ADB sets ambitious goals, allocates half of yearly loan to climate finance

By Faridat Salifu

 

The Asian Development Bank (ADB) has announced plans to allocate half of its yearly loan proceeds to climate finance, marking a significant commitment. This strategic change corresponds with the institution’s larger goal of tackling urgent global concerns and represents a considerable increase from the current aim of 35%.

 

With a dollar-based goal of $100 billion in cumulative climate finance from 2019 to 2030, ADB has reported a current contribution of $30 billion.

 

The organization said it is determined to ramp up its efforts to meet this ambitious target, recognizing the urgent need for enhanced financial support in the face of ongoing environmental crises.

 

ADB also announced that it aims to secure $13 billion in financing for private sector projects over the same timeframe, more than tripling the earlier projection of $3.7 billion.

 

This ambitious financing strategy will be propelled by ADB’s own private-sector lending initiatives, as well as collaborations with partner institutions and various lenders, according to reports.

 

A critical component of the ADB’s new plan involves a minimum target of $4.5 billion in direct private capital mobilization, a significant escalation from the $1.4 billion reported since 2019. By engaging diverse private sector partners, including investment funds and philanthropic organizations, ADB aims to broaden its funding reach and enhance project impact.

 

Reflecting on the current landscape, ADB President Masatsugu Asakawa expressed concern about the cascading shocks that have threatened years of development progress across Asia and the Pacific. “ADB is updating its vision, expanding its financial capacity, and modernizing its operational approach to help its members respond to these unprecedented challenges,” he stated.

 

This new strategy comes in the wake of reforms approved last year that aim to expand ADB’s lending capacity by $100 billion over the next decade.

 

The initiative aligns with a directive from U.S. Treasury Secretary Janet Yellen, urging world development banks to increase their lending capabilities for climate change and other global crises.

 

In response to strong demand from client countries, ADB is actively working to deploy its enhanced lending capacity.

 

However, the bank acknowledges there are significant constraints to its lending volume that must be addressed, particularly in relation to improving project preparation for loan approval.

 

As the ADB forges ahead with these ambitious goals, the implications for climate finance and the future of sustainable development in the region could be profound.