Partnership aims to bridge funding gap for green projects through blended finance
The Monetary Authority of Singapore (MAS) and Temasek have signed a memorandum of understanding (MOU) with Allied Climate Partners (ACP) and the World Bank’s International Finance Corporation (IFC) to address the sustainable infrastructure financing gap in Asia. The collaboration will leverage blended finance, combining concessional capital from the philanthropic and public sectors with private capital to fund green and sustainable projects across Asia, with a focus on South-east Asia.
The partnership will focus on sectors such as renewable energy, electric vehicle infrastructure, sustainable transportation, and water and waste management. The initiative aims to address the region’s climate finance gaps and improve the bankability of green projects. The stakeholders are committed to achieving environmental and social goals, such as meeting carbon reduction targets and creating jobs in the region.
ACP will provide origination and technical support, while IFC will contribute pre-investment advisory and capital mobilisation expertise. MAS will leverage Singapore’s international financial centre and its network in sustainable finance, while Temasek will utilize its portfolio companies and partners, including Pentagreen Capital, to identify investment opportunities.
According to Ajay Banga, World Bank Group President, innovative financing mechanisms are essential to support early-stage climate projects, as government, philanthropic, and development bank contributions are insufficient. A 2017 Asian Development Bank report indicated that Asia needs US$1.7 trillion per year in infrastructure investment until 2030. Despite Asia attracting 70% of global inflows into ESG funds, green bonds and sustainability-linked loans represent less than 5% of global market share.
Ravi Menon, Managing Director of MAS, emphasized that the partnership’s use of blended finance and derisking mechanisms will enhance project bankability and attract large-scale private investments. Dilhan Pillay, CEO of Temasek, highlighted the importance of concessional capital providers in unlocking investments from commercial sources.
