In support of the Philippine government commitment to the global climate summit last year, the Bangko Sentral ng Pilipinas last week released Annex A to the Sustainable Finance Framework that was issued in April 2020 embodying the guiding principles. Among the incentives being considered are preferential rediscount rates or provision of higher loan values that would bring about a significant increase in the share of green financing in banks’ loan portfolios.

Indeed, countries like the Philippines committed to sustainable development and climate change mitigation and adaptation move more decisively considering the urgency of the climate crisis. According to latest reports from the Organization for Economic Cooperation and Development (OECD) Green Recovery Database, some $677 billion that have been earmarked over the next few years for environmentally positive recovery measures “are now almost double the total allocated to measures with negative or mixed environmental impacts.”

This seemingly auspicious scenario is canceled by continuing government support to fossil-fuel producers and consumers. According to OECD and the International Energy Association, in the year 2020 alone G20 countries and emerging economies spent $345 billion subsidizing fossil-fuel use. The OECD’s portfolio review reveals that nearly 80 per cent of post-pandemic recovery spending “cannot be considered environmentally neutral: 10% is specifically tagged as mixed or negative for the environment, and the final 69%, while not tagged as having direct environmental impacts, is unlikely to be benign for the environment.”

The emergent scenario, therefore, looks more like business-as-usual instead of the much-needed green transition.

The BSP and the Department of Finance are spearheading the Green Force’s efforts to promote sustainable investments by “bridging policy and regulatory gaps.” Since 2017, seven banks have issued $1.15 billion in foreign currency denominated and P85.4 billion in local currency denominated green, social and sustainability bonds. Amid the pandemic, two local banks have issued social bonds worth approximately P29 billion to finance the needs of eligible micro, small and medium enterprises.

These amounts pale in comparison with the quantum of sustainable investments being made at the regional level. The sustainable bond markets in ASEAN+3 continued to expand to $389 billion as of September 2021. Some $278.5 billion worth of green bonds dominate the ASEAN+3 sustainable bond market while social and sustainability bonds amounted to $110.2 billion. Even while being boosted by the participation of economic behemoths China, Japan and Korea, such scale of investments is still modest by OECD standards.

Moreover, mere subscription to bonds must translate into actual spending for green projects. Hence, government must work closely together with the private sector to bring about the full fruition of projects that would decisively tilt the balance toward significant reduction of fossil-fuel use and carbon emissions.