By setting ambitious climate finance targets and expanding its private sector engagements, ADB is positioning itself as a leading force in the global fight against climate change and development disparities.

The Asian Development Bank (ADB) has unveiled its new strategy to intensify its efforts in addressing climate change, marking a transformative shift in its approach to development finance across Asia and the Pacific. The newly approved Strategy 2030 Midterm Review reflects ADB’s renewed commitment to combating the climate crisis.

Strategy 2030 Midterm Review has introduced an ambitious target for climate finance to constitute 50 per cent of its annual committed financing by 2030.

ADB President Masatsugu Asakawa highlighted the urgency of the bank’s updated strategy, noting that recent cascading shocks have disrupted years of progress in the region.

“Cascading shocks have derailed years of development progress in Asia and the Pacific. ADB is updating its vision, expanding its financial capacity, and modernizing its operational approach to help its members respond to these unprecedented challenges, including the accelerating climate crisis, public health crises, and economic and fiscal vulnerability,” Asakawa said.

“Our support is needed now more than ever. This new road map sets an unprecedented level of ambition and focus for ADB’s work and will ensure we meet the moment through bold action and transformative impact.”

The Asian Development Bank’s Strategy 2030 Midterm Review marks a bold and decisive step towards a more sustainable and resilient future for Asia and the Pacific. By setting ambitious climate finance targets and expanding its private sector engagements, ADB is positioning itself as a leading force in the global fight against climate change and development disparities. As the region navigates a rapidly changing landscape, ADB’s enhanced strategy provides a vital blueprint for progress and transformation.

With its updated strategy, the bank is poised to play a central role in addressing the region’s most pressing challenges and contributing to global development goals.

A Pivotal Commitment

The Strategy 2030 Midterm Review signifies a pivotal moment for ADB, underscoring a strategic pivot towards more robust climate action. The bank has pledged that by 2030, 50% of its total annual committed financing will be dedicated to climate finance. This ambitious goal aligns with ADB’s broader target to mobilize over $100 billion in cumulative climate finance from 2019 to 2030.

The increased focus on climate finance reflects the growing urgency to address the region’s severe environmental challenges, including escalating climate risks, extreme weather events, and environmental degradation. ADB’s strategy emphasizes that 75% of its committed operations, on a rolling three-year average, will support climate change mitigation and adaptation efforts by 2030.

Expanding Private Sector Engagement

In addition to its climate finance commitment, ADB is intensifying its support for private sector development. The bank aims to triple its private sector financing to $13 billion by 2030. This includes a targeted $4.5 billion in direct private capital mobilization. Furthermore, ADB plans for 40% of its sovereign operations to contribute meaningfully to private sector development within the same timeframe.

By significantly boosting its private sector engagement, ADB aims to stimulate economic growth, create jobs, and enhance the sustainability of its investments. This effort is particularly crucial for driving innovation and efficiency in infrastructure projects and other development initiatives across the region.

Financial Capacity; Operational Efficiency

The ADB’s strategic overhaul is underpinned by substantial financial and operational reforms. In September 2023, ADB approved capital management reforms designed to unlock $100 billion in new funding capacity over the next decade. These reforms increase the bank’s annual new commitments capacity to over $36 billion—an approximate 40% increase from previous levels.

Additionally, a significant overhaul of ADB’s operating model, initiated in June 2023, aims to enhance the bank’s responsiveness and efficiency. The new model is expected to strengthen ADB’s role as a climate bank, bolster private sector development, and modernize its operational processes to better serve its developing member countries (DMCs).

Addressing Key Development Challenges

ADB’s updated strategy encompasses a broader range of development priorities, reflecting the complexity of the region’s needs. The strategy focuses on five critical areas:

• Climate Action: Scaling up efforts to mitigate and adapt to climate change, including a significant increase in climate finance.
• Private Sector Development: Expanding private sector operations and mobilizing private capital to support development goals.
• Regional Cooperation and Public Goods: Enhancing regional connectivity and cooperation to address cross-border challenges.
• Digital Transformation: Leveraging technology to improve development outcomes and operational efficiency.
• Resilience and Empowerment: Building resilience against economic and environmental shocks and empowering vulnerable communities.

ADB’s approach will also prioritize support for the poorest and most vulnerable countries, including fragile states and small island developing states. This differentiated strategy ensures that ADB’s interventions are tailored to local needs and contexts, enhancing their effectiveness and impact.

Future Directions and Implementation

To operationalize its Strategy 2030, ADB will develop detailed operational plans for each of its seven priority areas. This will include refining country partnership strategies, aligning annual work plans with strategic priorities, and strengthening monitoring and evaluation frameworks.

The “One ADB” approach will be pivotal in implementing the new strategy, fostering greater collaboration and integration across the bank’s various divisions to deliver comprehensive and effective solutions.