At the Asian Development Bank’s annual meeting, the discussion around climate change has become focused on the very real problems affecting the region and its people, and the innovations needed to finance the solutions. 

Severe flooding in Pakistan in 2022 was a wake-up call regarding the severity of the climate risks that Asia-Pacific is experiencing. With 33 million people affected and $15.2bn in economic losses, it is likely the country will take generations to fully recover. Yet there is no way of knowing the climate-related events the country could experience in the years to come. 

Multiply these risks across the whole region and it is easy to see why the Asian Development Bank (ADB) has stated its intent to be considered as much a climate bank as a development bank. At the bank’s annual meeting in Incheon, South Korea – the first to take place in person since 2019 – climate risk was the key topic. But while in the past the discussion on climate has focused on the theory of reducing carbon emission and increasing green resources, the debate now was on the practical side of making these ideas a reality. 

Part of this was the ADB’s announcement that it is to free up capital as part of its Innovative Finance Facility for Climate in Asia and the Pacific, which utilises a leveraged guarantee mechanism to take the risk off the bank’s books. This follows an announcement by the World Bank that it is looking to reduce its International Bank for Reconstruction and Development arm’s equity-to-lending ratio by one percentage point to 19%, which could free up $4bn per year. 

But will this be enough? There are pressures on these funds to not only close down existing coal-fired power plants and increase renewables resources, but to ensure a just transition for the communities affected, which are losing their livelihoods with the decommissioning of power facilities. With billions of dollars needed to tackle the already present risks, more avenues of financing – and innovative thinking – are needed.


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