Southeast Asian countries like the Philippines stand to benefit from greater interest among global investors looking to finance profitable and scalable decarbonization as well as "green" projects in the region.
On the sidelines of the ongoing 29th Conference of the Parties (COP29) to the United Nations' (UN) Framework Convention on Climate Change in Baku, Azerbaijan, the International Finance Corp. (IFC) announced partnerships with leading infrastructure investment firm BlackRock Inc. as well as Singapore-headquartered debt financier Pentagreen Capital, specifically for climate-related initiatives in Southeast Asia.
In a Nov. 12 statement, the World Bank Group's private-sector arm said it signed a statement of intent (SOI) with BlackRock, the central bank Monetary Authority of Singapore (MAS), Japanese financial giant Mitsubishi UFJ Financial Group Inc. (MUFG), Japan's state-owned Nippon Export and Investment Insurance (NEXI), and the AIA life insurance group "to explore ways to work together on a blended finance debt initiative for global investors seeking opportunities to finance corporates' decarbonization projects at scale in Asia with a focus on Southeast Asia."
"Under the SOI, the parties will explore mutually beneficial opportunities to provide debt financing to private-sector borrowers seeking to decarbonize their businesses, including projects in the following sectors: in hard to abate sectors, technology solutions for the low-carbon transformation, and industrial opportunities," the IFC explained.
This SOI falls under MAS's Financing Asia's Transition Partnership (FAST-P), which targets to secure as much as $5 billion from public, private as well as philanthropic funds for energy transition projects in the region, where there's a decarbonization financing gap, the IFC noted.
Citing its joint report with the International Energy Agency (IEA), the IFC cited that Southeast Asia should ramp up yearly public-private clean energy investments to $208-244 billion by 2030, from just $30 billion in 2022, amid increasing regional demand.
In a separate statement also on Nov. 12, the IFC said its Green Investments venture with Pentagreen, which is backed by banking giant HSBC and the Singaporean government's investment company Temasek, will deploy $1 billion starting next year, also under MAS's FAST-P initiative.
Green Investments "will deploy capital to projects in sectors including renewable energy and storage, electric vehicle infrastructure, sustainable transport, and water and waste management, as well as those from other green infrastructure sectors," the IFC said.
"Over time, the partnership will also increase the supply of bankable opportunities in the market. HSBC and Temasek, as the founding shareholders of Pentagreen, will continue to commit capital. The Singapore government will contribute concessional capital to the Green Investments partnership to match contributions from the other potential catalytic capital providers such as Allied Climate Partners (ACP)," it added.
For its part, the IFC said it's "considering opportunities in providing appropriate financing that can in turn crowd in other capital providers."
The IFC highlighted these partnerships' importance given that "many sustainable infrastructure projects in the region face difficulties in attracting commercial financing, and these gaps are more acute in the project development and construction phases."
"Blended finance can help unlock the flow of capital to such projects" in Southeast Asia, according to the IFC.