THE Asian Development Bank (ADB) and the United Kingdom government are setting up a trust fund to support Association of Southeast Asian Nations (Asean) countries achieve climate-resilient development.
The ADB and London has signed a memorandum of understanding to establish the £107 million or $134 million UK—Asean Catalytic Green Finance Facility (ACGF) Trust Fund, a statement from the Manila-based multilateral lender read.
According to the ADB, the trust fund intends to leverage UK and ADB funds to create a pipeline of low-carbon and climate-resilient infrastructure projects and to catalyze financing from public and private capital sources. The fund will be part of the Asean Green Recovery Platform launched at the United Nations Climate Change Conference in Glasgow (COP26).
“We are facing a climate crisis and Southeast Asia needs rapid and innovative solutions to help countries raise financing to deliver their climate targets and ambitions,” ADB President Masatsugu Asakawa was quoted in the statement as saying.
“This new fund will build on a longstanding UK–ADB partnership through an innovative revolving fund structure that will mobilize public and private funds and build a robust pipeline of climate projects in the region,” Masatsugu added.
The fund will leverage financial resources for the ACGF, an ADB-managed regional green financing vehicle that is owned by Asean countries and the ADB.
Since its launch in 2019, the ACGF has attracted $2 billion in cofinancing pledges and included five projects in its formal financing pipeline.
It has also helped develop a longer pipeline of 29 green infrastructure projects and provided advisory support that has enabled countries to tap capital markets through the issuance of more than $5.6 billion in green bonds.
The UK–ACGF Trust Fund will build on these efforts and support countries through loans and technical assistance to mobilize capital, including through regional initiatives such as the Blue SEA (Southeast Asia) Finance Hub, based in Indonesia.
“As a trusted partner to Asean, this UK financing delivered through the ADB is imperative to help deliver new honest and reliable green investment—creating jobs and putting UK expertise at the heart of tackling climate change,” UK Minister for Asia Amanda Milling said. “It’s another step in delivering the UK’s commitments made at COP26 in Glasgow last year.”
Asean countries are grappling with increasing costs of climate change, which add to the existing investment needs of $210 billion per year for infrastructure in the region and exacerbate the heightened vulnerability of people and the economy after the Covid-19 pandemic.
The ADB recently elevated its ambition to deliver climate financing to its developing member countries to $100 billion from 2019 to 2030.
The ADB is committed to ensuring at least 75 percent of the total number of its operations will support climate change mitigation and adaptation by 2030. The UK is a founding member of the ADB.