Senator Loren Legarda has filed a measure that would ensure that loans or related funding applications in both public and private lending institutions are in compliance with the country’s environment laws.
In filing Senate Bill No. 436, Legarda, Chair of the Senate Committees on Finance and Climate Change, said that she proposes the establishment of environmental units in every banking institution to assess the environmental component of loan applications.
“We need to involve the private sector in our goal to build a resilient nation. This measure will complement our current environmental laws and will contribute to their sound implementation through the proposed mechanism in place at the initial stage of the project – that is, before it is actualized through funds,” she explained.
“These environmental units will continue monitoring the project’s environmental compliance until such time when the account is fully paid or the collaterals are released or substituted. This measure will help facilitate sustainable development and likewise encourage sound business management,” Legarda added.
Under said measure, the environmental unit shall be composed of three functional units, namely: Environmental Review and Assessment Unit tasked to ensure the environmental soundness of the project and the account’s compliance with environmental laws, thereby avoiding environmental risks; Environmental Policy, Planning and Systems Management Unit tasked to develop/enhance the lending institutions internal policy to effectively implement the corporate environmental policy; and Environmental Program Management Unit tasked to develop/manage grant-assisted environmental programs and assist project management units in developing environmental-related lending facilities that will provide services/support to the bank and its clients.
“We have to strike a balance between economic development and environmental protection by creating in-house environmental units in every lending institution that will ensure that projects subject of financing applications as well as collateral offered as security shall conform to environmental laws. Moreover, they have to look into reported complaints against a client’s project or collateral and monitor compliance through periodic reports submitted by the clients to ensure the success of this legislation,” Legarda concluded.