Speech at the Corporate Governance Advocacy Webinar Series Deputy Speaker and Antique Congresswoman Loren Legarda Pilipinas: Aspire, Rise, Sustain “Integrating Climate Risks in Corporate Strategy” October 29, 2020

Good afternoon to you, Red; Bangko Sentral ng Pilipinas(BSP) Governor Benjamin Diokno; Convergence Blended Finance Managing Director Robert van Zwieten; Institute of Corporate Directors CEO Leonardo Berba; corporate directors; and to all of you who are listening and joining us virtually.

Thank you for inviting me to this very important event. The private sector has an incredibly critical role to play in our people’s response to climate change. I have worked on climate change long before it became mainstream, because it is certainly the most serious existential threat our country has ever faced. 

To say countless lives are at stake is an understatement.

The climate crisis threatens nothing less than the long-term viability of the Philippines as a nation. 

As an archipelagic country situated along the Pacific typhoon belt, our people have grown used to twenty typhoons entering the Philippine area of responsibility annually. What makes the new normal different, however, is how warming oceans are fueling the intensity of severe weather events. Combined with bad infrastructure and decades of short-sighted planning, we have become extremely vulnerable to climate impacts. We therefore need to consider building adaptive capacities and resilience at the very core of our climate policies and plans. 

Adaptation is a matter of life and death. Climate impacts are anticipated to become harsher and more painful to the populace. It is thus vital that we ensure the right investments flourish in our economy in order to give our people the ability to survive and thrive in the face of the climate emergency.

Why is it that our vulnerabilities appear to continue to grow?

In registers like the Global Climate Risk Index, the Philippines has consistently ranked among the highest.

We were the 2nd most affected by climate change in 2018, which is a significant increase from our 20th place in 2017.We were also the 4th country most affected by extreme weather events in the long-term index from 1999 to 2018.

In 2019, 51 of our local governments declared a state of calamity due to droughts and dry spells induced by El Niño and aggravated by climate change. For example, in the first quarter of 2019 alone, the estimated cost of agricultural damage amounted to 168 million US dollars, affecting the lives of more than 247,000 Filipino farmers.

Hard fought development gains and productivity will continue to be undermined even more or reversed if the 1.5-degree limit of the Paris Agreement is breached.  

Many consider the Philippines as a pioneer in terms of environment and climate policies, passing legislation ahead of our time and regarded as model policies for other countries.

We’ve enacted the Climate Change Act in 2009, which I principally sponsored and authored during my time in the Philippine Senate, and which I envisioned to mainstreamclimate change in the development strategies and tools of government.

This law created the Climate Change Commission as our country’s lead policymaking body on climate change, which eventually led the formulation of our National ClimateChange Action Plan or NCCAP that would outline our country’s long-term adaptation and mitigation priorities.

In 2012, I also sponsored the People’s Survival Fund Act, which sought to provide funding for adaptation projects by local governments and community organizations. The PSF has an annual allocation of one billion pesos, or 20 million US dollars, which may be augmented by other funding sources. Investors should consider public-private partnerships as co-investments with the PSF and private capital moving towards more local climate-sensitive prosperity plans.

The PSF is one of many domestic public funds — alongside our National and Local Disaster Risk Reduction and Management Funds, Quick Response Fund, and Performance Challenge Fund — that LGUs can tap for financing adaptive responses and adaptation priorities.

We recognize of course that these funds, even those from international sources, are simply not enough for our country’s climate finance needs, especially when we consider the colossal challenges imposed by the pandemic. This is why nothing less than a whole-of-government, and whole-of-society approach, is needed. We need to tackle climate change far more seriously and with greater urgency, without sacrificing the country’s ability to achieve its own sustainable development goals.

Globally, the Philippines plays an active leadership role in the Vulnerable Twenty Group of Ministers of Finance, more popularly known as the V20. The group was founded in 2015 through the leadership of the Philippines during its time as the Chair of the Climate Vulnerable Forum (CVF). Today the CVF and V20 are now 48 member-states strong.

The V20 focuses on mobilizing climate finance and de-risking financial flows to vulnerable country economies. The association clearly plays a critical role in the global effort to face the climate emergency through effective, visionary measures in the real economy. We are long past the period of talking. What the public expects is action. As I reminded officials almost a year before the Paris Agreement was gaveled, we may be vulnerable but we are also, most certainly, most capable.

As the CVF Global Ambassador for Parliaments, I strongly believe it is particularly important to rally fellow parliamentarians around the world to raise the banner of ambition and urgency. We need to make our strategies matter. Our long-suffering public deserves nothing less.

This is why I look forward to the fruits of V20 efforts to move closer to fruition the V20’s own Accelerated Financing Mechanism or AFM, which V20 colleagues drew up as a contribution to the global response to climate change. More importantly, the AFM is meant to de-risk and buy down the cost of capital to complement the focus of stimulus investments and mobilize new green private sector-driven investments towards resilient infrastructure, food and water security to overcome the twin crisis from COVID-19 and climate change.  

The objective, colleagues, is to achieve a triple dividend for V20 countries by reducing pandemic risk, while at the same time, increasing climate resilience and strengthening economic recovery and sustained growth.

In terms of recovery from COVID-19 and its economic impacts, and adapting to the climate crisis, I very much think we are striving for a far better normal with the positioning of our country as a green investment destination.

In March this year, the Monetary Board of the Central Bank of the Philippines approved the “Sustainable Finance Framework” to safeguard the financial system from the evolving material hazards of physical climate risk and transition risk, including stranded and stranding fossil fuel assets. This would give banks the impetus to start pricing,not only climate and transition risks, but also to value climate-resilience and low-carbon opportunities. We have the BSP Governor Benjamin Diokno present here today to discuss more later on BSP’s Sustainable Finance Framework. Ben Diokno certainly represents the new ranks of climate leaders making their mark in the global financial community.

The BSP’s framework is an important catalyst for investors who are today putting more weight on environmental, social,and governance standards, or ESG.

The BSP’s agenda also complements the work of our Securities and Exchange Commission, which previously released mandatory ESG reporting guidelines for publicly-listed companies and issued the ASEAN green bonds standards in 2018. In 2019, the Philippines listed over 2 billion US dollars’ worth of green bonds, the third largest issuer in Southeast Asia after Singapore and Indonesia. We are glad that the event organizers — the Institute of Corporate Directors, the Institute for Climate and Sustainable Cities, and The Climate Reality Project Philippines — were also able to invite SEC Commissioner Kelvin Lester Lee for next week’s webinar to talk more on sustainability reporting.

Colleagues, according to the Department of Labor and Employment, 10 million Filipinos are estimated to lose their jobs this year due to the pandemic. But with the influx of available green bonds, and with President Rodrigo Duterterecently calling on the United Nations General Assembly to recognize the climate emergency we are in — as well as the need for historically responsible countries to act sooner — the potential of green opportunities in driving job growth and economic growth should be clear. Moving towards low carbon development will address both the impacts of COVID-19 and climate change.

I take this opportunity to challenge the corporate directors and officers listening here today to become more strategic and to adopt far longer horizons. As you take into consideration your fiduciary responsibilities, heed as well what our Central Bank has suggested: that it is high time to assess and manage climate risk as you would any other financial risk, and to act towards the future decisively.

As we strive to move to a better normal at the global and local levels, understanding all financial risks and taking advantage of available resources will be key to helping embrace a new risk management paradigm that can bring about resilience and stability, especially to our businesses and to our people.

This is a fight that needs all our contributions. The fight for the future doesn’t start tomorrow. It commences today, no island must be left behind, colleagues. Everyone counts, and everything matters.

Thank you.