GOVERNMENT efforts to stem the Covid-19 pandemic may serve a double purpose as it can also help the Philippines meet the Sustainable Development Goals (SDGs) by 2030.

National Economic and Development Authority (Neda) Director General and Socioeconomic Planning Secretary Karl Kendrick T. Chua told the BusinessMirror over the weekend that the government's efforts to address Covid-19 can also help attain the SDGs.

The government earlier disclosed that its Covid-19 response included the social amelioration program funded by the Bayanihan 1 and Bayanihan 2 laws, as well as the passage of legislations such as the Create (Corporate Recovery and Tax Incentives for Enterprises, or Republic Act 11534)  to reduce income tax payments of firms, among others.

However, the ADB said more needs to be done to meet the SDGs. The Manila-based multilateral development bank is proposing the use of a new kind of SDG bond.

"The COVID-19 pandemic has slowed down the momentum for sustainable and equitable growth in most of developing Asia and many countries are at risk of not meeting their SDG targets in climate resilience, gender equality and human development," ADB Vice President Ahmed M. Saeed said.

"For countries looking to fund sustainable projects and programs on a large scale, capital markets represent an underused but viable mechanism to bring in SDG investments," Saeed added.

The ADB said the SDG Accelerator Bond could help countries reduce the perceived investment risk posed by an issuing entity, sector or project with no track record on bond issuance.

The new bond, the ADB said, proposes to combine exit guarantees and other credit enhancement structures with incentives to help countries meet SDG targets.

Bonds

SOUTHEAST Asian countries have issued a record $12 billion in green, social, and sustainability bonds in 2020. However, their financing needs have only grown amid the Covid-19 pandemic.

These include Philippine institutions such as Rizal Commercial Banking Corp., which launched P8-billion and $300-million worth of SDG bonds in June and September 2019, respectively.

The BPI also issued the first peso-denominated social bond worth P2.1 billion in August 2020; the Development Bank of the Philippines, P18.125 billion in November 2019; and, the Manila Water Co. Inc., which issued 500 million euros worth of Sustainability Notes in July last year.

The ADB said, however, that the SDG Accelerator Bond builds on global best practices in project finance and aims to standardize the risk-return structure to ensure investor appetite and help local governments and new state-owned entities access funds.

The framework would allow variations in fund structure among countries and issuers of the accelerator bond or other SDG bonds.

Performance

According to a report released by the ADB, the Philippines is on track to meet two of the 17 SDGs.

The country ranked 99th out of 166 countries in terms of its efforts to meet its SDG commitments. It received a score of only 65.5 percent in the index.

The report noted that the country is on track to meet only SDG 1 on eradicating poverty. Still, major challenges "still persist" in meeting SDG 1 and SDG 13 (Climate Action).

Based on the report, the Philippines's performance in meeting the goals is decreasing or regressing in SDG 4 (on quality education) where challenges remain and SDG 15 ("Life on Land") where significant challenges remain.

The country's performance is stagnating in SDG 5 (on gender equality); SDG 7 (on affordable and clean energy); and, SDG 11 (on Sustainable Cities and Communities).

The progress is also stagnating in SDG 14 (on Life Below Water) and SDG 17 (on partnerships); significant challenges also remain in meeting these goals.

Commitments

HOWEVER, ADB data showed the country's progress is moderately increasing in SDG 2 (on zero hunger); SDG 3 (on good health and well-being); and, SDG 9 (on industry, innovation and infrastructure).

The country's progress is also moderately increasing in SDG 6 (on clean water and sanitation) and SDG 8 (on decent work and economic growth).

ADB data also showed there is no data available to determine the country's progress in SDG 10 (on reducing inequalities) and in SDG 12 (on responsible consumption and production).

Around 193 United Nation-member countries committed to meet the SDGs by the year 2030. The SDGs were adopted in September 2015.

Requirements

IN an earlier presentation, ADB Economic Research and Regional Cooperation Department Director General and Chief Economist Yasuyuki Sawada said the Asia and the Pacific region's annual investment requirements to meet the SDGs between 2016 and 2030 could reach $1.5 billion annually or four percent of the region's gross domestic product.

This amount is staggering, especially if only governments and multilateral institutions will be working together to pool the funds. Sawada said private green and social financing for the SDGs would go a long way.

Globally, Sawada said, green and social finance have grown rapidly driven by factors such as changing shareholder preferences; hedging and mitigating sustainability risks; and greater resilience under shocks.

Green bonds are a part of "green financing" initiatives. Sawada said Asian green bond issuers improved their environmental scores after issuing green bonds by as much as 17 percent a year after issuance and 30 percent two years after issuance.

In terms of social impact bonds, Sawada said, has also improved various sectors including the education of girls in India. These social impact bonds allow private investment to share the risk of green and social investments with the public sector.

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