Estimated reading time: 3 minutes
British International Investment (BII), the UK’s development finance institution and impact investor, together with the Asian Development Bank (ADB), a regional development bank for Asia and the Pacific, announced their collaboration to finance up to $100 million in green trade transactions across the region.
This initiative will be administered through ADB’s Trade and Supply Chain Finance Programme (TSCFP) and aims at supporting renewable energy, energy efficiency, and climate-smart agriculture, aiding the region’s transition to sustainable energy and enhancing climate resilience.
In South and South-East Asia, regions highly susceptible to climate change, the development and supply of renewable energy is crucial for realising regional sustainability objectives.
Trade plays a vital role in this context, facilitating the movement of goods that aid regions in mitigating and adapting to climate change effects. A global trade finance shortfall of approximately $2.5 trillion annually indicates that businesses struggle to access necessary funds for trading goods used in climate projects.
Additionally, local banks often find it challenging to fulfil the demand for extended credit terms needed for financing climate project-related goods, particularly in the renewable energy domain.
The collaboration between BII and ADB seeks to bridge this global trade finance gap and cater to the unmet need for extended credit for green transactions. The risk-sharing arrangement between the two entities will enable international banks to enhance their financial support to local banks, starting in Vietnam and then expanding to other nations assisted by BII and ADB.
This arrangement will provide vital financing for local importers of solar panels, wind turbines, electric vehicles, and agricultural products, facilitating the region’s shift to more sustainable energy sources.
Andrew Mitchell, UK Minister for Development and Africa, said, “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.”
Admir Imami, Director and Head of Trade and Supply Chain Finance at BII, remarked, “Trade finance is not only critical to job creation and economic growth, but also a key enabler for green sectors to thrive by facilitating trade of green goods and strengthening the supply chain industry in the region. Designed to address the financing gap, the BII-ADB facility will empower financial institutions and businesses to deliver strong impact on productivity, sustainability and inclusion via greater access to credit.”
Suzanne Gaboury, Director General for Private Sector Operations at ADB, said, “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.”
The BII-ADB trade finance partnership aligns with SDG 7 on Affordable and Clean Energy and SDG 13 on Climate Action.