The Asian Development Bank (ADB) has announced plans to deploy private capital as a significant part of its strategy to address urgent climate goals.
At its 56th annual general meeting, the ADB launched a new climate financing facility, intending to provide loans of up to $15 billion to incentivize climate action in the Asia Pacific region.
The bank reiterated its commitment to catalyze funding for private sector-led development and increase non-sovereign borrowing to one-third of bank operations by the next year.
However, regional rights advocacy groups caution against overreliance on the private sector, expressing concerns that projects may fall short of due diligence and transparency standards.
The ADB’s commitment to expanding private sector financing has raised apprehensions about potential negative impacts on local communities, given the bank’s track record.
Advocates cite instances like the ADB’s support for the Electric Power Industry Reform Act in the Philippines in 2001, which they argue led to increased electricity bills for consumers.
Rene Ofreneo, president of Freedom from Debt Coalition, supports private capital mobilization but emphasizes the need for cautious navigation to avoid adverse effects on local communities.
Advocacy groups fear that increased private sector financing might compromise due diligence and transparency standards, potentially limiting the participation of affected communities in meaningful consultations on ADB-backed projects.
ADB President Masatsugu Asakawa emphasized leveraging the private sector’s potential, emphasizing the need for careful consideration to prevent unintended negative consequences.
The ADB aims to increase the share of private sector financing while addressing concerns about transparency, due diligence, and community impact.
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