Speech by Ingrid van Wees, ADB Vice-President for Finance and Risk Management, at the High-Level Event 10: Building Back Better with a Biodiversity-Positive Economy led by International Development Finance Club on 12 November 2020.
Ladies and gentlemen, it is a great pleasure to address you as part of this distinguished panel on biodiversity.
I would to start with a confirmation ADB’s operations are largely aligned with this summit’s goal to reorient and leverage our financial flows to reduce climate change and achieve the SDGs. In 2018, we updated our strategy and I am proud to share that we committed that at least 75% of our projects have a beneficial impact on climate change. All our projects serve various SDGs, but we special spotlight on SDG 5 – 75% of our projects have to enhance gender equality.
Oceans and Blue Economy
Despite our efforts, we realized in 2018 that much of our projects were focused on terrestrial investments and SDG 14 was underserved.
To counter the accelerated degradation of the oceans, marine ecosystem and biodiversity in Asia and the Pacific, ADB launched in 2019 a $5 billion Healthy Oceans and Blue Economy Action Plan. We focus on protection and restoration of coastal and marine ecosystems, pollution control, and creating inclusive and resilient coastal communities and livelihoods.
The funds will be used for technical assistance (TA) and to catalyze and mobilize third-party funds for investments in marine ecosystems.
For the protection of biodiversity, I would like to share three recommendations:
First off, eliminate and redirect subsidies for harmful activities. At least $20 billion of annual fishery subsidies are “harmful” and counterproductive. They benefit large industrial fleets and increasing their fishing capacity resulting in further overexploitation of fish stocks and unfair competition to artisan farmers. We should assist policymakers in pressing the reset button and redirecting these subsidies towards sustainable initiatives
In addition, we need to support governments in investing the sizable COVID-19 recovery packages in a more sustainable and resilient infrastructure, enabling environment, and blue economies.
Second, if we are serious about mitigating the impact of developments on ecosystems and biodiversity, we need to improve safeguards and risk management of all investments.
We need to ensure timely assessment of potential environmental impact and risks for project development. This can be done through adherence to best practices such as the G20 Principles for Quality Infrastructure. When we talk about safeguards, it is essential to apply a common set of standards to protect biodiversity.
Here, we need to stick together to avoid funding projects that fail to meet adequate safeguards, resulting in significant human casualties and destruction of nature. This was the case with a hydro powerplant in one of our member countries, where anticipated risks materialized.
When we have assured timely access and agreed the standards, the final part of the jigsaw is the development of a toolkit to measure potential impacts. I can share two examples. ADB is developing a Biodiversity Road Map to ensure, guide and mainstream integration of biodiversity conservation into all our programs and projects.
In addition and in cooperation with Birdlife International, we are developing a screening tool for wind and transmission line developers to avoid key habitat and migratory routes of birds in four countries.
I now come to my third and final point on how we believe we can expand finance for nature-positive investments. Key ingredients are transparency, regional cooperation, and financial innovation.
Transparency can be enhanced in two ways: Implementation of Natural resource accounting. The very accounting for natural resources, their value additions and declines creates transparency on not only the state and but also the potential of national natural treasures and induces accountability. To assist with the redirection of investments towards sustainable initiatives, transparency for investors and financial institutions should be improved. This can be achieved through e.g. independent ESG (environmental, social, and corporate governance) rating for large investments.
It is not new that regional cooperation is key to establishing and enforcing agreements for management of borderless ecosystems, such as oceans. We view it as part of our mandate to assist regions in this process. Since 2007, ADB has been supporting the protection of the Coral Triangle, a unique biodiversity hotspot. The aim of the Coral Triangle Initiative was to significantly strengthen the regional policy dialogue, by building institutional capacity and improving governance of marine protected areas.
Financial innovation and assistance are not needed for bankable projects but essential to fund “blue” projects suffering from a lack of bankability.
Heightened credit risk or revenue shortfalls are often mentioned as the main hurdles. Blended and leveraged finance can play a catalytic role in lowering risks and bridging revenue gaps enabling private sector participation. Concept for innovative financing can comprise bonds, payments for ecosystem services, or blue credits.
An example of ADB’s innovative financing work is the ASEAN Catalytic Green Finance Facility for Southeast Asia, which was established to accelerate green infrastructure investments, including $350 million window for blue projects and ocean health, courtesy of the government of the Republic of Korea.
In closing, let me share some next steps:
Partnerships are key to turn the tide on the biodiversity crisis. We welcome partners for two new partnership funds.
The Ocean Partnership Facility relates to sustainable blue economy and maintenance of marine diversity.
The Regional Flyway-Initiative is a fund for biodiversity conservation and livelihoods in the most threatened wetlands along the East Asian–Australasian Flyway.
As you hear, there are many challenges. We need all hands on-deck to build a resilient, inclusive and sustainable future for the planet’s ecosystems, ourselves, and the next generation.
We are looking forward to working with you to make this happen.