Philippines Strengthens Climate Action with Enacted Loss and Damage Fund Law, USD 500 Million ADB-Loan for Climate Change Nearing Approval

The Philippines recently saw key developments in its climate change efforts, including the signing of the “Loss and Damage Fund Board Act” and the upcoming approval of an Asian Development Bank (ADB)-sourced loan for climate change initiatives.  

On August 29, 2024, President Ferdinand “Bongbong” Marcos Jr. signed into law the “Loss and Damage Fund Board Act” (Republic Act No. 12019). This legislation marks an advancement in the Philippines’ efforts to address climate change impacts globally. The Act creates the Loss and Damage Fund (LDF) Board, a legal entity responsible for managing international financial resources to aid communities vulnerable to climate change. 

The Act allows broad authority to the LDF Board, including the acquisition and management of assets, initiation of legal actions, and negotiation of agreements with international organizations. These powers are crucial for the effective management and allocation of the Fund’s resources. 

Additionally, the Act permits the LDF Board to establish a hosting agreement with the World Bank, which will act as the interim trustee and host for the Fund’s secretariat. This collaboration is expected to enhance the Fund’s operational efficiency and transparency in its initial phase. 

The full document of the Loss and Damage Fund Board Act can be found here.  

ADB’s USD 500 Million Loan to Support Climate Efforts in the Philippines

The Asian Development Bank (ADB) is set to approve a significant loan of USD 500 million (around PHP 28.5 billion) to support the Philippines in its fight against climate change. This loan, under the Climate Change Action Program (CCAP) Subprogram 2, is nearing its final approval stage, according to the Department of Finance (DOF). 

This latest funding builds on the progress made by the first phase of the CCAP, which was initiated in June 2022. In the initial phase, ADB provided a USD 250 million (around PHP 14.3 billion) policy-based loan. This marks ADB’s inaugural venture into policy-based climate action, focusing on enhancing the Philippines’ strategies for climate adaptation and mitigation. The loan aims to develop a comprehensive framework for managing climate impacts and promoting a shift towards renewable energy sources. 

Additionally, the new loan is part of a broader commitment by ADB to invest USD 10 billion (approximately PHP 570 billion) in the Philippines by 2029. This substantial commitment was first announced by ADB President Masatsugu Asakawa during the UN Climate Change Conference held in Dubai, United Arab Emirates (UAE) last year. The funding is intended to assist the Philippines in meeting its climate objectives and Paris Agreement targets, supporting a transition to a low-carbon and climate-resilient economy. 

DOF Secretary Ralph G. Recto also emphasized the vital role of regional financial mechanisms, such as the ASEAN Catalytic Green Finance Facility and the Green Climate Fund, in providing additional grant support to the Philippines. ADB continues to be a key multilateral partner and the second-largest source of official development assistance (ODA) to the country.