Government pushes greater access to green financing

MANILA, Philippines — The government is keen on strengthening its policies to improve the access of both the public and private sectors to green financing, according to the Department of Finance (DOF).

Finance Secretary Carlos Dominguez said the government is pushing to expand the coverage of the ASEAN Framework for Green Bonds to cover other sectors, including transportation, infrastructure and commercial banking.

Green financing is a form of investment specifically dedicated to sustainable projects that could help mitigate the effects of climate change.

“We hope to mainstream access to green financing through banks and microfinance institutions,” Dominguez said during the “Green Finance Toward  a Sustainable Philippines” Forum in Manila.

The finance chief said the government is also exploring the possibility of funding various public-private partnerships through green financing.

With climate change emerging as the most pressing global problem, Dominguez said green financing has turned into an effective instrument for countries, especially the highly vulnerable ones like the Philippines, to mobilize investments aimed at improving the resilience of communities.

Among these is the ASEAN Green Bonds, which refer to bonds and sukuk (Islamic bonds) that comply with the ASEAN Green Bond Standards (GBS), developed through consultations with the International Capital Market Associations (ICMA), capital regulators and industry players in the Association of Southeast Asian Nations.  

Proceeds from the issuance of ASEAN Green Bonds will be exclusively applied to finance or refinance, in part or in full, new or existing eligible green projects.

However, the finance chief said there is still a need to refine instruments for green financing to make them more attractive to investors given the huge investments needed for climate change mitigation measures.

 “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,” Dominguez said. 

The government and the financial sector, in partnership with multilateral institutions,  have been carrying out initiatives  in line with the strategies outlined in the Philippine Development Plan and National Climate Change Action Plan.

These include the launch of the People’s Survival Fund in 2016, which has an annual rolling budget allocation of P1 billion to finance climate change projects proposed by local government units.

In October last year, the Department of Budget and Management also launched its Green Green Green program to assist 145 cities in making life more livable for residents through the development of public open spaces.

The Asian Development Bank in 2016 issued its landmark $225-million climate bond through the Bank of the Philippine Islands (BPI), while the International Finance Corp. last year issued its triple A rated peso-denominated Mabuhay bonds. 

China Banking Corp. also issued its first green bond in 2018, while the Development Bank of the Philippines launched its Green Financing Program.

Meanwhile, Budget Secretary Benjamin Diokno said the government’s  budget for climate change initiatives exceed P200 billion annually, both for adaptation and mitigation measures.

He said the Duterte administration’s climate change-related expenditures already reached six to seven percent of the total national budget.

 “Most of these funds are allocated in the Department of Agriculture for climate resilience crops and food security programs. In the Department of Environment and Natural Resources, for research and implementation of climate change laws and policies and in the DPWH, for flood control and seawall projects,” Diokno said.