BlackRock, Monetary Authority of Singapore (MAS), International Finance Corporation (IFC), Mitsubishi UFJ Financial Group (MUFG), NEXI, and AIA Group have teamed up to boost decarbonization investment in Asia with a focus on Southeast Asia.

IFC said in a statement on Tuesday that they have signed an statement of intent (SOI) at the 29th Conference of the Parties (COP29) to the United Nations Framework Convention on climate change to explore ways to work together on a blended finance debt initiative for global investors seeking opportunities to finance corporates’ decarbonization projects at scale in Asia with a focus on Southeast Asia.

The Industrial Transformation infrastructure debt program is one of the programs under MAS’ Financing Asia’s Transition Partnership (FAST-P), a blended finance initiative announced by the Singapore Government at COP28 that aims to mobilize up to $5 billion from public, private, and philanthropic partners to finance transition opportunities in Southeast Asia.

It is noted that Southeast Asia faces a decarbonization financing gap.

According to a joint report by IFC and the International Energy Agency, annual investment (both public and private) in clean energy in Southeast Asia may need to increase more than eight-fold from $30 billion in 2022 to $208-244 billion a year by the early 2030s to meet rising energy needs1.

FAST-P’s Industrial Transformation program will explore financing solutions for investors to access decarbonization projects mainly focusing on Southeast Asia, enabling countries, companies, investors, and philanthropies to pursue their decarbonization objectives.

The Industrial Transformation program will also seek to catalyze additional concessional and commercial capital to support these projects.

Under the SOI, the parties will explore mutually beneficial opportunities to provide debt financing to private-sector borrowers seeking to decarbonize their businesses, including projects in the following sectors: a) in hard to abate sectors, b) technology solutions for the low-carbon transformation, and c) industrial opportunities.

It is noted that BlackRock is an industry leader in infrastructure investing, with approximately $170 billion in asset under management (AUM) that spans all major infrastructure markets and sectors.

“Emerging markets in Southeast Asia face hurdles in funding capital-intensive projects like decarbonization,

“BlackRock is bringing our blended finance and transition investing expertise to public-private partnerships like FAST-P, benefitting our clients and the societies in which we invest,” said Mark Wiedman, Head of Global Client Business, BlackRock.

Leong Sing Chiong, Deputy Managing Director, Markets and Development, MAS, said for Asia to transition to net zero, they must decarbonize sectors of the economy progressively, including carbon intensive or hard-to-abate sectors.

“Financing for businesses and sectors that seek to adopt cleaner technologies and processes, is an important enabler,

“The signing of the SOI is an important step towards accelerating the transition in Asia and we are delighted to have BlackRock, IFC, MUFG, NEXI and AIA as partners in FAST-P,” he added.

Riccardo Puliti, Regional Vice President for Asia Pacific, IFC, said the stakes are high in Southeast Asia, where climate change poses major challenges to environmental stability, economic growth, and human development.

“We are delighted to collaborate with MAS, BlackRock and other partners on this important initiative, which will help investors channel the financing required into countries and projects that need it most to accelerate the transition to low-carbon, resilient, and inclusive economic growth in emerging and developing markets in the region,” he added.

Fumitaka Nakahama, Chief Executive and Senior Managing Corporate Executive, Global Corporate and Investment Banking, MUFG, said they are excited to cooperate on FAST-P and delighted to be part of this initiative in order to support accelerating the sustainable development of Asia.

“FAST-P is a very significant platform for MUFG, and we would like to contribute to promoting an energy transition in the Asian region,” he added.

Mark Konyn, Group Chief Investment Officer, AIA, said as a leading pan-Asian asset owner, AIA is pleased to collaborate with BlackRock, MAS and other partners on this decarbonization initiative and to explore the blended finance opportunities this collaboration is expected to create.

“Our commitment to decarbonization is reinforced through our near-term emissions reductions targets validated by the Science Based Targets initiative (SBTi) and this collaboration demonstrates our wider intent to fund appropriate transition opportunities in addition to achieving our SBTi targets,” he added.

#Decarbonization #BlendedFinance #SoutheastAsiaTransition #ClimateInvestment #PublicPrivatePartnerships #Ifvex