Business World

PHL seeking to expand applicatio­n of ‘green bonds’

- Tubayan Elijah Joseph C.

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 climatecha­nge 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 climateres­ilient 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. —

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