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Business

Wildfires, super typhoons, and financial stability

EYES WIDE OPEN - Iris Gonzales - The Philippine Star

The war zone is everything around us the environment, the seas, the urban jungle, our homes, our world, our planet, but the fight is political.

There is no doubt it’s a warmer planet we have now, with 2019 seeing the second warmest year on record and the end of the warmest decade ever recorded. This means that carbon dioxide levels and other greenhouse gas emissions rose to new records in 2019.

Physics

Against this backdrop, it’s worth reminding ourselves that climate change is a political fight and governments like ours must continue to take urgent action, alongside leading the country’s recovery from the devastating impact of the COVID-19 pandemic.

Changing weather conditions are all about physics, says professor Kerry Emanuel of the Massachusetts Institute of Technology, as quoted in an article in the New Yorker. Hurricanes, for example, draw their power from heat in the ocean. If there’s more heat, the hurricane can get stronger, the article said.

To put it simply, the earth runs on energy and when we’re trapping more of it near the planet’s surface because of carbon dioxide, that energy needs to manifest. Thus, we have rising seas, typhoons, and many other extreme weather conditions.

This must have been what happened around this time eight years ago when Super Typhoon Yolanda, one of the most powerful tropical cyclones ever recorded, ravaged Tacloban and the heart and soul of its people; at least 6,340 people died. Homes and livelihoods were destroyed.

A huge political task

Acting on climate change is extremely urgent, now more than ever, and the fight is really political. Our government, the Bangko Sentral ng Pilipinas, our lawmakers, and policymakers need to step up the fight.

The UN has proposed six climate-positive actions:

Green transition: Investments must accelerate the decarbonization of all aspects of our economy.

Green jobs, and sustainable and inclusive growth.

Green economy: making societies and people more resilient through a transition that is fair to all and leaves no one behind.

Invest in sustainable solutions: fossil fuel subsidies must end and polluters must pay for their pollution.

Confront all climate risks.

Cooperation – no country can succeed alone.

These are the six recommended climate-positive actions the government can take, and I can imagine it’s easier said than done.

But our government agencies and institutions can play major roles in making these happen.

Financial stability

The Bangko Sentral ng Pilipinas, for one, has a critical role to play in mitigating climate change.

Central banks around the world are no longer debating whether or not mitigating climate change is part of their mandates.

As a recent BSP study has revealed, natural disasters have a negative impact on the banking sector’s performance.

“The study confirms that extreme weather conditions negatively affect the growth of deposits and loans, loan quality, and profitability. While more studies are needed to further measure the impact of climate and environmental risks on the financial system, the rankings and figures about the country’s exposure and vulnerability to climate and other environmental risks are compelling enough for BSP to take steps to manage the potential threats to financial stability,” BSP Governor Benjamin Diokno has said.

Thus, the BSP will be issuing more regulations to enable the banking industry to make safe and sound responses to risks arising from the transition to a low-carbon economy.

“Banks may gradually consider the future implications of stranded asset risk in their credit portfolio,” the BSP chief also said.

COP26

At the Climate Change Conference in Glasgow, Finance Secretary Carlos Dominguez III discussed how the Philippines, as a developing economy and climate-vulnerable country, has been spearheading initiatives to broaden the participation of the financial sector in mobilizing funds and investments to squarely address the ill effects of the climate crisis.

The Philippines, he said, is proceeding with its adaptation and mitigation programs on the ground without waiting for the annual $100-billion climate financing pledge made by developed countries in 2020 to materialize, given that time is fast running out.

But Sec. Dominguez stressed that developed countries should get their act together to deliver on this financing commitment to assist climate-vulnerable countries like the Philippines.

The Philippines also submitted, as its Nationally Determined Contribution (NDC) to the Paris Agreement, a projected greenhouse gas (GHG) emission reduction and avoidance of 75 percent from 2020 to 2030 for agriculture, wastes, industry, transport, and energy sectors.

This is a positive step in the right direction.

Off-setting

There are many more initiatives the Philippines can do. The private sector, for instance, should also implement a rapid, time-bound plan to end fossil fuel extraction instead of just doing offsets.

This means corporations must reduce their greenhouse gas emissions instead of just planting trees and restoring forests to reduce their carbon footprint. Offsetting initiatives take time and will not immediately address the climate crisis.

Only a rapid, time-bound plan to reduce gas emissions will avert catastrophic climate chaos.

This we must implement on a bigger, larger, and institutional scale and it is the role of our policymakers to make sure this happens.

Time is running out as Sec. Dominguez said, and he is very much on point.

 

 

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com

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