1. Secretary General, ADFIAP
The Asia-Pacific Finance & Development Forum “Fiscal and Financial Policies for Low-carbon Economic Development”
The Role of Development Finance Institutions in Green Governance & Finance: The ADFIAP Experience
Octavio B. Peralta
Secretary General, ADFIAP

2. AGENDA ADFIAP and its Mission The Need for and Role of DFIs
The Business Case for Green Governance
ADFIAP & DFIs: Case Studies on Green Finance
Green Governance Initiative
Concluding Remarks
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

3. Introducing…ADFIAP
Asso. of Development Financing Institutions in Asia & the Pacific
120 member-institutions in 43 countries & territories
Founded in 1976 during the 6th ADB conference for DFIs
Founding member & Secretariat of the World Federation of DFIs
An NGO in consultative status with the UN ECOSOC
Member, UNEP Finance Initiative Asia-Pacific Task Force
EU-Asia Pro Eco Programme grantee on Environmental Governance
2008 Winner of ASAE’s Associations Make a Better World Award
Permanent secretariat is in Manila, Philippines
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

4. ADFIAP’s Mission & Focus Areas
“Financing Sustainable Development”
MSMEs
Trade
Agriculture
Industry
Technology
Infrastructure
Services
Financial Inclusion
Social Housing
Education & Health
Economic
Social
Governance
Climate change
Environment finance
CDM
Carbon finance
Others
Corporate Governance
Institutional Integrity
Environment

5. Mission & Focused Areas
ADFIAP’s Sustainable Development Pillars
Sustainable Development
Good Governance
SME Finance
Environmental Finance
Social Finance
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

6. DFI vis-à-vis DB
A Development Financing Institution (DFI) connotes a broader term since not all DFIs are “banks” per se. However, alternatively and for ease of terminology, it can also be referred to as a “development bank.”
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

7. The Need for Development Banks
1 Need for an “special purpose institution” to accelerate long-term investments to create employment and achieve rapid national growth.
2 Need to provide financing to the “engines of growth” to achieve a higher degree of productivity and efficiency in the economy.
3 Commercial banks are usually contented with short-term banking activities and are reluctant or are not in a position to support national priorities of long-term investment in the real sectors.
4 A case of “market failure” requiring national governments to intervene in the financial markets.
The underlying principle is that long-term resource allocation should be done by business-oriented financial institutions vis-à-vis direct allocation by the government.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

8. Roles of a Development Bank
Plays a “supply-leading” role (in anticipation of future demand) e.g., technology transfer, strategic industries, environmental projects
Initiator
Develops new methodologies & systems in raising capital & increasing investments through non-traditional areas, e.g., financing large projects via BOT, BOL, BOO, etc.; capital market; microfinance
Institution-Builder
Takes a lead role in creating new financial packages with involvement of banks & other financial institutions, e.g., loan syndication of large projects; guarantee schemes for industry sectors
Catalyst
Promotes the ‘business’ of development such as job generation, domestic resource mobilization, country-side development, MSMEs
Development Advocate
Assists projects that no other financial institution will fund, thus promoting new & innovative economic activities, e.g., funding for inventors, cooperatives and high-risk investments
Bank of Last Resort
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

9. Institutional Linkages of a Development Bank
Government
Commercial Banks
Financial Institutions
IFIs
Capital Markets
Project
Proponent
Regulatory Body
Public /
Private Sector
job creation
earnings
technology transfer
other economic benefits
Repayment
Participant
Capital
Enabling policy
Institutional Strengthening
Dividend
Development advice
Wholesale Loans
Syndication
Loan
T.A.
Repay
Funds
F/S
Info/
support
Project Ideas
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

10. General Types of Development Banks Today
policy banks – directly support the national government’s economic policy plans & directions. Ex. China, Malaysia, etc.
special-purpose DBs – support focused sectors of the economy. Ex. SME Bank Thailand, Agro Bank Malaysia, Housing Bank India, etc.
multi-purpose DBs – also called “universal banks” – support both development projects as well as commercial businesses. Ex. Philippines, India, Sri Lanka, etc.
commercially-oriented DBs – support development through commercial banking services. Ex. Singapore
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

11. The Business Case for Green Governance
Climate change effects on business organizations
As early as 2006, a report analysing greenhouse gas emissions of the 500 world’s largest publicly-traded companies found that businesses will not be immune to the predicted changes and may experience disturbance to their operations and profitability.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

12. The Business Case for Green Governance
Climate change effects on business organizations
it makes good business sense for business organizations to start accounting for their own greenhouse gas emissions, according to a report issued by the World Resources Institute.
The benefits include:
- identifying reduction & subsequent money-saving opportunities;
- cutting the company’s regulatory risks that may result from more stringent regional, national, or international efforts to curb global warming; and
- enhancing reputational status in the eyes of the consumers and other stakeholders.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

13. The Business Case for Green Governance
Direct financial gains
cost savings (in energy/water use, paper, etc.)
cost-consciousness among employees
lower future compliance costs
Reputational/Image benefits
attract & retain customers
attract & retain good employees
better recognition in society & public in general
Work place benefits
proper facility management
accident-free environment
healthier working environment
Environmental/Ecological Gains
clean environmental services & access to natural resources
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

