The Asian Development Bank (ADB), in a report launched on Wednesday, has proposed the creation of national green financing vehicles to catalyse environmentally and financially sustainable infrastructure investments in Asia and the Pacific.
The report, titled Catalysing Green Finance: A Concept for Leveraging Blended Finance for Green Development, highlights the constraints for developing a large pipeline of bankable green infrastructure projects and calls for an integrated approach to transforming country's financial systems, said an ADB press release.
The report outlines the concept of a Green Finance Catalysing Facility (GFCF), which would serve as a model for countries to create their own financing vehicles and implementing mechanisms. This would leverage public funds and policies to catalyse a blend of financing from private sources for increasing green infrastructure investments.
Mobilising additional funds from the capital markets is a major objective of these vehicles. Public funds would be used as risk mitigators to create bankable projects and crowd in private funds, technology, and efficiency improvements.
GFCF's nature as a facility, rather than a fund, would enable a holistic approach to green finance, through raising private funds not just for projects but also at the portfolio level, providing project development and structuring support, and establishing a financing mechanism which links financial incentives with green targets, leveraging, credit ratings, and capital markets access, said the report. source - BSS