Lots Of Funds, Few Takers: Borrowers shy away from LBP environment window

The Land Bank of the Philippines (LBP) is offering loans with very attractive terms for projects, but there are very few takers.

LBP president and chief executive officer Margarito "Gary" Teves noted that most companies show little or no interest in environmental projects because they are perceived as being non-profitable and won’t result to savings for the company anyway.

"We have also identified leniency in enforcing environmental laws as still another reason for the law availment of financing programs for environmental initiatives," Teves added.

Teves said government shares part of the blame for being lenient in enforcing environmental laws and regulations such as the Clean Air Act. A number of legal and institutional frameworks for environmental protection and natural resources conservation have been formulated and enacted into law or regulations, but government agencies have failed to enforce this.

"This poor implementation and even the inappropriateness of the penal provisions pose as major setbacks in promoting sustainable development," the LBP executive said.

According to Teves, most of the businesses do not understand that cleaner production initiatives reduce operational costs with the subsequent savings on raw materials and energy, among others.

Banks provide the capital for environmental projects and the conditions that help stimulate environmental awareness. These include the implementation of cleaner production technologies, end-of the pipe treatment projects, and environmental amelioration projects.

"As provider of credit, banks are in the best position to require companies to comply with loan conditions that will address the environmental soundness of projects they implement. This is through integrating environmental risk management as part of the banks’ loan evaluation process," Teves told participants of the 3rd Asia Pacific Roundtable on Cleaner Production conference held at the EDSA Shangrila recently.

The government financial institution is one of a few institutions that have included environmental concerns in their corporate thrusts. It has sourced credit facilities from multilateral and bilateral agencies for programs that promote sustainable development.

These projects include the Air Pollution Control Credit Facility of the Asian Development Bank (ADB), the Countryside Loan Fund Programs of the World Bank, and the Local Government Unit Credit Facility funded by the Japan Bank of International Cooperation (JBIC).

It is also the first bank in the country to set up an environment unit within the bank which evaluates the environmental aspect of projects funded under its special financing programs.

"We have underscored the role of banks in providing financing support and in integrating environmental risk management in their loan evaluation process."

Environmental protection is a major concern that calls for a unified action from all sectors, according to participants of the conference.And they likewise agreed that banks could play a key role since they handle credit.

"We believe that in the long run environmental-concerned production activities will increase profitability. Once the business sector proves that this can indeed happen, more financial institutions will be drawn to provide funds for such activities," Teves said. "The concerted efforts of all stakeholders, coupled with the government’s commitment and strong implementation of cleaner production initia-tives, will further pave the way for a flourishing, yet environmentally-concerned, business operations."