THE GOVERNMENT is looking to expand the list of environmental projects eligible for financing via the issue of so-called “green bonds.”
“Government is looking at expanding the coverage of the ASEAN (Association of Southeast Asian Nations) Framework for Green Bonds to cover such sectors as transportation, infrastructure, and commercial banking. We hope to mainstream access to green financing through the banks and microfinance institutions,” Finance Secretary Carlos G. Dominguez III said in a speech during the Forum on Green Finance Towards a Sustainable Philippines on Thursday in Manila.
In August, the government adopted the guidelines on green bond issuances under the ASEAN Green Bonds Standards, which uses proceeds to fund renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, clean transportation, climate change adaptation, and green buildings.
Mr. Dominguez added that the government is also exploring possible funding of various public-private partnerships through green financing.
Budget Secretary Benjamin E. Diokno meanwhile said that the government has allotted P242.6-billion worth of climate-change mitigation projects this year, which accounts for about 6-7% of the 2019 national government budget, compared with the 1-2% average share about two decades ago.
“Most of these funds are allocated to the Department of Agriculture (DA) for climate-resilient crops and food security-oriented programs, to the DENR (Department of Environment and Natural Resources) for research and implementation of climate change laws and policies, and yes, to the Public Works Department for flood control and seawall projects,” he said.
British Ambassador to the Philippines Daniel Pruce meanwhile said that the Philippines can tap the £1.2 billion Prosperity Fund to bridge the gap in financing environment-friendly projects.
“We are looking to develop areas where we can work specifically in partnership. We have an extensive program, the Prosperity Fund. Elements of which will be focusing on low-carbon economic development and doing that here in the Philippines. We are in early stages of that program. The definition of specific projects, areas is still to be clarified and identified,” he said.
In the same forum, the Bangko Sentral ng Pilipinas (BSP) said that it is focusing on capacity-building programs for banks seeking to participate in green bond issues.
“For now our focus is on capacity building. Our efforts on the last years on this are getting more understanding in risk measurement, and embedding risk management principles in our banks. We are also seeing if there’s anything in terms of regulatory guidance, possible regulatory incentives, these are the things that under study,” said Bernadette Roman-Tayag, Head of the BSP’s Inclusive Finance Advocacy Office, during the forum.
But she noted that the BSP wants to mainstream green financing in the local banking system “without it just being seen as a compliance mechanism,” and attracting investments from the private sector.
Three local private banks have participated in green bond issuances in the Philippines in 2018.
Bank of the Philippines Islands (BPI) was involved in a $225-million green bond transaction, $90 million was also raised through BDO Unibank, Inc. and $150 million through China Banking Corporation — which were backed by multilateral institutions Asian Development Bank and International Finance Corporation.
Securities and Exchange Commission Commissioner Ephyro Luis B. Amatong said that green bonds are currently seen as a high-risk investment.
“We want to structure them in a way that makes them financially viable. We are looking at where we can mitigate, or de-risk the project. The interest of the private sector to finance them to be commercially viable are so important,” Mr. Amatong said.
National Economic and Development Authority (NEDA) Assistant Secretary Mercedita A. Sombilla meanwhile said that the government is pushing to remove investment restrictions on advanced environmentally-friendly technology.
The government has reiterated its commitment to keep the rise in the global temperature below 1.5 degree Celsius.
“The challenges posed by climate change demand all hands be on deck: government, the private sector and the non-government organizations. Among the weapons we have is green financing. This will allow us to mobilize investments for a range of initiatives, from wider use of renewable energy to improving the resilience of our communities,” Mr. Dominguez said.
“The Philippines is among the most vulnerable to the effects of climate change. We have seen how increasingly severe weather conditions inflict a growing cost on our economy, increase the vulnerability of our communities and threaten our food security. We need to put in our best efforts to turn back climate change and improve resilience to minimize economic dislocation,” he added. — Elijah Joseph C. Tubayan