Macroscope | How the Asian Development Bank can be a key player in turning billions into trillions for climate finance
- The Innovative Finance Facility for Climate in Asia and the Pacific will leverage lending on the back of mutual guarantees, a first for a multilateral development bank
- Other development banks may take inspiration, boosting the global pot for climate finance and taking their place as climate leaders instead of bit players
With the unprepossessing title of the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), it is hardly surprising that the initiative failed to take the world by storm. But the international cooperation among governments and multilateral agencies that it involves is truly groundbreaking.
Put simply, governments – including those from the United States, Japan, Britain, South Korea and Denmark – plus multilateral development banks and other public and private sector agencies would guarantee loans made by the ADB so it can grow into its self-designated role as the climate bank of Asia.
The principle of leveraging lending on the back of mutual guarantees is likely to spread, helping to make a reality of the ambition to transform climate (and infrastructure) financing “from billions to trillions” of dollars and allowing private investors more options to get involved.