Accelerating GreenFinance for Post COVID19 Recovery in ASIA
ASIFMA Webinar on Sustainable Finance andthe Role of Technology and Data
Ramesh Subramaniam,Director General, Southeast Asia Department, ADB
28 October 2020

SDGs: Some Progress…much more to do

Source: Refinitiv Sustainable Finance Review 1H 2020•

A lot more needs to be done inAsia despite progress•

COVID-19 will have severe
negative impact on most SDGs•

2020: 0.7% economic
contraction in developing Asia,
the first time in 6 decades –3.8% in SE Asia

•Youth job losses possibly
doubling post COVID-19: 10 - 15
million jobs may be lost across
13 countries in Asia Pacific in2020

Source: Sustainable Development Report 2020 (J Sachs et al; Bertlesman, SDSN, Cambridge2

Investments Needed: Massive…with gaps
• UN Estimates: $3-$5 trillion
annually, globally for SDGs
• ADB: Developing Asia needs $26
trillion investments in infrastructurefrom 2016 to 2030, or $1.7 trillion
per year, to maintain growth,
eradicate poverty, and respond toclimate change (climate-adjustedestimate)• The GAP: Even before COVID-19, theregion faced a substantial
investment gap $459 billion per year($907 billion p.a. if including socialinfrastructure)3

Private Capital Resources Available …but constrained flows
SDGs in Infra
Planning…rare andcomplicated• OECD: Pension fund assets rose to $32 trillion in OECD
area and $0.7 trillion in 29 other selected (non-OECD)
reporting jurisdictions in 2019

Projects…a lack ofBut• Key finance flows - scarce and slow growth for many
ASEAN countries - constrains ability to achieve SDGs

Multiple
Challenges• Low levels of domestic revenue mobilization (below $600 per person versus $15,000 in high incomecountries) - limits ability of governments to fundservices and public investment
Stimulating sufficient quantities of quality private investment is a key challenge to unlocking
private contributions toward the SDGs…from project approach to pooled approach?

Financing
Instruments….need to bebroadened
Government
Capacities…need to bestrengthened
Domestic & International
Resources …risk averse
investors4

Green Finance for Post COVID Response: A Critical Way Forward
Green Finance: As a cross cutting theme across several SDGs, green finance provides aclear roadmap for countries to achieve their SDGs and Paris Agreement Goals.
Figure 6: Growth of the Green Finance Market

Green finance denotes all financing instruments,
investments and mechanisms that contribute toa "climate plus" approach, impacting on bothclimate and environmental sustainability goals.
Green finance promotes a reduction ingreenhouse gases and improved climate
resilience, air and water quality, ecosystems,
biodiversity, and use of resources. ACGF, 2020

•Green bonds in Asia Pacific (incl Japan) in2019 - record high of $47.6 billion; China majority - US$22.9 billion in proceeds•ASEAN Green bond market 2019 –ASEAN
issuance doubled $7.8bn; cumulative ASEAN
issuance since 2016 at $ 13.4bn; still small
globally - 3% of global total and 16% of theAsia-PacificSource: Climate Bonds Initiative. Forthcoming. Climate Bonds Initiative Market Summary H1 2020.

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Green and Sustainable Bonds: Interest Post COVID is growing in ASEAN•

Thailand PDMO Sustainability Bond, August 2020:
First sustainability bond by a sovereign in Southeast
Asia.
• Raised THB30 billion (about $964 m)• Oversubscribed three times• To finance green infrastructure (Mass RapidTransit Orange Line (East) Project) & social
impact COVID-19 recovery projects (health, jobs,SMEs)•NHA Social Bond, September 2020: NHA’s maidensocial bond; one of the first by an SOE• Raised THB6.8 billion• To finance affordable housing and promotesustainable communities•

ADB already being asked to develop 2 more green,sustainability, SDG bonds in Indonesia and Thailand
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More is needed: Green Finance Strategies for Recovery Publication• This publication suggests green finance mechanisms that
could be used by countries in ASEAN but also wider afield
to develop and accelerate green recovery strategies.
• The paper provides both examples of green financemechanisms - such as de-risking pooled facilities and green
bonds – as well as innovative concepts – such as green
securitization and COVID-19 recovery bonds; that could be
used by governments in their green finance strategies.
• The overall point of this mechanisms is to leverage publicfunds to catalyse private capital to the largest extent
possible.

