2 June 2021 — Finance Secretary Carlos Dominguez reiterated yesterday the need to secure economic growth and community resilience amidst growing risks from climate change. Secretary Dominguez along with several officials from the Vulnerable 20 Group of Finance Ministers (V20) addressed the High Level Consultative Group meeting of the InsuResilience Global Partnership, an initiative between the G7, G20 and V20 to insure 500 million of the poorest and most climate-vulnerable people around the world.
“The ongoing pandemic added to the Philippines’ vulnerabilities, but it has steeled our determination to make our economic development more inclusive, and our communities more resilient,” Secretary Dominguez said. V20 member countries were among the first to support InsuResilience in 2017, which also aims to integrate comprehensive disaster risk finance strategies in national plans, and cover 10 percent of their annual climate and disaster losses by 2025.
Co-chairing the High-Level Consultative Group meeting were Dr. Maria Flachsbarth, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development (BMZ) of Germany and Finance Minister Alfred Alfred, Jr. of the Republic of Marshall Islands.
“Germany is pleased to support the V20’s Sustainable Insurance Facility starting in 2021, as this will enable V20 countries to submit tailor-made project proposals to better protect small enterprises against extreme weather events,” said Dr. Flachsbarth.
The Facility aims to protect micro, small and medium-sized enterprises (MSMEs) that account for 29% of GDP and employ 78% of workforce in vulnerable economies. Worsening climate disasters would further drag down economic productivity and resilience if the MSME sector does not have adequate insurance protection and investment capacity to absorb financial shocks and de-risk the low-carbon transition, according to the V20, which was founded by the Philippine government and currently chaired by that of the Marshall Islands.
“On behalf of the V20 Group, we would like to express our appreciation for Germany’s commitment to support the implementation of the V20-led Sustainable Insurance Facility over the coming years. As climate damages mount, enabling the SIF can only help accelerate the development of domestic financial protection markets,” said Minister Alfred.
Bangladesh, Fiji, the Marshall Islands and the Philippines are expected to be the first to test the SIF, which was developed in partnership with the Asian Development Bank, Munich Climate Insurance Initiative, UN Environment’s Principles for Sustainable Insurance, and the InsuResilience Funds invested in by G20 members.
“Climate change is very real to us…. Several initiatives are being implemented by the Philippine government to lessen its impact on our economy and our people. These include the Philippine Disaster Risk Financing and Insurance Strategy, our Climate Change Expenditure Tagging Program, and the People’s Survival Fund,” said Secretary Dominguez.
“Despite the advantages of having a safety net against the pandemic and climate change-induced uncertainties, we agree the uptake of climate and disaster risk finance and insurance (CDRFI) among vulnerable countries remains low. And yet, due to local realities, decisions made by vulnerable country governments and citizens are far more constrained and would usually result in trade-offs,” said Renato Redentor Constantino, executive director of the Institute for Climate and Sustainable Cities (ICSC). “We thus strongly associate with voices today urging us to consider robust support for macro as well as micro and meso insurance.”
Constantino currently represents Southern think tanks at the High-Level Consultative Group, while ICSC has been an InsuResilience member since 2019.
The Institute for Climate and Sustainable Cities is a Manila-based international policy group advancing climate resilience and low carbon development.
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Below are Constantino’s full remarks as delivered in the meeting:
Dr. Maria Flachsbarth and Hon. Alfred Alfred, Jr. your leadership is much appreciated in this challenging period. What hangs in the balance may very well determine our ability to survive and thrive in the face of compounding threats posed by the pandemic and climate change.
Despite the advantages of having a safety net against the pandemic and climate change-induced uncertainties, we agree the uptake of CDRFI among vulnerable countries remains low. And yet, we must also raise a specific angle: due to local realities, decisions made by vulnerable country governments and citizens are far more constrained and would usually result in trade-offs. Who has not heard of the farmer who chose to pay for his children’s education or purchase seedlings instead of an insurance premium?
We thus strongly associate with the voices today urging us to consider robust support for macro as well as micro and meso insurance.
Debt to GDP ratios are approaching dangerous levels around the world, especially among climate-vulnerable countries. We must not further burden these countries with potential debt. Grant-based instruments are central to moving this discussion forward.