GLASGOW—Philippine Finance Secretary Carlos Dominguez III has urged multilateral development banks (MDBs) to adopt a harmonized set of guidelines for vetting climate adaptation and mitigation projects, which will serve as the “seal of good housekeeping” to catalyze the flow of private sector capital that developing countries need to meet their objectives on fighting planet warming.

In a letter jointly addressed to the presidents of the World Bank Group (WBG), Asian Development Bank (ADB) and the Asian Infrastructure Investments Bank (AIIB), Secretary Dominguez said his proposal will allow the MDBs to “play a pivotal role in mobilizing the trillions of dollars in private sector financing available for climate adaptation and mitigation projects.”

MDBs can also set the standards for transparency and accountability in monitoring the climate change initiatives of developing countries to further assure private investors on the prudent use of the funds they have invested in these projects, said Secretary Dominguez, who led the Philippine delegation in the 26th United Nations (UN) Climate Change Conference of the Parties (COP26) held here.

“The support extended by the WBG, ADB and AIIB to the climate projects of developing economies is crucial to encourage the flow of private sector capital into these initiatives meant to help highly vulnerable countries adapt to, and mitigate the effects of, the climate crisis. Given the extensive monitoring and vetting processes of the MDBs in approving projects, they are in the best position to provide the seal of good housekeeping that would spur the private sector to invest in these projects,” Secretary Dominguez said in his letter to the three MDBs dated November 7, 2021.

The letter was addressed to WBG President David Malpass, ADB President Masatsugu Asakawa and AIIB President Jin Liqun.

“With the public and private sectors resting their trust and confidence in MDBs, I propose that the WBG, ADB and AIIB collaborate in setting up a harmonized set of guidelines to determine the viability and sustainability of climate projects,” said Secretary Dominguez, who is also the chairman-designate of the Philippines’ Climate Change Commission (CCC).

He said the three MDBs can also work together with other development banks around the world in ensuring that such standards and guidelines are adopted.

Secretary Dominguez broached his proposal to the three MDBs after observing in COP26 that its series of meetings have largely focused “on consensus regarding certain principles and parameters on climate change without a clear understanding of how global finance can play a significant part in moving the climate agenda along.”

“Combating climate change should move beyond conducting annual meetings that, unfortunately, often yield unfulfilled commitments. We should now all focus on applied solutions and workable programs to quickly reduce greenhouse gas emissions. We have a planet to save and do not have much time to do it,” Secretary Dominguez said in his letter.

Secretary Dominguez said that without resolving the critical question of how global finance can serve as the catalyst for climate action, “it may be impossible to achieve the US$ 100 billion goal, much less come out with a higher achievable target.”

He was referring to the 2009 commitment of developed countries to channel US$100 billion per year by 2020 to the climate adaptation and mitigation initiatives of developing countries.

This commitment remains unfulfilled and developing countries like the Philippines had demanded at the start of COP26 that the world’s wealthiest economies, which are responsible for most greenhouse gas (GHG) emissions, make good on their pledge made 12 years ago.

Secretary Dominguez said integral to this critical issue of climate finance is a clear definition of what constitutes it, which, he said, should be the “blended approach” of sustainable orchestration of grants, investments and subsidies.

He said grants should be used to improve the capacity of local communities in climate-vulnerable areas to undertake mitigation and adaptation measures, while investments should focus on programs and projects that will unlock more business opportunities, create new jobs, and lead to energy self-reliance in the long run.

Subsidies should also be a key component of climate finance because these will help address the financial costs and risks of communities transitioning to a climate-resilient economy, Secretary Dominguez said.

“As these funds are from taxpayers and investors, accountability and transparency should be ensured both on the part of the beneficiary and donor countries to guarantee the prudent use of such aid,” he said.

Secretary Dominguez earlier underscored the importance of these three elements of the blended approach—grants, investments and subsidies—in his intervention at the 4th High-Level Ministerial Dialogue on Long-Term Finance held here last Nov. 3.

The Philippine delegation to COP26 had highlighted the country’s efforts in addressing the climate crisis through practical projects on the ground, and demanded greater accountability from Western countries that have contributed and continue to contribute the most to global warming, during the series of meetings held as part of the climate change conference.

As its Nationally Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected GHG emission reduction and avoidance of 75 percent from 2020 to 2030 for the sectors of agriculture, wastes, industry, transport and energy despite being among the countries with the smallest carbon footprints.

The Philippines contributes only 0.3 percent of the world’s total GHG emissions but is among the countries most vulnerable to the destructive impact of erratic weather patterns resulting from climate change.

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