The Asian Development Bank (ADB) urged the Southeast Asia’s policy makers to use green and innovative financing approaches to help catalyze the investments required for climate-adjusted infrastructure in the region.
In a new ADB book, the Manila-based multilateral institution, said that the estimated $3.1 trillion required investments from public and private sources for climate-adjusted infrastructure by 2030 would be critical to the region’s economic recovery from the pandemic.
“A green recovery for Southeast Asia is needed to encourage long-term, sustainable job creation in a region with more than 650 million people,” Ahmed M. Saeed, ADB vice-president said in a statement.
“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,” he added.
Green finance refers to all financing instruments, investments, and mechanisms that contribute to climate and environmental sustainability goals.
It aims to reduce greenhouse gas emissions, boost climate resilience, and improve environmental protection, such as air and water quality, ecosystems, and biodiversity.
The ADB book recommended 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, the bank noted that much more are needed to help Southeast Asia’s economies meet their large financing needs and accelerate economic recoveries in a sustainable manner.
ADB 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 $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 $6.5 billion in climate finance from its own resources in 2019.
ADB aims to reach a cumulative $80 billion from 2019 to 2030 in climate financing under its Strategy 2030, with a commitment to make 75 percent of all projects climate relevant by 2030.