14. The Business Case for Green Governance
Being a value-driven company
Tangible value drivers:
Profitability
reductions in resource use, health and safety excellence, responsibility beyond compliance, environmental performance measurement, sustainability communication
Asset utilization
Service quality
Shareholder value creation
Intangible value drivers:
Customer relationships
Brand equity & reputation
Stakeholder interests on the company‘s products & services
Alliances
Source: GEMI
Technology
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

15. Starting from within: The Environmental Governance Project www
Starting from within: The Environmental Governance Project
The issue of environmental governance has been and will always be in the forefront of ADFIAP’s activities.
ADFIAP’s “Greening of DFIs” Project is its collective and responsive effort to pursue sustainable development through its adherence to the principles of a safe and clean environment, not only as part of good corporate citizenship, but more importantly, as an integral part of sound business practice.
- ADFIAP Board of Directors
About 300 CEOs and senior staff were involved in the project in ADFIAP regional, sub-regional and national meetings & conferences;
A new ADFIAP publication, Greenbank, was developed and produced for dissemination to members and other networks; and
An Environmental Category has since been included in the annual ADFIAP Awards program for outstanding achievements of member banks.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

16. Starting from within: The “Greening of DFIs” Project
Sustainability Report 2009
Water Financing Carbon Offset
Certificate
Green Banking Book Launch
Project Partners
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

17. www.devbankphil.com.ph DBP Forest: Greening the countryside
Clean Development Mechanism* (CDM):
The CDM is an arrangement under the Kyoto Protocol which allows industrialized countries with a greenhouse gas reduction commitment to invest in initiatives that lessen emissions in developing countries as an alternative to more costly emission reduction measures.
Environmental Development Project* (EDP)
Local government units, government-owned and controlled corporations, cooperatives, water districts, private corporations and private water service providers can access long-term funds through DBP and its participating financial institutions to mobilize, encourage, and support activities and investments in environment-friendly projects.
* With the Japan Bank for International Cooperation (JBIC)
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

18.
Cumulative Approvals & Disbursements of Credit under RERED & RERED-Additional Financing as at 30 Sept. 2008
Renewable Energy for Rural Economic Development (RERED) Project
To expand the commercial provision and utilization of renewable energy resources and improve the quality of life in rural areas in Sri Lanka.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

19. www.bpmb.com.my Biofuel Financing Scheme
Financing to all biofuel-related activities including processing of biofuel produced from agricultural products such as palm oil, rapeseeds, soybeans, linseed, jatropha, coconut oil and mustard seeds, or from waste cooking oils and other organic products.
Renewable Energy & Energy Efficiency Scheme
Supports government efforts in developing and enhancing the RE & EE projects that have an environmental benefits from the renewable-related projects. 
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

20.
Financing Scheme for Energy-saving projects in the MSME Sector – encourage MSMEs to undertake energy-saving investments in production facilities to reduce energy consumption, enhance energy efficiency, reduce CO2 emissions, use alternative and renewable energy sources, etc.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

21. www.cdb.com.cn CDB’s initiatives:
controlling loans to industries with high energy consumption and high pollution.
expediting the upgrade of outdated production methods.
financing industrial pollution treatment and ecological environment protection projects.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

22. Green Finance of other ADFIAP Members
SME Development Bank of Thailand – provides loans for hire-purchase of natural gas vehicles
Bank of Khyber – assists small entrepreneurs to finance purchase of /conversion to natural gas auto rickshaw
Lankaputhra Development Bank – to open avenues for small farmers to move towards new technology, techniques and market opportunities
Land Bank of the Philippines – provides financing for bio-fuel projects sourced from a kind of plant called jatropha curcas
Bank of Maharastra – provides loans for adoption of renewable energy practices and use of solar home systems
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

23. Green Finance of other ADFIAP Members
Weather-Indexed Insurance for Agriculture in Developing Countries
A Market Mechanism for Climate Adaptation
aimed at alleviating the negative impacts of extreme weather on farming households and village economies by compensating part of the damage caused to farming products
pilot project is a scheme whereby insurance premiums are paid by industrial countries and climate disaster compensation payouts are received by developing country governments or local governments.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

24. Green Governance Initiative
Driving the initiative
Regulatory
Bodies:
Central Bank
Securities Com.
Stock Exchange
Business Sector:
Banks
Corporations
Listed Cos.
Sustainable Development & Growth
Green Governance
Low Carbon Economy
Regulations
Directives
Policies
Practices
Board structure
Board policy
“Scorecard”
Renewable Energy
Clean Technology
Others
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

25. Green Governance Initiative
Corporate Governance
Green Governance
1. Independent directors/fit & proper rule
1. At least one director knowledgeable on climate change/environmental issues
2. Board committees
2. A separate environment committee or as part of the risk management committee; an environmental management unit under the Board
3. Corporate governance code
3. Environmental governance code or policy approved by the Board; environmental risk management integrated in operational decisions
4. Reporting and disclosure
4. Issuance of an integrated annual and sustainability report or a standalone sustainability report
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

26. Concluding Remarks
Currently, climate change and environmental issues are not merely discussed in boardrooms or part of company CSR, they are being imbedded as part of new a business model and future sustainability.
A “green governance” initiative can be built in into existing corporate governance policies and practices.
One organization like ADFIAP can only do so much to advocate green governance and finance. It takes other like-minded institutions and partners to make it work.
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China

27. Thank you for your kind attention!
Let’s all help save our one Earth!
Image: Miguel Villagran/Getty
Asia-Pacific Finance & Development Forum, November 26, 2010, Shanghai, China