Advancing Asia’s climate agenda needs partnerships between philanthropies, public and private sector

NEW YORK - The Asean power grid will connect the electricity grids of the countries in the region, enabling them to share renewable energy resources, stabilise their power systems, and create a reliable and efficient regional energy system that can drive economic growth.

But the development of such a powerful regional energy network is still in its early stages. A lack of coherent vision of what it would look like could also prevent investments from going to where they are needed, said one sustainable finance expert on Sept 23.

Without such a regional vision, it could be difficult for the private sector to get involved, said Columbia Centre on Sustainable Investment director Lisa Sachs.

She was speaking at an hour-long roundtable discussion on Sept 23 organised by the Temasek Trust-backed Philanthropy Asia Alliance (PAA) during New York Climate Week.

The need for a broader vision so progress can be made in the regional power grid was an example she cited of how there needs to be more partnerships between the public, private and philanthropic sectors, if Asia is to do more in tackling climate change and protecting nature.

The event ended with the consensus that the various groups, with their different interests and funding appetites, need to work together to accelerate progress on the region’s green transition.

Over 70 people from global philanthropic organisations, academia, governments and the private sector gathered at the Knickerbocker Hotel in Times Square to discuss how Asia can make more headway in sustainability.

The event, also attended by Temasek Trust chief executive Desmond Kuek, gave all attendees the opportunity to speak.

Moderated by Straits Times editor Jaime Ho and Mr Yash Divadkar from PAA’s partnerships team, it was one of only a handful of Climate Week events that focused on the situation in Asia.

Mr Dave Sivaprasad, the South-east Asia lead for climate and sustainability at Boston Consulting Group, said the ability to play to each sector’s strengths will be key to establishing such partnerships in the region.

Philanthropic capital, for example, has a higher risk appetite and greater willingness to fund novel solutions that can serve as proofs-of-concept.

When it comes to scaling up these solutions, however, deeper pockets are required, and that is where the private sector can come in, said Mr Sivaprasad.

“But to play to the private sector’s strength, you need to have a line of sight on monetisation,” he added. Once a commercial case can be made for an innovation, the private sector is “fantastic at creating new commercial models”.

Governments are also key because they play a role in bringing these different capital stacks together, and in getting things to work, he added.

Regarding the Asean grid, “one barrier to investment is that the region has not had a coherent vision or scenario of what a regional energy system looks like”, noted Associate Professor Sachs.

This has resulted in a situation where individual governments are focused on establishing partnerships at a bilateral level. Singapore, for instance, has established a number of bilateral deals with countries such as Malaysia and Indonesia to import clean electricity from them.

Prof Sach’s centre, which is part of Columbia University, is supporting the Asean Centre for Energy in developing a model for an integrated energy system that will be published in 2026.

With that, it will be possible to start mapping out the next steps of where investments should go in Asean, a region where each country has its own energy market system and regulatory structure, she added.

Another mechanism to promote partnerships between the public, private and philanthropic sectors discussed at the event was blended finance.

This is where more money for climate initiatives can be unlocked by starting first with capital from public or philanthropic sources.

The willingness of these sectors to take higher risks or absorb losses serves as a catalyst to spur the private sector to invest in sustainable development.

Ms Karen Sack, executive director of the Ocean Risk and Resilience Action Alliance, said Asia has a huge opportunity to bank on blended finance to boost sustainable investments in emerging areas, such as the blue economy.

This is an economic system that seeks to protect and sustainably use marine environments, instead of just exploiting them for economic growth. But many of the developments in this space, whether it is farming seaweed or developing alternative fuels for the maritime industry, are nascent.

The US-based alliance aims to connect international finance and insurance sectors, governments, multilateral organisations, civil society and local partners to boost investment in coastal and ocean resilience.

“Without philanthropic capital coming in to derisk the investments, we’re not going to get anywhere,” Ms Sack said, likening the initial investments made by philanthropic organisations to a tugboat that can help steer larger pools of private capital to climate- and nature-friendly projects.

Asked about his thoughts on how Asia could do more for climate and nature, Mr Brian San, secretary-general of the Hong Kong-based Institute of Philanthropy, reiterated the importance of blended finance.

“The tugboat analogy works only if you know there is a tanker behind you, and if there is a larger pool of capital that it can unlock,” he said.

“The biggest reflection for me is that you need to find the right partner – because there are so many different governments, industries and multilateral banks here, you need to know each other’s priorities.”

Speaking to ST after the event, PAA chief executive Shaun Seow said there was plenty of enthusiasm and optimism from the room about the situation in Asia.

“One of the threads that came out from the conversation today was on Asian pragmatism – that at the end of the day, we have no qualms about working with each other,” he said.

Mr Seow said there is no need for businesses and philanthropy to be on opposite sides.

“I think we need to overcome that. In Asia, we need to know what it takes to advance the agenda. And if we need to talk to the private sector, then we should,” he added.

“Business interests can also be aligned, and when you’ve got the businesses aligned, then that’s where everyone will chime in.”