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Digitalisation: Another important element for sustainable development
1) Address regional disparities and ensure more access to technology,
including an equitable expansion of investments in digital infrastructure toclose the “digital divide”, while addressing cyber security+ 1,700 high-level government officials, private sector
representatives, and other stakeholders from 57 countries.
+ 500 start-ups
ADB President highlighted five key policy areas that can support
developing economies in Southeast Asia as they return to a path ofsustainable growth:2) Facilitate a green and resilient recovery by promoting investments thatdrive economic activity toward low-carbon and resilient practices3) Strengthen regional cooperation and integration by improving crossborder digital connectivity, e-customs systems, and electronic cargo
tracking systems4) Deepen institutional capacity for mobilizing domestic resources tofinance public services, while ensuring debt sustainability.
5) Incubate, develop, and congregate small and medium-sizedenterprises with entrepreneurship and technology, supported by anaggregated financial, academic, and business ecosystem to help set thestage for tech-based growth.

An ADB fund investing in technology driven businesses

8Digitalisation and Emerging Technologies

9Digitalisation & Emerging Technologies: Can help leapfrog inclusive development

10Thank You
www.adb.org/acgf

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Appendix: Background on ACGF

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The New Pilot
Window:Overview

In 2018, AIF board approved
creation of new Green &Inclusive Window: Inclusive
Finance Facility and ASEAN
Catalytic Green Finance Facility

The Green and Inclusive
Infrastructure FinanceWindow

Inclusive
Finance
Facility
Offersconcessional loans
to Cambodia, Lao
PDR andMyanmar

ASEAN Catalytic
Green Finance
Facility (ACGF)
To accelerate‘green’ technologyand solutions

To leverage AIF
resources forbridgingbankability gaps

Offers a twostep pricing
loan product

Explicit aim tocrowd-in
private capital

Help member
countries achieveenvironmentaland climatetargets
13Launched!
AIF’s new “Green and Inclusive
Infrastructure Window” launched at
ASEAN Finance Ministers’ Meeting,
Chiang Rai, Thailand, 4 April 2019

Witnessed by H.E. Apisak
Tantivorawong, Thailand Finance
Minister; ADB President; other
ASEAN Finance Ministers

Co-financing
partners

Signing of Letters of Support fromco-financing, development andprivate sector partners

Knowledge
partners

ADBEIB

Privatesectorpartners
ADM Capital

OECD
City of London

AFD
KfW
Gov. of Korea

BNP Paribas
GGGI
OPIC
In-kind contributions
14ACGF mission
To accelerate the development of green
infrastructure in ASEAN by better utilizing
public funds to create bankable projects
and catalyze private capital, technologies
and management efficiencies.
ACGF ‘value-added’
Combines project origination, project
structuring and financing for green
infrastructure projects

CATALYTIC

Mobilizing resources andbuilding pipelines

GREEN

Promoting environmental
sustainability by scaling up
green infrastructure

FACILITY

Pooling and leveraging
public capitalMain Objective: Infrastructure development& mobilization of domestic savings.

Overview of the ASEAN
Infrastructure Fund (AIF)

All equity
contributed

1st projectapproved

Shareholders
Agreement

2011

Governance: AIF Board chaired by ASEAN
member, currently: Malaysia. ADB acts as
Administrator and co-financier

2012

Incorporation

2013

2014

Myanmar joined
AIF

2015

Approval of Green & Inclusive
Infrastructure Window

2017

Lending commitment at $520m,exceeded equity base2018

2019-21

Pilot period for newwindow

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AIF lending operations• Total loan commitments(2013-2018): $520 million• Total project value: $3billion• No. of projects: 917