By Leika Kihara
INCHEON, South Korea (Reuters) - The&nbsp;Asian&nbsp;Development Bank (ADB) on Tuesday announced a&nbsp;funding&nbsp;guarantee facility to help the region reduce greenhouse gas emissions and build infrastructure resilient to the impact of&nbsp;climate&nbsp;change.
The new&nbsp;funding&nbsp;plan&nbsp;is the first mechanism of its kind to be developed by a development bank and reflects the pressure such lenders face from shareholders to innovate in order to tackle a&nbsp;climate&nbsp;crisis that has hit Asia hard.
"Climate&nbsp;change&nbsp;is the critical issue of our lifetime, and here in Asia and the Pacific, we are on the frontlines of that battle,"&nbsp;ADB&nbsp;President Masatsugu Asakawa said in a statement announcing the launch of the facility.
"The&nbsp;climate&nbsp;events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold action now," he said.
Named the Innovative Finance Facility for&nbsp;Climate&nbsp;in Asia and the Pacific (IF-CAP), the&nbsp;plan&nbsp;is the first leveraged guarantee mechanism for&nbsp;climate&nbsp;finance adopted by a multilateral development bank, the&nbsp;ADB&nbsp;said.
IF-CAP will contribute to meeting the&nbsp;ADB's goal to use $100 billion from its own resources to&nbsp;combat&nbsp;climate&nbsp;change&nbsp;for 2019-2030, the lender said.
Under the programme, Denmark, Japan, South Korea, Sweden, the United Kingdom and the United States will guarantee some of the lender's loans and shoulder losses in case its borrowers default on their debt.
It will free up capital the&nbsp;ADB&nbsp;needs to hold for credit risk, and allow it to increase lending to&nbsp;climate-related projects in Asia.
Asia is among the regions most vulnerable to the impact of&nbsp;climate&nbsp;change. More than 40% of&nbsp;climate-related disasters occurred in Asia and the Pacific since the start of the century, the&nbsp;ADB&nbsp;said.
Its&nbsp;funding&nbsp;announcement precedes a meeting of&nbsp;Asian&nbsp;finance leaders in Incheon, South Korea, which is likely to debate how the region should address the economic impact of market turbulence.
&nbsp;
(Reporting by Leika Kihara; editing by Barbara Lewis)

you might like

ADB announces funding plan for Asian efforts to combat climate change