ADB, UK put up fund for Asean green efforts
The Asian Development Bank (ADB) and the UK have inked a memorandum of understanding for a £107 million (around $134 million) trust fund to support projects in the Association of Southeast Asian Nations (ASEAN) that promote environmental sustainability and climate-resilient development.
In a statement, the multilateral lender said the UK–ASEAN Catalytic Green Finance Facility (ACGF) Trust Fund would leverage UK and ADB funds to accelerate a pipeline of low-carbon and climate-resilient infrastructure projects and catalyze financing from public and private capital sources.
The fund will be part of the ASEAN Green Recovery Platform.
Launched at the 2021 United Nations Climate Change Conference or COP26, the ASEAN Green Recovery Platform seeks to help ASEAN countries accelerate the development of infrastructure to achieve a green recovery from the pandemic, by bringing together financing and development partners.
“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 said.
“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,” Asakawa said.
Increasing costs of climate change add to the region’s existing investment needs for infrastructure amounting to $210 billion per year.
“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,” said UK Minister for Asia Amanda Milling.
She said this is also in line with the UK’s commitments made at COP26 last year.
The fund will leverage financial resources for the ACGF, an ADB-managed regional green financing vehicle, owned by the
ASEAN countries and ADB.
Launched in 2019, AGCF supports Southeast Asian governments in preparing and financing infrastructure projects that promote environmental sustainability and contribute to climate change goals.
So far, ACGF has attracted $2 billion in co-financing pledges and included five projects in its formal financing pipeline.
It has helped develop a longer pipeline of 29 green infrastructure projects and provided advisory support that enabled countries to tap capital markets through the issuance of over $5.6 billion in green bonds.
The UK–ACGF Trust Fund will be building on these efforts and will be providing support to countries in the form of loans and technical assistance, including through regional initiatives such as the Blue SEA (Southeast Asia) Finance Hub based in Indonesia.