BIS-issued securities, will help “diversify” their reserve portfolio.

“The amount ($150 million) is part of (the) Republic of the Philippines’ gross international. It’s part of the diversification of the bank’s reserves,” Diokno said in a text message.

The BIS earlier said the open-ended fund for the central banks’ investments in so-called green bonds was in response to the growing demand for climate-friendly investments among official institutions.

Also, the BIS’ green bond fund initiative aims to help central banks incorporate environmental sustainability objectives in the management of their reserves.

BIS Banking Department head Peter Zollner said the initiative also serves as catalyst for the development of similar bonds.

“We are confident that by aggregating the investment power of central banks, we can influence the behavior of market participants and have some impact on how green investment standards develop,” Zollner said.

With this development, the BSP takes a step in recognizing the role of sustainable investing in reserve management.

“Climate change appears to be inevitable, and the financial sector has a significant role to play in pursuing sustainable and inclusive growth in the global economy, the environment and society,” Diokno said.

“The BSP is one with the BIS in its broader commitment to support environmentally responsible finance and investment practices,” it added.