Episode 23: Financing Asia’s Green Transition with Nikki Kemp

Speaker A: Foreign. Welcome to this 23rd episode of the Blended Finance Podcast brought to you by the Blended finance company. At the Blended Finance company, our ah, goal is to increase the flow of capital to the development sector. And we do that by pioneering blended finance programs that enable investors to deploy significant capital while generating sustainable returns and donors to maximize their catalytic leverage. A lot of heavy words there I realize. And that is precisely why we decided to start this podcast to demystify blended finance and to understand what it can and equally importantly, cannot achieve. Through these podcasts, we bring to you some of the foremost thinkers and practitioners of blended finance globally who would be sharing their insights and experiences with us. I'm your host, Nirav Khambati, partner at the Blended Finance company and today we have with us Nikki Kemp. Nikki is the Executive Director at Singapore Green Finance Centre, established by the Monetary Authority of Singapore, Singapore Management University, Imperial College of London and global financial institutions. Prior to this, Nicky led the World economic forum and OECD's joint initiative, the Sustainable Development Investment Partnership in ASEAN, engaging finance and investment leaders to unlock capital for sustainable development, especially energy systems, transition and electrification. Nikki, welcome to the Blended Finance Podcast.

Speaker B: Thank you Narav. It's great to be here with you and to have this conversation. It's such an important one.

Speaker A: Nikki, you worked across institutional banking, sustainable finance advisory and now you are with the Singapore Green Finance Center. I'm very curious to know what first drew you to this work and uh, how is your understanding of the role that finance can play, needs to play in uh, sustainable transition changed over time?

Speaker B: Well, it's been a journey, quite a long one over more than three decades. Um, I've seen the financial markets evolve quite significantly over that time and certainly my understanding of the role of finance um, has become far more nuanced. Uh, let me give you a bit of what I mean by that. I, um, initially entered the sector as a junior analyst in the 90s. I was writing risk reports on banks and setting interbank exposure limits. And during that time that apart from a lot of skills and um, technical things that I learned, the tension between our market traders, KPIs to maximize returns and the risk limits that I was responsible for recommending on a daily basis was real, a real lived tension, a real experience that, that has stayed with me and really formed a lot of um, my understanding of where the markets are right now. It certainly um, laid the foundation for my understanding that financial markets would endlessly seek returns like that's the fundamental of the market and that financial sector stability requires Checks and balances. Um, so history's proved um, that you know we've got that wrong once or twice, uh, maybe a few times. The global financial Crisis uh, in 2007 and 8, um, is probably our most recent evidence of quite catastrophic market failure. And it was a failure of governance and also failure in the pursuit of returns, dominating and really being um, out of control over what really was a social contribution. So it was mortgages and the market had proved that housing funding could get out of control. Crazy as it sounds in that very simple terms. But this is a really good example of how when we don't have those checks and balances we see failure. Um, and that was a big bang failure. Um, around this time I also became aware of another catastrophic market failure playing out which is the one that we're seeing now over the long term in the environment and social costs of um, not addressing um, the risk of overexploitation of environment and society and people. Um, I've spent the last 15 years or so building my understanding about the causes and consequences of this failure. And now at the center I'm working on research and courses, learning products that help our understanding of what needs to be done in the Asia region, what the very real socio, political, economic climate, nature trade offs are and what the costs are to avoid the environmental, community and financial markets disasters that we're heading for. Green finance in developing Asia faces significant barriers and one of those really um, is this massive funding gap. And um, at the beginning of the decade the IMF estimated that emerging and developing Asia needs um, about $1.1 trillion. There's lots that's annually and there's lots and lots of different variations on this number. So let's just um, take this one as an indicative from the imf and this is to meet climate mitigation and adaptation. And it's a big number but in the context of the $500 trillion global financial markets it's not, it's half of 1%. So it's doable and yet the actual investment has been falling short by around $800 billion per annum. And we're now six years into the decade. So now we have this cumulative gap that's occurring and not being filled.

