Lawmakers in the Philippines have introduced a draft law that seeks to hold companies accountable for their contributions to climate change.
“If passed, this would be a world first,” researchers at the Grantham Research Institute said in a note.
“The bill combines requirements of transition planning and due diligence with substantive emission reduction obligations, alongside stringent accountability mechanisms and a novel approach to redress for those suffering loss and damage.”
Why it matters: Over the past decade, extreme weather has cost the Philippines roughly $10 billion, according to the country’s finance department. The toll is only expected to increase as climate change advances.
Even though the Philippines is a minor contributor to the climate crisis, it’s bearing the brunt of it as sea levels inch higher and storms grow more intense. That’s driving a wave of climate lawsuits, which, in turn, are now influencing state policies.
The draft Climate Accountability Act sets climate due diligence standards for corporates, and includes both penalties and incentives to ensure they’re adhered to. Companies that fail to comply could be hit with fines equivalent to 15% of their gross incomes, while those that meet the standards would be eligible for tax incentives.
The bill also seeks to implement the ‘polluter pays’ principle, whereby companies must pay up for the environmental damage they cause.
It includes the establishment of a Climate Change Reparations Fund, which would cover claims by the victims and survivors of climate change-fuelled catastrophes. It would rely on attribution studies to determine the degree to which a company is liable, and would be funded by fines for things like greenwashing and exceeding emissions allowances.
Further, the bill seeks to ensure that the transition away from fossil fuels does not harm communities and workers reliant on the traditional energy industry, partly by setting up a compensation and reemployment mechanism.
“In many ways, the provisions in [the bill] reflect themes that have emerged in recent examples of climate change litigation cases that aim to force companies to take responsibility for their contributions to climate change,” the Grantham Research Institute note says.
“Although it remains unclear whether the bill will pass into law in its current form, the mechanisms proposed are potentially precedent-setting.”
