Report on Bridging Asia’s Climate Finance Gap to Advance Sustainable Development Goals

The Climate Finance Deficit and its Impact on SDG 13

A significant climate-financing gap in the Asia-Pacific region presents a critical challenge to the achievement of the Sustainable Development Goals, particularly SDG 13 (Climate Action). According to the Asian Infrastructure Investment Bank (AIIB), there is a major disconnect between available global capital and its deployment for climate-related projects in Asia. Data from the International Finance Corp (IFC) quantifies this deficit:

• Annual Investment Required: A minimum of US$1.1 trillion is needed for climate mitigation and adaptation efforts.
• Annual Investment Shortfall: The current investment level is falling short by approximately US$800 billion per year.

This shortfall directly impedes progress on nationally determined contributions and undermines regional efforts to build climate resilience.

Mobilizing Private Capital for Sustainable Infrastructure (SDG 7, 9, and 11)

The AIIB emphasizes that private sector financing is essential to overcome the fiscal limitations of governments. Tapping into the global pool of over US$200 trillion in assets managed by institutional investors is crucial for funding sustainable infrastructure. This strategy directly supports several interconnected SDGs:

1. SDG 9 (Industry, Innovation and Infrastructure): Directing capital towards sustainable infrastructure projects promotes resilient and environmentally sound development.
2. SDG 7 (Affordable and Clean Energy): A significant portion of climate finance is allocated to renewable energy projects, advancing the transition to clean energy sources.
3. SDG 11 (Sustainable Cities and Communities): Investment in climate adaptation and green infrastructure is vital for creating sustainable and resilient urban environments.

Hong Kong’s Role in Forging Partnerships for the Goals (SDG 17)

Hong Kong is positioned to play a pivotal role in facilitating the necessary financial flows, embodying the principles of SDG 17 (Partnerships for the Goals). By acting as a financial hub, Hong Kong can bridge the gap between international investors and sustainable development projects in Asia.

• Catalyst for Investment: Hong Kong can help channel the US$200 trillion global capital pool towards the region’s sustainable infrastructure needs.
• Public-Private Collaboration: The city can foster the partnerships between governments, multilateral institutions like the AIIB, and private sector investors required to close the US$800 billion financing gap.
• Market Opportunity: The AIIB notes that global investors are already beginning to increase their capital allocations to the region, indicating a prime opportunity for Hong Kong to lead this financial mobilization.

Analysis of Sustainable Development Goals in the Article

1. Relevant Sustainable Development Goals (SDGs)

1. SDG 13: Climate Action
   • The article is centered on the theme of “climate action,” specifically addressing the “staggering climate-financing gap” for projects related to climate change. It directly mentions the need for investment to meet “mitigation and adaptation needs” and to achieve “nationally determined contributions,” which are core components of SDG 13.
2. SDG 17: Partnerships for the Goals
   • The article explicitly highlights the need for partnerships to address the financing gap. It points out that “governments around the world lack fiscal capacity” and emphasizes that “we really need the private sector to come into financing.” This call for collaboration between the public sector, the private sector (institutional investors), and multilateral institutions like the Asian Infrastructure Investment Bank (AIIB) directly aligns with the principles of SDG 17.
3. SDG 9: Industry, Innovation and Infrastructure
   • The article specifies that the financing is needed to “fund sustainable-infrastructure projects.” This directly connects to SDG 9, which aims to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. The focus on sustainable infrastructure is a key element of this goal.

2. Specific SDG Targets

1. Target 13.a: Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions…
   • The article’s entire premise revolves around mobilizing finance for climate action in the Asia-Pacific region. The discussion of an “US$800 billion” annual shortfall in the required “US$1.1 trillion” for mitigation and adaptation directly relates to the goal of mobilizing financial resources for climate action in developing regions.
2. Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • The article identifies a specific source for these additional resources: the “global pool of more than US$200 trillion” held by institutional investors. The call to tap into this private capital to supplement insufficient public funds is a direct reflection of this target.
3. Target 9.a: Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support…
   • The article’s call to channel global capital towards “sustainable-infrastructure projects” in Asia is a clear example of efforts to achieve this target. The role of the AIIB in helping to fill the financing gap is a form of the enhanced financial and technical support mentioned in the target.

3. Indicators for Measuring Progress

1. Annual Climate Finance Investment and Shortfall:
   • The article provides concrete financial figures that can be used as indicators. The stated need for “at least US$1.1 trillion a year” and the identified shortfall of “about US$800 billion” are direct quantitative measures of the gap in climate financing. Progress towards the targets could be measured by the reduction of this US$800 billion gap.
2. Volume of Mobilized Private Capital:
   • The article implies an indicator by mentioning the “global pool of more than US$200 trillion” available from institutional investors. An indicator of progress would be the amount of capital from this pool that is successfully deployed into sustainable infrastructure and climate action projects in the Asia-Pacific region annually.

Summary Table: SDGs, Targets, and Indicators

Source: scmp.com