Speaker A: Thank you Nikki. I think first of all, thank you so much for calling out the inherent tension between risk and return as far as finance is concerned. And of course while our uh, understanding of uh, risk has evolved over time to now also include uh, not just financial risk but also the social and economic risk, I mean this is a conversation that I have several times with my friends. Uh, and as you know, my previous life was asset management. And I sometimes feel that there is perhaps over enthusiasm around the fact that impact and returns can go hand in hand. And I'd sort of like to point out that there is a real trade off in most cases between impact and returns, between the risk and return, as you rightly put it, which is exactly why, uh, blending of capital becomes so important. Uh, Asia, of course, is right at the frontier of the transitions that we need to make happen in several spheres. Energy, of course, being a prominent one. Uh, from your experience and everything that you're seeing around you, what does transition finance actually mean? I mean, the gap that we're calling out, uh, the number that you referred to, uh, which as you said, is only compounding every year. But there is still, I feel, not enough understanding of what transition finance is all about. Is it just financing assets that could, uh, be classified as green, or is it much more than that?

Speaker B: It's a great question. And I think very often in the financial sector we jump on these, this jargon and we start using it, thinking everybody understands what we're talking about. Whereas I think sometimes we just need to roll that back a little bit and just understand it for a minute. This is something obviously we do in academia is making sure that there's a really fundamental understanding. So let's talk about this. Um, we're talking about transition to, when we talk transition finance, transition to low greenhouse gas emissions across economies across the world. The ambition of reaching net zero, which is often, um, talked about in terms of the transition or net zero emissions, is when greenhouse gas emissions and removals net off to zero. Well, sorry, from human activities. That's a caveat that's been built into the, um, definitions. So greenhouse gas emissions and removals resulting from human activities net off or balance off to zero. And this was set at COP21 in Paris. So interestingly, we're heading into COP31, so 10 years ago, um, and is fondly referred to as the Paris Agreement. So for those who know that, great many perhaps don't understand that that's where the Paris Agreement came from. And it sits in that agreement, sits in the scientific evidence that was outlined in the IPCC Fifth Assessment Report, uh, a year or two before COP21. So in other words, this wasn't just, uh, a bunch of people sitting around and going, this sounds like a good idea. This is actually grounded in scientific evidence, and not just any scientific evidence. The IPCC's responsibility is to Review all of the scientific evidence in the world and distill it into these reports. So we know this is grounded in something that is really, um, solid. We're not making this up. Achieving net zero emissions by 2050, which is the Paris Agreement targets, is a critical global objective in order for us to mitigate the impacts of climate change. While many countries, including some in Asia, have committed to this goal, substantial challenges are still remaining. And we're seeing some walking back of some of the commitments. We're seeing net zero no longer being referred to. And so there's a lot of challenges that have occurred not just in those first years in trying to understand it, but also in the more recent years as we see, uh, a whole lot of these trade offs, if you like, um, using your phrase in the world. So the other really important part of this is that the targets, these net zero targets are merely targets and this is why they can be walked back. Because we need to actually look at the evidence, like what is really being spent, what is being financed, what's that green expenditure or CapEx. And we need to evaluate that