Asia remains underfunded in climate finance but philanthropic funding can help plug gaps: Ravi Menon

SINGAPORE - Asia is where the climate change fight will be won or lost, yet the region remains severely underfunded in terms of cutting emissions and building resilience, said Singapore’s Ambassador for Climate Action Ravi Menon on May 5.

Speaking at the Philanthropy Asia Summit, convened by Temasek Trust’s Philanthropy Asia Alliance and held at the Sands Expo and Convention Centre, Mr Menon said philanthropic funding can help to plug these gaps.

Asia accounts for half of global emissions, he said, adding that some 90 per cent of the world’s future growth in energy demand will come from Asia.

Yet, globally, less than 2 per cent of philanthropic giving goes towards preventing climate change. Of this, only 12 per cent goes to Asia, Mr Menon said.

“Without decarbonising Asia, the world will not reach net zero,” he added. “This is a time for philanthropy to play a larger role in driving climate action in Asia.”

Public funding is willing but insufficient, while private funding is ample but unwilling to commit owing to high risks or because returns are not commensurate with the risks, said the former chief of Singapore’s central bank.

Philanthropic funding can help to de-risk projects, so private sector capital can be crowded in, he added.

Mr Menon noted that decarbonisation projects are often capital-intensive and require large investments.

Philanthropic capital is considered “catalytic”, as it is willing to accept lower returns, even losses, and can thus help to reduce risk borne by commercial entities.

For philanthropies, tapping funding instruments such as blended finance schemes can also maximise the impact of their contributions, compared with giving grants, Mr Menon added.

Blended finance refers to using public and philanthropic funding support to make it easier for private funding to come on board.

An example of a blended finance initiative is the Financing Asia’s Transition Partnership (Fast-P) launched by Singapore in 2023 to raise up to US$5 billion (S$6.4 billion) to address the financing gap in green projects in Asia.

This could include the early phase-out of coal power plants and the upgrading of electricity grid infrastructure.

Fast-P involves the Monetary Authority of Singapore, multilateral development banks and philanthropic organisations, among others.

With many parts of South-east Asia lacking sufficient climate data – which hinders efforts to cut emissions or prepare for climate impacts – philanthropies can also fund data collection, enhance access and build local capacity in data analysis, said Mr Menon.

And given that the transition to a lower-carbon economy will disrupt communities and livelihoods, philanthropies can also help by reskilling workers and empowering communities, he added.

“Amid the growing risks to lives and livelihoods from the climate crisis, we need philanthropy to help communities adapt and thrive,” Mr Menon said.