The climate challenge: Need and models of collaboration in the Asian context

The research finds that the severity and complexity of issues like climate change call for strong multistakeholder collaboration, as such issues involve actors at all levels of influence—multilaterals, governments, private companies, and philanthropies. Social investors echo this. Sugandhi Matta of ABC Impact says, "I anticipate that like-minded investors can come up with platforms to solve certain problems. For example, to address water-related issues in Indonesia, you can create a platform where investors take different levels of the equity or capital structure". Further, when asked about the role of the private sector in the mitigation of the effects of climate change, Joshua Agusta of Indonesia Impact Fund says, "private companies have the speed and agility that the public sector sometimes lacks, and this enables them to tackle issues the government can’t address in time. For example, air quality is an issue but the government might not be able to deal with it because a) the solution is longer-term than the tenure of the officials, and b) they have bigger problems to worry about".

These platforms could also facilitate policy advocacy and convergence on disclosure standards and reporting. The Asia Investor Group on Climate Change (AIGCC) is one such platform. AIGCC represents the perspective of the Asian investor towards evolving global discussions on climate change and the transition to a net-zero emissions economy. Its members belong to 11 different markets in Asia-Pacific and internationally, and include asset owners and managers with a combined assets under management (AUM) of over US$35.8 trillion. With a strong international profile, the AIGCC network also engages with government pension and sovereign wealth funds, family offices, and endowments. A recent example of AIGCC’s work in facilitating international collaboration is their ongoing engagement in Japan’s energy transition plans. Along with its partners, AIGCC is facilitating policy engagement with domestic and international investors, corporates, utilities, policymakers, and civil society organisations to help formulate a reliable and actionable transition plan backed by robust policy mechanisms as the country phases out coal⁷.

Another example is the India Climate Collaborative (ICC). "ICC is a platform to drive collaboration and coordinated action within the climate space by connecting grant capital with impactful climate solutions to fill key gaps in the ecosystem", says Shloka Nath, Acting CEO of ICC. According to her, one example of such an effort is ICC’s collaboration Council on Energy, Environment, and Water (CEEW) to build a Climate Risk Atlas (CRA) for India. With the ICC's support and efforts for pool funding, CEEW is creating a mapping of climate risks in India at a district level, which is likely to play a critical role in building resilience to the impacts of climate change by informing interventions like climate-proof infrastructure. Furthermore, the platform also integrates the work of local civil society organisations, thereby providing them with an opportunity to scale. Highlighting the work these organisations do on the ground is attracting venture capital (VC) funding, which is a crucial aspect in climate action, says Shloka.

New Forests’ Tropical Asia Forest Fund (TAFF) is an example of a climate fund that uses blended finance. The TAFF is the first sustainable forestry fund for institutional investors in Asia and focuses on sustainable plantation forest management. It aims to provide viable forestry investment pathways in Southeast Asia. The fund has invested directly in companies in Laos, Malaysia, and Indonesia that are focused on sustainable plantation forestry and natural rubber production on over 150,000 hectares of land. The fund was able to create market-rate forestry returns while generating environmental and social impact through sustainable forest management, land restoration, conservation, reduction of CO2 emissions, and rural job creation. Owing to the success of the first fund, a second fund (TAFF2) was launched with a blended finance structure. "The blended finance structure will enable TAFF2 to integrate investment in impact activities focused on climate action, community engagement and livelihoods, and biodiversity conservation", says Lauren Stewart, Head of Communications, Impact and Advocacy Group at New Forests Asset Management Pty Ltd.