Sustainable Finance in the Indo-Pacific Conference - Scott Morris

Opening remarks by Scott Morris, ADB Vice-President (East Asia, Southeast Asia, and the Pacific), at the Sustainable Finance in the Indo-Pacific Conference, 24 June 2024, Bangkok, Thailand

Good morning evening. I want to welcome Bertrand Walckenaer and the team from Agence Française de Développement (AFD) for offering us the opportunity to partner on a very important session today. I also want to acknowledge the United Nations Educational, Scientific and Cultural Organization (UNESCO) along with all the SUFIP participants – both here in the room and online. I also want to recognize my own colleagues from ADB, from our Climate Change and Sustainable Development Department, our Economic Research and Development Impact Department, and from our ADB Thailand office. ADB’s strong showing today speaks to the importance that as an institution we place on the subject matter of today’s conference.

The task of building resilience to climate change is both urgent and daunting. Unprecedented heat waves and flooding events have become routine headlines in the regional and global press, with reports of tragic loss of lives and long-term setbacks for household incomes and national economic progress.

I’ve just come last week from Papua New Guinea, where recent landslides in Enga province resulted in many lives lost and a pressing humanitarian disaster. The heavy rains that caused these landslides have also set back progress on efforts to build out a regional road network that is critical for the country’s development progress. ADB has been a long-term partner in these efforts, but as I toured the new construction of roads and bridges, I also saw sections of those same roads that have collapsed as a result of unprecedented rainfall and flooding.

Damage to infrastructure is just one effect of climate-related disasters. Climate change leaves virtually no part of the economy or society unharmed, and as a result, the climate resilience agenda is both large and complex.

Simply raising financing at the needed scale on the needed timeline represents a major challenge, but one where ADB and development finance partners are making progress.

For instance, ADB’s work on Green, Social, Sustainable, thematic Bonds Initiative or GSS+ Bonds Initiative for Southeast Asia. Thematic bonds are an effective and efficient means to raise private capital for public investment in resilience.

The bonds initiative here in Thailand, which relies on technical assistance support from ADB, has enabled both public and private sector issuances of green, social, and sustainable bonds – In some instances, the initiative has supported the first such issuances. The GSS initiative has catalyzed over $ 2bn directly and $ 12bn in following tranches for Thailand.

Similarly, the Government of Indonesia's initiative to issue a series of green bonds and green sukuks also created huge interest from the investor community.

In both instances, proceeds from these bond issuances have financed critical investments at the intersection of climate and development, such as in affordable and energy efficient housing, low-carbon transportation, employment generation, and gender equality.

ADB has also been supporting the derisking of green private sector investment vehicles. One example is the Shandong Green Development Fund in the People’s Republic of China which is also supported by AFD, KFW and the Green Climate Fund. The Fund is structured as an investment pooling vehicle for climate financing and targets investing 75% in mitigation and 25% in adaptation. It is a multi-tiered fund structure to accommodate a timing difference between the ADB loan of 20 years and the investment horizon of private, institutional and commercial investors. The fund is showing good progress on leveraging in many multiples from non-sovereign sources, and with targeted investments aimed at greening key industries, we estimate a reduction in CO2 emissions of at least 37.5 million tons, along with strengthened resilience to climate change for at least 7.5 million people.

While we have seen progress in tapping private capital for the resilience agenda broadly, it’s also the case that there are many areas that remain critically underinvested—areas like protecting biodiversity in the face of rising temperatures, or supporting small holder farmers as centuries-long farming practices no longer work, whether due to drought or flooding, too much heat, or erratic growing seasons. And of course, the essential natural resources represented in our oceans and forests remain critically vulnerable, with far too little financing deployed to preserve these natural assets.

ADB’s launch of the nature solutions finance hub at COP 28 in Dubai, with support from AFD, marks an important step forward in addressing these underserved needs. We are already seeing projects emerge in areas such as oceans and plastics, sustainable fisheries, and mangroves restoration. These efforts have attracted interest from private sector clients, for example in developing biodiversity credits, which is very encouraging.

Here in Thailand the Tid Lor Access to Finance Project will provide rural women with first-time access to formal credit, which will enable highly vulnerable households and communities to invest in their own resilience and livelihoods. ADB is providing technical assistance to Tid Lor for the development of the first social finance framework (SFF).

Finally, let me highlight the important role that partnerships and collaboration are playing in carrying forward the resilience agenda. National and local governments in our developing member countries are key partners, and increasingly we are working with them alongside other development partners like AFD and the other MDBs. Such partnerships are delivering greater scale to the resilience agenda and ensuring stronger programming by focusing upstream project development.

As I’ve already mentioned, our partnership with AFD on nature based solutions is hugely promising, and I’m pleased that this morning we will be signing a cooperation agreement to carry this work forward.

Another leading partnership for ADB is the Community Resilience Partnership Program.

Together with AFD, the Green Climate Fund and the Government of the United Kingdom, ADB is supporting our developing member countries in scaling up climate adaptation measures at the community level, explicitly addressing the nexus between climate change, poverty, and gender. The CRPP has a trust fund commitment of $60 million and an investment fund supported through GCF of $120 million. The focus of the CRPP allows exploring the potential to scale up climate adaptation solutions at the local level through operations in the social sectors, livelihoods, finance , governance. We have a strong pipeline of projects and at present, there are active projects in Lao PDR, Nepal and Bangladesh.

The CRPP has a dedicated gender window with funds earmarked specifically for supporting women-focused investments. This window (i) supports the development of community-level climate adaptation solutions where the primary stakeholder are women and (ii) provides grant financing to implement such solutions.

The past year has been an important one for ADB’s role in delivering climate solutions. We’ve announced our ambition to be the climate bank for Asia and the Pacific, and we’ve backed that up with a commitment to deliver $100 billion of our own funds for the climate agenda. At the same time, it’s become increasingly clear that, when it comes to climate resilience, we’ve really had no choice. Each and every one of our client countries are demanding resilience-centered partnerships with ADB and are setting a level of ambition in their national programs that we will work hard to support.

But of course, we can’t and won’t be doing it alone. So let me again thank AFD for their leadership in pursuing partnerships to build resilience. ADB is honored to be co-hosting this year’s SUFIP and to continue our vital partnership going forward.

Wishing you the best for the conference today and thank you very much.