Asia remains severely underfunded in the fight against climate change, says Ravi Menon, the former managing director of the Monetary Authority of Singapore (MAS) and current Ambassador for Climate Action.
Speaking at the Philanthropy Asia Summit on May 5, Menon, who is also senior adviser at the National Climate Change Secretariat (NCCS), notes that the region's funding gap for climate mitigation and adaptation stands at over US$800 billion ($1.04 trillion) annually. This is largely due to insufficient public capital and private investors not committing in a big way, as the returns are insufficient to justify the risks, he adds.
As such, Menon is calling for philanthropy to step up and play a larger role in driving climate action in Asia. “A partnership across public, private and philanthropic capital and philanthropic capital can help effectively flood the gaps in Asia's climate finance," he stresses.
Climate-related giving in Asia remains modest. About less than 2% of philanthropic giving goes towards preventing climate change, and of the 2% globally, about 12% of that goes to Asia despite the region’s outsized needs, Menon notes. The region accounts for 50% of global emissions, and 90% of the world’s future growth in energy demand will come from Asia, he adds.
"Asia will suffer the most from climate change, and lives as well as livelihoods, by 2080, 1 billion people in South and Southeast Asia could be affected by extreme heat," he warns, adding that Asia’s climate-induced losses could also reach about 40% of the region’s GDP by 2100.
To maximise their impact, philanthropists may leverage funding instruments such as blended finance to maximise the impact of their contributions, he suggests.
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“The premise of blended finance is to use concessional capital to de-risk and crowd in multiples of commercial capital,” says Menon, who notes that the concessional layer from both philanthropic and public capital accepts first loss and lower returns, which then catalyses “significantly more” private capital.
“Blended finance allows philanthropies to amplify the impact of their giving, because for every dollar they put in, they are crowding in multiples of private capital,” he adds.
