Representatives from the private sector declared their support for the Low Carbon Economy Investment (LCE) Bill during a forum hosted by Eco-Business on 14 August in Taguig City.

The bill was recently passed within the Climate Change Committee in the House of Representatives after months of deliberations. It aims to better engage businesses in accelerating the reduction of greenhouse gas emissions from sectors of the economy.

Rep. Anna Veloso-Tuazon, member of the House Climate Change Committee, deemed the passage of the bill as necessary for the Philippines to achieve its climate targets.

“The business-as-usual scenario is no longer feasible if we want to survive for the next three decades,” she said.

Tuazon also emphasized the huge costs of inaction, including losses on productivity, business disruptions, costs of relocation, and damages to infrastructure. This indicates that climate change mitigation would also benefit adaptation, which is acknowledged as the anchor strategy for the country.

“We have to view mitigation, which the LCE tries to address, as a function of adaptation, in line with our Framework Strategy on Climate Change,” she added.

Citing the newly-published NDC Implementation Plan, Tuazon also highlighted that the private sector would play a key role in implementing policies and measures to reduce emissions. The plan outlines how the country aims to avoid and reduce its pollution by 75% within the current decade.

Options for businesses

The most contentious part of the LCE Bill is the proposed creation of a carbon pricing framework. Under its current form, if businesses exceed a designated emissions limit, they would have to allocate a corresponding “decarbonization fund”.  

What happens to this fund would be up to businesses. They could invest in their own low-carbon projects like renewable energy development, pool resources with other small enterprises for joint investments, or invest in smaller businesses that develop sustainable solutions. 

This approach is designed to give the private sector options to pursue what they perceive as the most effective pathway to contributing to decarbonization. Proponents hope to entice more businesses to participate in this framework, some of whom have expressed hesitation because of their perception that carbon pricing would limit their growth.

Bonar Laureto, Principal at SGV and Co., praised it as a more liberal and flexible “enabling mechanism to drive decarbonization that also takes advantage of the economic benefits that a low-carbon economy presents”.

Many stakeholders, especially from civil society, have criticized this planned approach, citing the lack of strong regulations that could end with the carbon pricing framework not helping reduce the country’s emissions.

On this issue, Laureto responded that the bill once passed into law would itself be the figurative “teeth” that would regulate the activities of the private sector, aligned with what is needed to adapt to and mitigate climate change.

“I believe in the competency of the private sector. Because the LCE Bill incentivizes businesses to invest, we need a policy that gives the flexibility to the business sector to determine where they invest, as long as they have clear guidance on it,” he added.

Marla Garin-Alvarez, Vice President and Head of the Sustainability Office of BDO Unibank’s Compliance Group, also expressed support for the LCE Bill, citing it as aligned with their group’s sustainable finance framework.

While BDO currently finances renewable energy projects such as hydro, geothermal, and large-scale onshore wind, she said that the bill and its proposed framework would provide “an incentive for us to even fund more, which is our goal”.

Garin-Alvarez also acknowledged that the economy-wide transition to a low-carbon model for the Philippines would not come without challenges. She highlighted how her group continues to expand its scope for sustainability management, such as the inclusion and strengthening of social and gender considerations in the aforementioned finance framework.

Referencing the bill, she added that “we also find it very much aligned to our environmental and social risk management. When it comes to banking and finance, we look at ESG as long-term risk management”.

John Leo is the Deputy Executive Director for Programs and Campaigns of Living Laudato Si’ Philippines, a member of Aksyon Klima Pilipinas, and the Youth Advisory Group for Environmental and Climate Justice under the UNDP in Asia and the Pacific. He is a climate and environment journalist since 2016.