realistically and understand how does that reflect back into that gap, that $800 billion gap and what is still needed. So the market has moved and we have seen, this is the good news, and we have seen significant rising in global investment in clean technologies and they actually now surpass investment in fossil fuels. Good. Uh, there remains a considerable shortfall though in the capital required, as I said, for financing energy transition and other hard to abate, um, in other words, hard to reduce the emissions, uh, uh, industries in order to meet those net zero targets. So let's talk about transition broadly. There's two strategies that underpin efforts for the transition, if you like. One is to achieve the net zero emissions by greening the economy, and the other is by growing the green economy. And I differentiate those for a reason, um, because they're often used interchangeably. But I think it's important for us to think about them separately and how they complement each other. So greening the economy refers to the integrating of sustainable practices into existing industries, reducing environmental harm, but of course continuing to contribute to economic prosperity. And an example of that might be, for example, um, um, a manufacturing firm that implements, uh, some energy saving measures, adopts recycling materials, minimizes waste, and so on and so on. So that could be a greening the economy. So it's an existing economic activity. How do we green it? Um, in contrast, growing the green economy involves expanding sectors that are inherently sustainable, such as renewable energy, clean technology, Environmental services and so on. So, you know, solar panel technology would be a good example. Solar farms both contribute to the transition to net zero, but they involve different financing approaches. So supporting the growth in the green economy requires channeling capital towards green sectors. And the essence of green finance is just this, what funds can be used for clean technologies. The alternative is what funds can be used in brown as contrast to green. Some people call it gray, some people call it brown, but brown, non green sectors, in order to transition them to a lower emissions or lower environmental impact, uh, status on an ongoing basis, permanently, Permanently transition them. In our research, we find that purely green economic activities account for less than 8% of the global economy. It excludes the large share of the economy, which is brown sectors, um, that needs to undergo the transition. So just keeping that in mind when we're talking about the Browning or green to brown transition, this is where the largest share of economic transition can take place. So when we are talking about transition finance, it's financing that transition from brown to green. Now that sounds simple, it's not, but it's essential. It's an essential part of bridging the gap and reaching net zero. We can't just withdraw funds from those sectors and achieve the outcome. We've proven that. So our research shows that that doesn't, that doesn't result in those assets no longer being funded because there will as many, there's as much capital, ah, out there willing to step in that doesn't have the scrutiny or the conscience to move to green. Um, and so we don't get the transition, we don't have those motivated funders to transition those assets. So to decarbonise, we need, uh, an approach that is measured, that is gradual, that brings in capital that is conscientious around that transition to green and can ensure that there is an orderly transition, an orderly approach so that we don't disrupt the progress, but also that we support economies and societies and communities and avoid bailouts, distress bailouts. That's another really important one. We've been talking, and we'll talk to that later in the context of blended finance. So that's what we're talking about when talking about transition finance, green finance. We're financing green things, transition financing. We are helping those brown or high emissions or high, uh, environmentally impactful assets or industries to become greener or low emissions.

