Senator Loren Legarda emphasized the need for the government to foster an enabling environment that would attract low-carbon investments from the private sector and address the uncertainties and risks that restrain lending institutions and private banks from engaging in these mitigation investments.
Legarda, Head of the Philippine Delegation to the 23rd Session of the Conference of the Parties (COP 23) to the United Nations Framework Convention on Climate Change (UNFCCC) in Bonn, Germany, made the statement in her presentation at the COP23 side event “Asia-Pacific Climate Action: Making Finance Flows Consistent With a Pathway Towards Low Greenhouse Gas Emissions and Climate-resilient Development for the Implementation of the Paris Agreement and the 2030 Agenda.”
The event was a forum organized by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), with the aim of identifying the challenges faced by the public and private sectors in climate-vulnerable countries in the Asia-Pacific region to tap capital markets for low greenhouse gas (GHG) emission and climate-resilient development, as well as introducing the idea of a Regional Action Agenda to direct finance flows towards low-carbon development.
“We need to foster a policy environment that will raise the participation of the financial sector in low-carbon investments needs. One strategy could be to identify the best mix of lending instruments to attract low-carbon investments,” the veteran legislator said.
“There should also be greater efforts towards making low-carbon innovations more affordable in the Philippines and increasing awareness of the severe impacts of climate change to encourage more investments. Regulatory challenges and technical risks could also be covered by the government through technical assistance to assist the private sector,” the seasoned lawmaker added.
The lady senator also mentioned the challenges and concerns from both the supply and demand sides of green investments.
“The demand side faces constraints, such as high capital requirements. On the other hand, green lending institutions also face challenges, such as market gaps faced by government banks, which are heightened because of uncertainties and the lack of large-scale long-term finance. For the private banks, long-term lending is constrained by the long-term risks associated with the global financial crisis, liquidity requirements, and sustainability of climate investments, among other factors,” she explained.
Legarda, however, said that, even though the Philippine contribution to GHG emissions remains negligible at 0.31%, pursuing low-carbon or climate change mitigation investments are still very much in line with international commitments and national development plans of the Philippines.
She mentioned that the National Climate Change Action Plan (NCCAP) and the 2017-2022 Philippine Development Plan (PDP) already espouses mitigation strategies that would also aid the Philippines in achieving the targets in its Nationally Determined Contributions (NDC), as part of its commitment to the Paris Agreement.
Legarda noted that the estimated cost to implement the identified mitigation actions for the energy, forestry, industry, and transport sectors, for the period of 2015 to 2030, is USD4.12 billion, which will pursue programs, such as the operationalization of the bus rapid transit system (BRT), expansion of rail transport systems, transition from traditional fuels to biofuels, development of more renewable energy programs, and the continued implementation of forest protection, management, and rehabilitation activities.
“This huge financial resource requirement to transit to a low-carbon economy would indeed require external support. Lending institutions have critical role to play to unlock more investments, including those from the private sector, in the pursuit of low-carbon and climate-resilient growth. A strong partnership among the government, the private sector, and the lending institutions will be greatly needed to put in place the right conditions to attract domestic and foreign low-carbon investments,” she said.
In order to promote green banking and financing in the Philippines, Legarda said that the Climate Change Commission (CCC), in partnership with UNESCAP, initiated a program to mainstream sustainable climate action within financial institutions in the Philippines, commencing with the Bangko Sentral ng Pilipinas (BSP). The program aims to engage banks in “greening” the financial sector by increasing awareness and appreciation on how they can integrate climate mitigation and adaptation criteria in in their lending operations.
She also mentioned that she filed a proposed measure to establish environmental units in every banking institution to assess and ensure that projects, subject to financing applications as well as collateral offered as security, shall conform to Philippine environmental laws. She also stressed that climate action makes good development sense.
“Pursuing green finance is crucial in our goal of pursuing climate-resilient, sustainable, and inclusive growth that likewise contribute to the fight to keep warming within the 1.5 degree threshold. Procrastination has already claimed hundreds of thousands of lives. It is time to bring the era of inaction to a close. Let our efforts reveal that we are firm in our resolve to deliver on our promise to save this planet for future generations,” Legarda concluded.
Apart from her, other resource speakers include: H.E. Inia Seruiratu, High-Level Climate Champion from the Marrakech Partnership and Minister of Agriculture, Fiji; Mr. Howard Bamsey, Executive Director of the Green Climate Fund; H.E. Fiame Naomi Mataafa, Deputy Prime Minister of Samoa; H.E. Mushahidullah Khan, Minister for Climate Change, Pakistan; H. E. Abraham Tekeste, V20 Chair and Minister of Finance and Economic Cooperation, Ethiopia; Mr. Michael Wilkins, Managing Director of Standard & Poor; and Mr. Peter Munro, Director of the International Capital Markets Association (ICMA) and Green Bond Principle Secretariat.