Private sector engagement is essential to effectively address the mitigation and adaptation gap, particularly during the post-coronavirus disease 2019 (Covid-19) era when public finance is under more severe strain, according to Asian Development Bank (ADB) sustainable development working paper.
The working paper titled “Accelerating Private Sector Engagement in Adaptation in Asia and the Pacific” authored by Xianfu Lu, a climate change adaptation consultant on Private Sector Finance to ADB, identified three main modes of private sector engagement in adaptation. Lu said businesses in the private sector need to become “adaptors” to survive and thrive in a changing climate.
“In addressing the wide range of physical climate risks to communities, economies, and the environment, the private sector is relied upon to be the “solution providers”—to supply the technologies, the services, and the products for building climate resilience,” she said. As “financiers,” Lu said the private sector can help fill in the considerable gap in financing programs for adaptation.
The paper said to date, all three forms of private sector engagement are taking place to varying extents and degrees of participation.
Lu said opportunities for the private sector are emerging so businesses could step up their engagement in adaptation amid considerable technical, institutional and financial barriers.
She said the adoption of the Paris Agreement on climate change, the ensuing climate policy development, and the compelling scientific evidence have provided the imperative for businesses in the privatesector to adapt.
“Building climate resilience is becoming an integral part of business risk management, and an area of business growth and/or investment,” she added.
With targeted support from the public sector, the paper said a climate resilience entrepreneurial ecosystem is emerging, developing and growing businesses that provide resilience solutions.
“Progress has also been made in developing more risk-tolerant financing instruments and tools to facilitate private sector.