The new partnership will operate through ADB's Trade and Supply Chain Finance Program (TSCFP) and is set to concentrate on renewable energy, energy efficiency, and climate-smart agriculture. The primary objective is to bolster the region's transition to clean energy and enhance climate resilience, particularly in South and South-East Asia. These regions are amongst the most susceptible to the adverse effects of climate change, BII said in a press release.

A critical aspect of this initiative is the development and enhancement of renewable energy capacity and its supply chain, deemed vital for achieving the sustainability goals of the region. Trade plays a crucial role in this endeavour, facilitating the movement of green goods that assist in mitigating and adapting to climate change's impacts.

However, a significant challenge remains: the global trade finance gap, estimated at $2.5 trillion per annum. This gap signifies the lack of accessible financing for businesses to trade goods essential for climate projects. Additionally, local banks often struggle to provide the extended tenures required for financing goods related to climate projects, particularly within the renewable energy sector.

The partnership between BII and ADB seeks to narrow this global trade finance gap and cater to the unmet demand for longer tenures in green transactions. A risk-sharing agreement between the two organisations will enable international banks to enhance their financial support to local banks, beginning in Vietnam and subsequently expanding to other countries supported by BII and ADB.

This initiative is poised to provide essential financing for local importers of sustainable products like solar panels, wind turbines, electric vehicles, and agricultural goods. By doing so, it will play a pivotal role in advancing the green trade agenda in Asia, thereby contributing significantly to the global fight against climate change and the promotion of sustainable development.

“This agreement between BII and the Asian Development Bank will unlock crucial green trade finance in Asia. It demonstrates how, by working together, the development finance system can mobilise the private finance so urgently needed to support countries in their transition to low carbon, climate-resilient economies,” said Andrew Mitchell, UK minister for development and Africa.

“Supporting sustainable development in South and South-East Asia is a key priority at BII. Green trade finance enables supply chain development of the renewable energy industry and tackles the bottleneck for much needed long-tenor financing in the region. We are delighted to work with ADB, a strong partner with extensive knowledge and network in Asia, on a shared ambition to support the region’s clean energy transition and build climate resilience,” said Srini Nagarajan, managing director and head of Asia at BII.

“This collaboration with BII will strengthen ADB TSCFP’s capacity to further grow green supply chains in Asia-Pacific region, with a focus on energy transition goods that are essential for tackling climate change,” said Suzanne Gaboury, director general for private sector operations at ADB.

Fibre2Fashion News Desk (DP)