Speaker A: Personally, I find it fascinating that, uh, the green investments per se are only 8%, 92%. The brown to green transition. One anecdotally sort of knew about that, but just Putting these numbers out there makes uh, it uh, so much more clear and evident, Nikki. Uh, particularly when one looks at this whole north versus south dividend, along with the transition of infrastructure, of the way we make stuff, the way we consume stuff. There's also this whole uh, people implication. Right. Uh, willy nilly we've grown our economies around a certain way of doing things. I mean uh, for example, if I look at the farming practices, uh, one could argue that uh, they do a lot of damage to the environment. And yet uh, a bulk of the farmers in, in the global south are smallholder farmers who have uh, a capital issue, who have a capacity issue, uh, towards making that transition. And I wonder if therefore even when it comes to transition, uh, finance are there, are there sort of uh, differences, Are there nuances that you are seeing even within Asia, but across countries, given the vast diversity of economies that we have, Even within Asia we have different economies, we have different energy systems, we have different development priorities and uh, I'm sure that must be making the whole job of transition finance pretty complex. How are you looking at addressing these complexities?

Speaker B: Yeah, m. Absolutely. And it's one of the things that I really love about working in this region, um, is addressing the nuances and complexity. So financing the transition in Asia is complex. The region needs to decarbonize. If we don't decarbonize Asia, we don't get anywhere near meeting our climate goals and we will end up in basically a hothouse world. And we know that there are all sorts of consequences to that. Asia is essential to decarbonization. At the same time, of course there's a whole huge um, huge proportion of Asia that is what we still call emerging and developing. And so the, the economic imperative around prosperity and growth, industrialization, improved living standards for the billions of people is equally important. And unlike the developed economies, much of Asia is still building infrastructure, expanding energy, uh, access and quantum. And also the populations are growing. And so there's this you know, trend towards urbanization and increased consumption. Um, many of the people in Asia are still sitting slightly above, on or below the poverty line. So we have this sort of very sort of fragile um, balance that needs to occur as this decarbonization or this transition occurs. Um, I've talked about the financing gap. So I won't labor that other than to say that within that gap or the solution for that gap, we would always look at what public funds are available. Because of course public funds can be used very, very effectively for critical infrastructure and development and supporting the likes of Smallholder farmers to continue to produce food and the food supply chain and so on. Um, but it has been really stretched since COVID Um, a lot of capital was public money was m, was used to prop up economies during that time. And so we see fiscal capacity in the region to be even more stretched than it has been um, prior to the COVID years. And so we must, must see private capital mobilization to sit beside uh, those public budgets. The other points to make around the challenges or complexities, let's call them complexities in Asia is it's not a single Asia is not a single market. So often people outside of Asia will think of Asia as akin to Europe. A single market, um, uh, that operates uh, quite tightly from an economic perspective. That's so not the case here of course as we know and the diversity of economies. So advanced economies such as Singapore, Japan, Korea and they sit alongside lower income and emerging economies, um, with very different financial systems and political and environments and transition needs. So a solution, financing solution, a green or transition financing solution that might work in one country isn't necessarily going to work in another. It might need to be uh, modified. Um, energy security concerns have risen rapidly since the um since the challenges in the Middle east and the region's heavy dependency on high emitting industries. And when I say dependencies, it's not just, it's not just from a negative perspective. These are really important industries from growing and developing economies in the region. And a lot of it is fossil fuel dependent from an energy generation perspective. Um, but the carbon intensitivity of the UM sectors such as steel, cement, shipping, chemicals, et cetera are also big contributors. So many talk about credible transitions of those activities. But I think there's another way to think about it that's more constructive, Frasier, and that is through the lens of what is efficient in terms of financing these transitions. Where can capital have its most impact? Where can we get the most bang for our buck or emissions reduction for our buck? Um, and this needs data and evaluation, uh, and much of that doesn't exist yet. The other things that are also data and evaluation dependent are things like policy. How are countries, um, uh, determining what is the right level of support or incentive that are required in order to um, really draw in that private capital I spoke of. And the other, of course we hear taxonomy, taxonomy, taxonomy. There are varying taxonomies across the region. Uh, and so looking at the interoperability of those and ensuring that there's an understanding of what they mean, they are important to be localized. We are not in Any way an advocate of single uh, taxonomies because they should be localized for their local needs. So how do we make sure they work for financial institutions who want to be able to look through all of those differences? The final point I'd make is as we have continued to fail to meet our climate targets, the rising cost on adaptation and resilience is also very important consideration for finance in and how capital is being deployed in the region. And we know this, uh, as we see increases in heat stress, um, flooding, storms and so on. So how is financing going to be needed increasingly across the uh, economies in order to build ah, resilience to this reality that we're facing? So these are some of the really, um, important complexities that I think are exciting but do need very clear supporting evidence in order to make sure that we're moving towards something that is, as I say, positive and impactful.

Speaker A: Well, I couldn't agree more with you, Nikki. Uh, that's very well put. You highlighted the role that private capital must play in enabling this transition. You also highlighted the challenge that today we face in terms of adaptation and resilience, uh, financing from our vantage point as a blended finance company, what we're seeing is private capital finds it relatively easy to um, and I think the keyword here is just relatively, but relatively easy to finance mitigation and a lot more challenging to finance adaptation and resilience. And perhaps that is where government capital needs to focus in that context. I think a lot of the subnational actors in India are uh, looking at the fast P example of Singapore quite closely. And it's something where private players have come together, uh, in partnership in some ways with the sovereign to support Asia's transition. I mean, I know you've been closely associated with FastP. Would you tell us what was the thinking behind setting up FastP and uh, in light of the need for data, uh, evidence, what is that fastpoint hopes to demonstrate?

