ADB to devote half its lending to climate finance by 2030

The Asian Development Bank said on Friday it approved a new goal to devote 50% of its annual lending to climate finance by 2030 and boost private sector capital mobilisation as part of a sweeping strategy update for the rest of the decade.

The lender said the new goal is a big jump from the current 35% ambition and comes with a dollar-based target of $100 billion in cumulative climate finance between 2019 and 2030, with only $30 billion contributed so far.

"We want to be the climate change bank in the region," ADB strategy director Tomoyuki Kimura told Reuters in an interview.

Kimura said under ADB's Strategy 2030 Mid-term Review, it will sharpen its focus on five of Asia's most pressing development issues: climate change, developing robust private sectors, cooperating on public goods such as healthcare, digital transformation and making vulnerable communities more resilient.

To expand private sector development, ADB will target $13 billion in financing on private sector projects from 2019 to 2030, more than tripling the current level of about $3.7 billion for that period so far.

Kimura said the target would be reached with ADB's own private-sector lending and funds from partner institution and other lenders.

That includes a minimum of $4.5 billion in direct private capital mobilization -- a major jump from the $1.4 billion since 2019. The lender is working with new types of private sector partners, including investment funds, philanthropies and other institutions.

"Cascading shocks have derailed years of development progress in Asia and the Pacific," ADB President Masatsugu Asakawa said in a statement. "ADB is updating its vision, expanding its financial capacity and modernizing its operational approach to help its members respond to these unprecedented challenges."

The new strategy comes nearly a year after ADB approved reforms to unlock $100 billion in new financing capacity over a decade, meeting a mandate from US Treasury Secretary Janet Yellen for the World Bank and other development banks to expand lending for climate change and other global crises.

Kimura said ADB is now working to deploy the additional lending headroom amid strong demand from client countries. But constraints to lending volume need to be addressed, including improving the preparation of projects for loan approval.