Green Finance Recovery Mechanism Needed in Southeast Asia: ADB

ADB has urged policy makers in Southeast Asia to use green and innovative financing approaches to help catalyze investments required for climate-adjusted infrastructure in the region by 2030.

A new book by the Asian Development Bank (ADB) urges policy makers in Southeast Asia to use green and innovative financing approaches to help catalyze the estimated USD 3.1 trillion investments required for climate-adjusted infrastructure in the region by 2030. These investments from both public and private sources would be critical to the region’s economic recovery from the coronavirus disease (COVID-19) pandemic.

The book ‘Green Finance Strategies for Post-COVID-19 Economic Recovery in Southeast Asia,’ which was launched on the sidelines of the 7th Annual OECD Forum on Green Finance and Investment, explores innovative, environmentally sustainable, and climate-resilient financing instruments, such as green and transitions bonds for COVID-19 recovery, blue credits for oceans financing, and green securitisation, while also providing examples of ADB-supported green initiatives.

“A green recovery for Southeast Asia is needed to encourage long-term, sustainable job creation in a region with more than 650 million people,” said ADB Vice-President Ahmed M. Saeed, who will speak at the forum on 9 October. “It will boost equitable growth, protect the environment, and help governments meet the Paris climate agreement targets. This timely book shows how green finance can spur growth in the region and overcome the challenges of climate change and a global pandemic.”

The book recommends that governments use green finance catalytic approaches to build upon national green targets and programs and steer away from fossil fuel or carbon-intensive investments. While some countries have embarked on green projects and bonds, much more needs to be done to help Southeast Asia’s economies meet their large financing needs and accelerate economic recoveries in a sustainable manner.

The bank has supported innovative financing mechanisms for green infrastructure, including thematic bonds, national green finance vehicles, green projects, and other initiatives. The ADB-administered Association of Southeast Asian Nations (ASEAN) Catalytic Green Finance Facility (ACGF) aims to spur more than USD 1.4 billion in green infrastructure investments across Southeast Asia. In recent years, rising investor interest in green financing in developing Asia has been reflected in the growth of green, sustainability, and social bonds.

With a growing green finance market in developing Asia, ADB committed USD 6.5 billion in climate finance from its own resources in 2019. ADB aims to reach a cumulative USD 80 billion from 2019 to 2030 in climate financing under its Strategy 2030, with a commitment to make 75 percent of all ADB projects climate relevant by 2030.