Speaker B: Um, it is such a, such an interesting example of how blended finance has evolved. So some of the work that I've done in my past, including the work at the World Economic ah, Forum and OECD platform, was to really um, understand blended finance. We worked with the multilaterals and the private sector alike, and philanthropy, and tried to really unpack a lot of. What does blended finance mean? It's not particularly new concept, but it's certainly evolving and FASTP is a really good example of that. And it seems probably one of the most significant recent developments in blended finance for Asia. So FASTP is the financing Asia's transition partnership. Uh MAS launched it at COP28. So um, gosh it'll be coming up for three years ago and it's a platform level blended finance initiative. So it's targeting $5 billion. So coming back to how much financing we need, it's a fraction of what we need but it's a good start. 5 billion at least it has a B in front of it, not millions. And it aims to de risk um and finance transition and marginally bankable green projects in Asia. So the idea is what are those projects that aren't getting the money? Because a lot of projects are particularly the green ones, uh less the transition ones. So this is really looking at transition and those green projects that are uh, essential to the transition but perhaps have some thorny issues around them whether they're local um, risk issues or project related issues. Now what UM FASTP is distinctive is in its platform architecture. Uh so rather than doing deals one by one it aggregates uh concessional capital. So the Singapore government pledged uh, uh 500 million. It's been matched dollar for dollar by a number of other governments and uh DFIs. And we've seen um private sector capital come in and support some of the platforms as well. So we're really seeing that blending at the platform level how it's managed. So it's managed through the central platform and even has a CEO um that runs it um and an international advisory board. And then uh, I mean you can think of that layers like the um ecosystem builder, the capital mobilizer, the making sure that the um mandate is fulfilled for the platform. Then there is this layer of thematic partnerships. Um these are separately governed entities uh and so each one is a pooled fund and they're broken up into distinct mandates. So different mandates they that complement this overall ambition. The first is the Green Investments Partnership and Pentagreen which is a joint venture between HSBC and Temasec um manages it and it operates like a credit fund um deploying blended debt into infrastructure. Uh the second is the Industrial Transformation Program. Uh so as you would expect from the title it's about industrial transition um and it's uh led with institutions uh like a combination of private sector and multilateral. So BlackRock, IFC, MUFG, AIA etc. Uh this focuses on the hudgell bait sectors and is structured as a separate debt and investment program. The third is an energy Transition acceleration framework and as you would guess it's targeted at the energy sector. Uh and it's co developed by the ADB and gapp, the Global Energy alliance for People and Planet, which is a philanthropy and MAS supports this also and it's focusing on coal transition grids and energy systems. So each of these is effectively a mini platform or a fund, um, with its own managers, governance and investor base and so on. The capital structure and investor governance, um, across the platform. FASTP pools the capital, as I said, um, public, philanthropic and commercial. Um, the concessional capital from governments de risks the investments and is intended to catalyze the private sector on a multiple of one to five. So five times, uh, um, private sector to the one $1 of um, concessional capital. Investors, um, participate at the partnership level, um, can, and not necessarily the whole platform. Each partnership has its own capital stack, uh, investment decisions. Um, and what's distinctive about this model is its execution is decentralized, so localized but the coordination is centralized. So an interesting structure compared to some others that have been attempted. It allows the managers, the specialist managers, uh, to um, efficiently hopefully apply the capital where it's most needed and where we can make sure that there's really um, we're unlocking um, funds flowing into assets that wouldn't otherwise get funding. Because uh, we've got to, we've got to remember that blended finance is something that carries a lot of friction with it. As I've just described. You don't want to do it unless you have to. You want to do this in circumstances where it's really needed because the capital markets, the global capital markets will run away from friction. Friction is the enemy of uh, efficient markets. So we're doing this. These are structures that are specifically for these targeted middle um, gaps if you like, that aren't funded. So if we want to then sort of consider, you know, what does this structure do? Like how do we learn? What are the learnings from it? Because what we'd love to see is we'd love to see multiple replications of this. It's a $5 billion initiative. Can we see 100 of these? And we'd start to get to the sort of numbers that we need to see. Maybe not 100, but yeah, you get, you take my point. Um, so it's effective because it allows risk sharing across the portfolio of projects, but not at the project level. So we're not requiring that analysis to be done um, by investors at every project level. Because this is what's been slowing down blended finance or one of the things that's been um, slowing down blended finance. It also means um, that there's hopefully ah, going to be an Opportunity for replication. So as these um, deals uh, occur, they'll be able to learn from each of those structures and how to apply them in a repetitive format. It's specifically focused for emerging markets. So your question around, you know, what can India learn? Well, these uh, investments are being made in emerging markets and the proof will be in the pudding. We have seen deployment of investments, uh, made by the GIP, one of the three platforms. As of about a month ago, there was 128 million deployed in four initial projects under GIP. Um, and they included utility, uh, scale solar and battery storage projects across Southeast Asia and distributed bioenergy in India. So these, as these progress, we'll be very interested to monitor them and see the effectiveness both from a financing perspective, but also the impact of that financing around the decarbonization. Uh, it's estimated, it's estimated that these projects will deliver emissions reductions of around one or maybe more million tons of CO2 annually. So there is a target, there's a clear target there. We'll be looking into how that's achieved. But very, very interesting structure and one that I think is useful uh, for us to consider as a solution across the region in different countries.

