THE Bangko Sentral ng Pilipinas (BSP) believes that efforts to finance climate change initiatives require incentives and policies.
In a plenary session at the Asian Development Bank (ADB) Southeast Asia Development Symposium (Seads) 2023, BSP Governor Felipe M. Medalla said that in the Philippines this means including efforts to lighten regulation on single borrowers’ limits.
Medalla also said the BSP has also been telling banks to lend to farmers, particularly agrarian reform beneficiaries, and including climate change in their credit risk analysis to ensure that this important issue is at the top of the agenda of the banking sector.
“Of course, this involves a lot of things including measurement, disclosure. So the entire financial sector must say, okay, every large corporation must make a declaration of what it’s doing not just in relation to the safety of the money of the banks, for instance, but they must make a declaration as well with regard to greenhouse gases,” Medalla said.
The BSP Governor said that even if the Philippines is a small emitter of greenhouse gases (GHGs), the country stands to lose a lot under a business as usual attitude.
“If this thing doesn’t get solved, we will be one of the biggest victims because of our geography and our location in the overall global climate sphere. So that’s why we have decided that the Philippines must of course, visibly, play a good role,” Medalla said.
Part of the recent efforts of the Philippine government, particularly in adopting a whole of government approach to climate change, is in energy.
Medalla noted that the Department of Energy (DOE), through the recommendation of Secretary Raphael P. M. Lotilla, now allows 100-percent foreign investment in renewable energy such as wind and solar.
This is due to the declaration that these resources are not Philippine natural resources but are resources that belong to the world. This skirts the provisions in the 1987 Constitution that investments using natural resources should be 100 percent Filipino owned.
“These resources belong to the world therefore, we are open to 100-percent foreign ownership of renewable energy. I think we may also take the same view about transportation, because these are the two biggest sources of emissions,” Medalla said.
During the plenary, ADB Southeast Asia Department Director General Ramesh Subramaniam agreed with Medalla saying that policies and incentives will shore up financing for renewables and other climate change-related efforts.
As far as ADB is concerned, Subramaniam reiterated the message of ADB President Masatsugu Asakawa that the Manila-based multilateral development bank commits to extend $100 billion worth of financing until 2030 for climate change adaptation and mitigation efforts.
‘Bankability’ of projects
HOWEVER, Subramaniam said there is the issue of “bankability” of projects. Climate Change-related projects can be challenging to do. Efforts to improve project preparation and implementation must be improved to maximize the available financing that ADB and other institutions are already offering.
He also noted the importance of including climate efforts in all the things governments and the private sector does particularly in energy, urban transportation, and economic transformation.
“For that, policy, legal, regulatory framework is very, very critical. The second is to mobilize skills and new ideas, new technology solutions because the technology landscape is rapidly changing and not all developing countries are equal there are lower income countries, even in Asean [Association of Southeast Asian Nations] and they need our assistance,” Subramaniam said.
The ADB executive also said climate change messaging is also important. He noted the message of Indonesia Finance Minister Sri Mulyani Indrawati who said that the transition to green and climate-friendly solutions need to be just and affordable.
Transforming the economy into a green one could be a pain point, especially in terms of labor. And this is where skills upgrading training are key as the transition could lead to significant job losses.
Economic rewards
HOWEVER, Subramaniam said, achieving success in this regard will lead to significant economic rewards, which are part of the findings of the latest ADB report launched on Thursday at the Seads 2023.
The ADB’s fourth Seads with the theme “Imagining a Net-Zero Asean” in Bali, Indonesia brought together decision-makers, innovators, and climate leaders from government, industry, academia, and the development sector to discuss practical ways to achieve carbon neutrality by 2050.
The hybrid event was held in-person at the Bali International Convention Center at The Westin Resort Nusa Dua, with a simultaneous broadcast online. A total of 500 in-person and more than 5,000 virtual participants are expected.
The Seads 2023 builds on the successes of Indonesia’s G20 presidency in 2022, which placed the global transition toward a low-carbon economy at the forefront of the agenda. It is a key side-event of the ASEAN Finance Ministers and Central Bank Governors’ Meeting on 28–31 March, also in Bali.
Image credits: Patrick Roque via Wikimedia Commons CC BY-SA 4.0