FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No. 2943

EXPLANATORY NOTE

The Constitution states that it is the policy of the State to protect and
advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature. In 1996, Executive Order No. 291 was
issued to facilitate the attainment and maintenance of a rational and orderly
balance between socio-economic growth and environmental protection. It
mandated the establishment of in-house environmental units in all
implementing government agencies to ensure compliance of projects with
existing standards provided in environmental laws. It covers government
financial institutions (GFls) and was intended to ensure that loan or related
funding applications of government and private institutions have complied with
the Environmental Impact System.

The Asian Development Bank (ADB) has asserted in its study in
corporate responsibility for environmental performance that though
governments must continue to play a central role in maintaining environmental
quality, it is also clear that this traditional focus does not attempt to work
directly with the most active financier and player in the development equation-
the private sector. While governments determine the rules under which
businesses act, the firms themselves use natural resources, make products,
and generate pollution. Thus, a sustainable future for the region is not possible
without the active engagement of the private sector. In light of the rising
corporate social responsibility, especially in the area of environmental
protection, financial institutions are now adopting the concept of corporate


environmental policy that is grounded on sustainable development. Further, the
risk of default as a result of environmental upgrading or costs for works
incurred by the borrower and other costs related to environmental risks are
aspects that financial institutions consider.

Hence, this bill which seeks to instate an environmental unit in lending
institutions that will ensure that any loan or related funding applications are in
compliance with environment laws.

In view of the foregoing, early passage of this bill is earnestly sought.

e

RUFUS B. IGUEZ
wo lis JR.


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )
HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No. 2943

AN ACT
ESTABLISHING ENVIRONMENTAL UNITS IN EVERY LENDING
INSTITUTION TO ASSESS THE ENVIRONMENTAL COMPONENT OF LOAN
APPLICATIONS

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Declaration of Policy. - It is hereby declared the policy of
the State to strike a balance between economic development and
environmental protection. In this regard, lending institutions are encouraged to
adopt a corporate environmental policy to support environmental protection and
sustainable development and to mitigate credit risks arising from adverse
impact of loans and other projects for financing in the environment. Pursuant to
this policy, loan evaluation, approval and release shall take into consideration
the borrower's compliance with applicable environmental laws.

SEC. 2. There shall be created an in-house environmental unit in every
lending institution tasked to ensure that any loan or related funding applications
of any natural or juridical entity have complied with the Environmental Impact
Statement System under Presidential Decree No. 1586.

SEC. 3. Lending institutions shall ensure that projects subject of
financing applications and collateral offered as security shall conform with
environmental laws. Compliance of projects and collaterals with environmental
laws shall be among the basis for approval of environmental units of loan
accounts with environmental impact.

SEC. 4. Lending institutions shall encourage continuous compliance with
environmental laws. Account officers (AOs) shall continue to monitor
compliance of projects and collaterals until such time that the account is fully
paid or the collaterals are released or substituted. The AOs shall look into
Teported complaints against client's projects/collateral.


Clients shall be required to submit copies of the periodic monitoring
reports of the Department of Environment and Natural Resources of their
projects/ collateral.

SEC. 5. The environmental unit of every lending institution shall prepare
an environmental assessment report for all projects and loans with
environmental impact. The report shall be integrated into the project proposal
and/or loan application.

SEC. 6. The environmental unit shall be composed of three functional
units, to wit:

a) Environmental Review and Assessment Unit tasked to ensure the
environmental soundness of the project and the account's compliance with
environmental laws, thereby avoiding environmental risks;

b) Environmental Policy, Planning and Systems Management Unit
tasked to develop/ enhance the lending institutions internal policy to effectively
implement the above corporate environmental policy; and

) Environmental Program Management Unit tasked to develop/ manage
grant-assisted environmental programs and assist project management units in
developing environment-related lending facilities that will provide services/
support to the bank and its clients.

SEC. 7. The non-compliance of borrowers with applicable environmental
laws shall be considered a condition for default.

SEC. 8. Separability Clause. - If any provision or part hereof is held
invalid or unconstitutional, the remainder of the law or the provision not
otherwise affected shall remain valid and subsisting.

SEC. 9. Effectivity Clause. -This Act shall take effect fifteen (15) days
after its publication in at least two (2) newspapers of general circulation.

Approved,