Speaker A: It's fascinating, I must say. And what I really like about the structure is how you've thematically grouped uh, various asset pools. Uh, that thematic grouping then allows development of uh, certain competence at the asset manager level, uh, sharing of best practices and then um, like you rightly pointed out, being able to transfer some of these practices to different parts. And personally I don't think that number of hundred is very ambitious to achieve. Even if I just look at uh, uh, all the states of India, you know, each of these states has the potential to set up uh, such a vehicle. And the need for financing as we know at each state level runs into several billions. So even if we, if we had uh, uh, one such vehicle and in India, one state has already done something similar and there are several conversations, we are at least aware of four other conversations at the state level to create uh, capital pooling structures. Uh, but if that happens, we are already close to 30 of these instruments, uh, right. Uh, just within India. So this is really, really very interesting. Nikki, I must say, quick question for you and uh, while I note that the deployment is still in early stages, are there any lessons learned so far which sort of would apply from the perspective of uh, blended finance, from the perspective, perspective of friction reduction, uh, that you, that you pointed out because already uh, you are looking at pulling in government capital, uh, pulling in philanthropy, you mentioned gapp, there's of course Temasek, uh, the sovereign arm, um, and uh, private investors, MUFC and uh, others that you mentioned. Right. So are there any lessons that perhaps uh, have been learned and you could share uh, with our listeners?

Speaker B: Yeah, it's a good question. Certainly. Um, there's been some lessons learned from other blended finance structures that I think have some interesting insights. One that I think that the FASTP addresses very well is this localization and specificity around what is needed in country or on the ground. And that separates if you like, the desire for or motivation for um, finance to come, various forms of finance to come in, whether it's concessional capital from governments, philanthropy and so on, or whether. Or multilaterals um, versus the private sector money. So you're saying you're giving the opportunity, the investment opportunity, um, and then giving the around as you say a thematic, a particular um, motivation to um, have impact or financial returns. And then you've got experts on the ground who are delivering on the projects. So I think that what we'll be very interested to follow is if that hypothesis is proven. Um, it's a bit early. It's a bit early for us to um, assess that because as I said there's only a few deals that have been done so far. And the other thing that um, I think is when we do um, and we have done this uh, on a number of occasions, ah, at the center is a review of what the academic literature is telling us. And really the interesting thing, despite the fact that blended finance isn't that new, is there's a scarcity of academic research into the effectiveness of blended finance, particularly when it comes to the effectiveness of things like how policy is helping to support blended finance or structures and so on. So we've got a bit of work to do. Uh, it's definitely a call to action for us and we absolutely leaning into this. There's one of the research projects that we are working on at the moment is specifically around the energy sector and it looks at India, Indonesia and um, Han Vietnam specifically because the blending in this case is um, being proposed at an entity level, specifically strategically important state on enterprise entity level for the energy sector. So understanding that we must transition, I've talked about we must transition Asia M. Actually if we don't transition the energy sector, the rest of it is nice to have but it won't get us there, um, from a climate change perspective. So energy is really so critical to the transition and we, this particular research project uh, creates a model around how blending can be structured to include not just the financial aspects of risk and reward, but all of the social, economic and sociopolitical contexts that are needed at that state owned enterprise level. What are the politically mandated um, requirements or returns or um, uh, um uh, social commitments that are needed or economic commitments that are needed for that state owned enterprise, enterprise to um, meet its objectives and how that model is structured includes those considerations. And I think this is so critically important that we really think about finance and blended finance in particular in the context of how these assets or how is this financing going to operate within that context. It's not just about a green bond and what, what can happen with a green bond. We're talking here about financial structures that are uh, dealing with sensitive sectors or sensitive assets. So that we need to include those components in our considerations. And that is not something that's been done very well in the past and it's been the cause of one of the causes of the, of some of the blended finance, um, big platform failures such as the JETPs. So we have to consider those elements and that's uh, as I say an ongoing piece of uh, work that we are generating at the moment. A couple of those reports for Indonesia and India are on our website for anyone who wants to have a look at them and you'll see the outputs there from that research you mentioned about

Speaker A: the need for having blending at uh, the institutional level. And from our experience that seems to be the need of the hour because uh, the friction that blended finance involves. If we are sort of embedding that friction right from get go at each investment level, each transaction level, then we are, we are really delaying the process. I think it might be easier to sort of absorb all of that friction, put it up front at the institutional level and then make the job of transactions much easier. Nikki, you sort of spoke of the socio economic consequences of uh, transition finance, uh, such an important point. From your perspective, what are the markers of success on that front that you would be closely monitoring and maybe let's say a few years down the road, if you see development on those markers, you'd sort of feel that we are headed in the right direction.

