Multilateral Development Banks unlock over $180 billion worth of climate finance at COP28

New Delhi [India] : The Asian Development Bank (ADB) unveiled its Nature Solutions Finance Hub for Asia and the Pacific at COP28, setting an ambitious goal of attracting a minimum of USD 2 billion in investments.

The initiative focuses on integrating nature-based solutions into investment programs, particularly targeting capital markets and private capital sources.

ADB President Masatsugu Asakawa highlighted the significance of nature as a crucial carbon sink, with ecosystems absorbing approximately 55 per cent of carbon dioxide emissions.

Asakawa said, “Nature is a critical carbon sink with forest and land ecosystems as well as oceans absorbing around 55 per cent of carbon dioxide emissions. It is vital to protect nature in our battle against climate change. The Asia and the Pacific region, where nature loss threatens two-thirds of GDP, is particularly vulnerable, and hence the hub is a much-required platform for bringing technical and financing solutions to this theme in the region.”

Given the vulnerability of the Asia and Pacific region, where nature loss poses a threat to two-thirds of GDP, the hub is envisioned as a vital platform for introducing technical and financial solutions to address these challenges.

Several partners, including the OPEC Fund for International Development, Agence Francaise de Developpement (AFD), and others, have expressed interest in supporting the hub by contributing financing or technical expertise.

Nature-based solutions involve incorporating features into project designs that protect, manage, and restore natural ecosystems.

These projects can simultaneously support growth for countries or communities while preserving biodiversity. Examples include restoring mangroves, reforesting wetlands, and implementing sustainable practices.

Razan Al Mubarak, the UN Climate Change High-Level Champion for COP28, emphasized the urgent need for collaboration to scale up nature-based solutions, aligning with the global call to conserve and restore a significant portion of the Earth’s lands, oceans, and coastal areas.

Mubarak said, “Biodiversity on land and water has been under immense pressure through development, agriculture, and urbanization. The global call to conserve 30 per cent of the Earth’s lands, oceans, and coastal areas, and restore 30 per cent of degraded inland waters and marine ecosystems, requires urgent collaboration to scale up nature-based solutions.”

The Nature Solutions Finance Hub aims to support both upstream activities, including awareness, policy development, and capacity building, and downstream finance structuring through innovative measures like nature bonds.

By deploying guarantees, impact-linked payments, and blended finance options, the hub aims to reduce risks in nature-based solutions projects and attract funding.

The hub is targeting around USD 1 billion in de-risking funds from global development partners, with advanced discussions underway.

Abdulhamid Alkhalifa, Director-General of the OPEC Fund, expressed pride in supporting the initiative, highlighting its alignment with their Climate Action Plan.

Alkhalifa said, “Climate change and nature are inextricably linked. There is a need for strong cooperation between governments and development agencies, not only for scaling up co-financing to nature-based solutions but also for knowledge sharing on innovative approaches in Africa, South America, and Asia-Pacific. The OPEC Fund is proud to support this initiative, which is in line with our Climate Action Plan”.

As ADB, the climate bank for Asia and the Pacific, strives to provide USD 100 billion in climate financing from 2019 to 2030, the Nature Solutions Finance Hub adds a significant dimension to its commitment.

In 2022, ADB committed USD 7.1 billion to climate finance, reinforcing its dedication to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific.