The Monetary Authority of Singapore (MAS), together with knowledge partners McKinsey & Company and Convergence Blended Finance, and supported by the Glasgow Financial Alliance for Net Zero (GFANZ), hosted the inaugural Transition Finance Towards Net Zero (TFNZ) Conference. The conference provides a platform to galvanise key public and private sector stakeholders to mobilise capital at scale to help economies and corporates decarbonise.  

The conference focused on the theme of scaling “blended finance” which involves the use of concessional and catalytic capital to draw in private capital at commercial rates for financing projects with sustainable outcomes. Concessional capital refers to financing that offers more favourable terms than commercial capital, e.g. grants, technical assistance, debt at below-market rates, to reduce overall risk in the project. Catalytic capital refers to financing that is patient or more risk tolerant or comes with added value such as technical project or structuring advice, to draw in private sector financiers.

The conference featured applications of blended finance in areas such as nature-based solutions and the managed phase-out of high carbon-emitting assets. Discussions focused on concrete actions to scale up the use of blended finance and demonstrating success cases and lessons learnt.

The conference featured the launch of a S$5million Asia Climate Solutions Design Grant by MAS and Convergence Blended Finance that will: 

• provide early-stage grant funding for proof of concept and feasibility studies on innovative and scalable blended finance solutions to fund sustainability projects; and 
• mobilise capital into high impact target sectors that are significantly under-capitalised in Asia, such as early-stage climate adaptation and mitigation technology, clean energy access, sustainable transport, sustainable cities and infrastructure, sustainable agriculture, and nature-based solutions.

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The conference also saw the launch of an initiative by the GFANZ Asia-Pacific (APAC) Network to develop guidance for financial institutions on how they can facilitate the managed phase-out of coal power generation in the Asia Pacific.  This guidance aims to provide the clarity that is needed to help drive capital into such projects. The Asian Development Bank and MAS will participate in this initiative and financial institutions interested in contributing to this effort are invited to express their interest.

The conference brought together senior representatives from multilateral development banks, governments, catalytic donors and financial institutions. Key speakers included:

• Tharman Shanmugaratnam, Senior Minister and Coordinating Minister for Social Policies, and Chairman of MAS, Singapore
• Dr Rania Al-Mashat, Minister of International Cooperation, Egypt 
• Kristalina Georgieva; Managing Director, International Monetary Fund
• Professor Lord Nicholas Stern, Chairman, London School of Economics Grantham Research Institute 
• Mark Carney, Special Envoy on Climate Action and Finance, United Nations & Co-Chair, Glasgow Financial Alliance for Net Zero.

Mr Ravi Menon, Managing Director, MAS, said, “Asia accounts for more than half of the world’s greenhouse gas emissions and will be decisive in the global transition to net-zero.  Bringing together public and private capital in a synergistic way is critical to Asia’s decarbonisation efforts.  MAS has been working with like-minded partners to facilitate and scale such blended finance solutions. This conference is part of that effort and we are thankful to the many thought leaders, policy makers, and practitioners who participated and generously shared their insights and perspectives.” 

Mr Oliver Tonby, Senior Partner at McKinsey Singapore, said: “The transformation of the global economy needed to achieve net-zero emissions by 2050 would be universal and significant, requiring $9.2 trillion in annual capital spending on physical assets until 2050. Catalyzing effective capital reallocation and new financing structures, including deploying collaborations across the public and private sectors, is required at unprecedented scale and speed. Forums like this, that bring together government and business leaders from Asia and around the world, are a vital step in fostering discussion and finding solutions to complex and challenging transition issues.” 

Ms Joan Larrea, CEO, Convergence, said, “Blended finance, through strategic use of catalytic funding, can provide critical de-risking for private sector investment and improve project bankability, and play an impactful role in addressing the financing gap for the net zero transition. We want to actively promote the creation of more blended finance solutions and are excited to see concrete efforts to grow the blended finance ecosystem in this region.”

Source: MAS