Scalable investment platforms, rather than scarce capital, are the main bottleneck for climate adaptation finance in Asia, according to Jeb Victorino, investment director at Netherlands-based investment firm Climate Fund Managers.
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Speaking at Singapore state investor Temasek’s Ecosperity summit on Wednesday, Victorino said there is ample private money looking into climate-aligned opportunities in the region, but a lack of a “multiplier effect” for structures that can absorb capital at scale and channel it into projects that build resilience.
“[In climate adaptation financing], we see the opportunity in innovating and creating replicable platforms and repeatable capital structures, so investors can fund at scale, even with their limited resources and enable private sector capital with the same magnitude as the public sector in financing adaptation projects,” he told a panel that discussed the bankability of climate adaptation and resilience.
He cited a debt-for-nature transaction structured three years ago where Ecuador exchanged about US$1.628 billion of its existing international bonds for a new US$656 million marine bond used for the protection of 150,000 hectares of mangroves in the Galapagos area.
Similar transactions were replicated for Vietnam and the Philippines through a US$1 billion blended finance facility, which targets water, sanitation and oceans infrastructure in emerging markets.
Panelists from left: Scott Morris, vice-president for East and Southeast Asia, and the Pacific, Asian Development Bank, Abigail Ng, chief sustainability officer, Monetary Authority of Singapore, Amar Rahman, global head, climate & sustainability solutions, Zurich Resilience Solutions, Jeb Victorino, investment director, Climate Fund Managers, moderated by Kohei Wada, partner, McKinsey & Company. Image: Ecosperity
However, he noted that with only around 5 per cent of climate finance flowing into flood defences, cyclone early‑warning systems and drought‑resistant agriculture, closing the adaptation gap is beyond the capacity of governments alone and will require substantial participation from the private sector.
Scott Morris, vice president for East and Southeast Asia and the Pacific at the Asian Development Bank (ADB) reiterated this when he said the fiscal space, squeezed by recent shocks, has constrained long‑term adaptation spending among member countries.
Natural disasters, especially floods, are already causing tens of billions of dollars in damage every year in the region, particularly in richer, asset‑heavy economies, so there is “urgency for countries and our government clients to invest in solutions that actually lower that risk,” he said.
Morris said the ADB is exploring private sector solutions like public-private partnership models in infrastructure, or private investment in agriculture and urban water where there are clear revenue streams – and is also expanding crisis‑response tools that can provide quick finance after disasters.
He also highlighted the growing use of insurance and risk transfer mechanisms so that governments are not carrying all the risk on their balance sheets. He pointed to the new “disaster resilience bonds” listed in Singapore, which use parametric triggers, such as rainfall levels, to release money quickly after an extreme event.
“We are engaged in working primarily with our government clients, but we are increasingly looking for private sector solutions and partnerships [which are] absolutely critical to us in pursuing this [climate] agenda,” he said.
