UNDP seeks private investment for sustainable initiatives in Bangladesh

The workshop targeted key stakeholders like financial institutions, potential bond issuers, large corporates, academics, and policymakers, reads a press release issued yesterday.

The GRDP, a collaborative effort by the European Investment Bank (EIB), the Nordic Development Fund, UNDP, and the Green Climate Fund (GCF), seeks to boost impact financing for green and resilient ventures by establishing a coordinated platform for channelling investments towards green, resilient, and blue bonds.

Environmental experts highlighted the urgent need for climate finance as the climate crisis intensifies, emphasising Bangladesh's national and international commitments to climate action. Despite a global rise in climate finance, significant gaps remain in funding for vulnerable nations.

To address this, the EIB and the Nordic Development Fund, in collaboration with UNDP, are launching a multi-country proposal to the GCF called the GRDP.

"The Green and Resilience Debt Platform represents a crucial step forward in addressing climate change impacts and promoting sustainable development in Bangladesh," said Stefan Liller, resident representative, UNDP Bangladesh.

"Enhancing private sector engagement in climate finance is crucial. We need to explore mechanisms like climate risk insurance, green bonds, and carbon trading, and create an enabling environment to achieve our sustainable development goals," he added

Shahriar Kader Siddiky, secretary, Economic Relations Division, said, "Bangladesh's graduation from LDC status will necessitate a shift towards private sector funding for sustainability needs. We have a strong credit history, and I believe the GRDP will unlock international private finance for our green and resilient journey."

The GRDP funds will be unlocked through a multi-country GCF proposal, targeting ten countries like Bangladesh, to facilitate the issuance of green and resilient bonds. These bonds, issued by sovereign, sub-sovereign, and corporate entities, aim to generate a substantial impact of EUR 15-20 billion.

The project aligns with the EU's Global Green Bond Initiative and involves a EUR 1.5-2 billion guarantee-backed investment fund supported by seven development finance institutions.

Besides facilitating green bond investments, the GRDP will focus on building investment readiness and mitigating financial risks to attract diverse investors. The initiative is expected to significantly impact sectors like health, food and water security, climate-resilient infrastructure, and low-emission transport.

The workshop also discussed challenges and opportunities. Dr Shaikh Shamsuddin Ahmed, commissioner, highlighted the potential of Islamic instruments like Sukuk, particularly Sustainable Sukuk, to generate market interest.

Enamul Huque, managing director, Standard Chartered Bank, emphasised the importance of sustainable finance taxonomy and bond standards aligned with international practices to attract wider investor participation.

Stakeholders also raised concerns about low investor confidence, limited bankable projects, and a lack of awareness about green and sustainable bonds. Dr Suborna Barua stressed the need for de-risking mechanisms for international investors, particularly regarding foreign exchange and default risks.

The workshop concluded with a call for collective action to address the challenges and harness the potential of the GRDP to drive sustainable development in Bangladesh.