Speaker B: Yeah, it's an interesting one I can't help thinking of. And this goes back a few years again to those uh, days when I was running the sustainable Development Investment Platform here. One of the things, one of the real successes I believe of that platform was a um, set of principles that we managed to have both private sector, multilateral and uh, philanthropic sector, um, to agree to which was. They were um, called the DUET principles. But they were just an urgent. The U was urgent energy transition principles and the eight principles were um, can be translated across other sectors. But this was specific for energy and the. I'll run through them very quickly because I think they're, I think they're important for us to think about as we consider just transition and socioeconomic consequences. There's no point in thinking about consequences. We actually have to think about how do we avoid the consequences. Um, so when we put these principles in place um, the things that we were thinking about were um, covered. Not just workers because that's of course one that everybody jumps to straight away. They are, it is an absolutely important part of the consideration. But it's not only that, but when we're thinking about workers it's not about an afterthought. They must be at the center of the solution. So integrating worker and community wellbeing into the energy transition planning is essential from upfront. So that was number one. Number two was mobilizing investment. So it's a no brainer if you like attracting public, private and philanthropic capital for clean energy projects. The third was supporting inclusive governance. So this is really interesting because if you look at jet, sorry the FAST P, you can see how that has, that the governance structures uh, are built around a principle similar to that where we're ensuring that there's decision, um making coming from various different stakeholders, stakeholder groups including uh, government including obviously representing people and uh, the financial sector alike. The fourth was addressing economic dimensions. So creating jobs. How do we flip this? Not from a loss of jobs perspective. How do we flip this to a. What are the opportunities and what is the opportunity not only for jobs but for broader economic stability and resilience? Because we know that uh, for example the relative cost of energy is now in favor of renewables than fossil fuels. So this is an economic stability question. Um, we also know that there's a whole energy um, security question that can, that can also fall into this um, point. The fifth is ensuring environmental integrity. So aligning with climate targets um, and avoiding any further lock in of high emissions assets. How do we ensure that we avoid any further lock in. And that doesn't necessarily say you have to wind back all of the, all of the fossil fuel generation capacity that's in the region right now. It says how do we avoid locking in further. And I think that's a very different conversation than what we've been hearing. Number six is uh, to promote social protection. Uh, and this is Safeguards around vulnerable groups, whether it's women, marginalized communities, indigenous communities, et cetera. Let's think about this as a core proponent of what we're thinking about when we talk about transition, uh, financing uh, the seventh uh, facilitating technology transfer. What we want to see and hopefully will see is this region will increasingly become leaders in developing technological solutions that work specifically for not just country but also region that we're in and ensuring that where we're seeing advances in technology from China, from Europe, from the US that these are um, transferred that knowledge that technology is transferred in country. The final is building global cooperation. So ah, if we look at FastP we see that there's a number of governments around the world contributing to this. There is a real um, sense of coalition of the willing. How do we bring those who really see the importance of global um, stability and uh, emissions reduction really underpinning future economic stability and well being. And I think that is what that principle is about. So when we're thinking about transition and we're thinking about the social consequences, I think this is actually a fantastic framework to still survives, you know, five, six years later as very relevant and could be transferred not just from an energy sector perspective but across various um, Hudgell bait sectors.

Speaker A: That is very heartening to hear Nikki. I've greatly enjoyed you walking us through how it all began. What's the current state of play, uh right at the cutting edge one could argue and what is it that we all need to aspire to achieve. And I'm pretty certain that our uh listeners true would have greatly enjoyed listening uh to you today as you sort of uh, walked us through what transition finance in Asia is all about. Thank you so much for being with us today Nikki and uh, I look forward to following your journey over the years and seeing uh, the progress that Fastbe makes.

Speaker B: Thanks so much for having me Nurav. I'm thrilled to be able to share and I hope to that that's been helpful but also um, would just urge any listeners to if you've got further queries do contact me or go onto our website, have a look at what some of the fantastic materials that we've got there. From research to learning, um, there's, there's certainly no end to the effort that's being made across Singapore and the region to support this transition. It's such an important journey.

Speaker A: Wonderful. Thank you listeners for joining us. Please let us know your thoughts and also the topics that you'd like to see covered in future episodes. You'll find details in the podcast description on how to get in touch with us. Meanwhile, we'll be back again next month with yet another stalwart of blended finance. Till then, here's me, Neerif and the team at the blended finance company signing off.