SOUTHEAST ASIA needs to undertake more green investment to minimize environmental footprints and promote sustainable development, the Organisation for Economic Co-operation and Development (OECD) said in a report.
“Investment for green growth is central to the ASEAN Comprehensive Recovery Framework (ACRF) and needs to be scaled up significantly to advance sustainable development in the region, and achieve national economic, social and environmental policy goals,” according to the report.
“Green growth means fostering growth and development while preserving natural assets, and ensuring that they continue to provide the resources and environmental services on which our well-being relies,” it said, noting that investment is needed in new technology, services and infrastructure that make more sustainable claims on natural resources.
The OECD said that growth and development in Southeast Asia has come at the cost of pollution and environmental degradation.
In urban areas, home to 50% of the region’s population, annual mean levels of air pollution often exceed World Health Organization limits.
“Manila’s air pollution has been linked to between 11,000 and 27,000 deaths in 2018 alone, according to a recent Greenpeace study, and affects 98% of the capital region’s 12.8 million people,” it added.
It also noted that the region was especially vulnerable to climate change, with the Philippines ranking fourth among the most affected countries in the world to extreme weather events between 2000 and 2019.
The OECD said that foreign direct investment (FDI) can contribute to the needed financial and technological resources to deliver green growth.
“Thanks to their multinational parent companies, foreign investors often have access to superior technology, skills and capital than domestic peers, which can allow them to deliver greener technologies, services and infrastructure,” it said.
“In some cases, foreign investors are greener than their domestic counterparts as a result of the more stringent international environmental standards that they are measured against. But foreign investors can also deteriorate environmental outcomes by offshoring highly polluting activities to countries with less stringent regulations and induce a race to the bottom with respect to environmental standards,” it added.
Governments should prioritize making their business environment more investor-friendly, according to the report.
“Uncertainty and unpredictability are among the greatest barriers to green investment. Too often the reason governments fail to attract green investment is due to the lack of an enabling environment for investment. Green investors are no different than any other in requiring a stable, predictable, and transparent investment environment in which to identify bankable projects,” the OECD said.
“Thus, efforts to mobilize green investment will fail to meet their intended target unless governments ensure a regulatory climate that provides investors with fair treatment and confidence in the rule of law,” it added.
The OECD also noted that policymakers need to improve conditions for green investment by developing policies and regulations that “systematically internalize the cost of environmental externalities like carbon emissions.”
“At the same time, openness, stability, and fair treatment are not enough to channel private investment towards green growth and decarbonization objectives. In other words, policies conducive to FDI will not automatically result in a substantial increase in green or climate-aligned FDI,” it said.
It cited targeted financial, technical and information support and aligning investment incentives to climate goals to ramp up green investments.
“Technical support is a useful tool for reducing the environmental footprint of investments, building capabilities related to green technologies, and promoting green innovation and spillovers,” it added. — Luis Maria Jacinta C. Jocson