May 27, 2024, 3:42 pm

Staff Correspondent

2022-11-06 18:47:20 BdST

BII signs $50mn climate loan agreement with Pubali Bank

British International Investment (BII), the UK’s development finance institution and impact investor has announced a $50 million loan to Pubali Bank Limited to help increase climate-related lending and boost climate mitigation projects in Bangladesh.

The directed lending climate facility will help increase funding to corporations for renewable energy and green transition projects and support Pubali’s climate finance practice, reports a press release issued on Saturday.

Bangladesh has made significant economic progress over the last decade however, the country remains vulnerable to the adverse effect of climate change and has a rising demand for sustainable energy, it said.

This green loan from BII will primarily be used for projects in the renewable energy, green buildings, textile and manufacturing sectors.

The facility will enable Pubali Bank to extend climate finance loans to its portfolio of corporate clients in such sectors, enabling them to purchase key equipment required in climate projects and implement climate-related technological solutions in Bangladesh.

The BII will also provide a technical assistance package which will further strengthen the bank’s rapidly growing sustainable finance franchise.

The package will support Pubali Bank in building technical expertise and best practice, strengthen data collection on climate financing and climate risk and further increase the bank’s ability to originate green projects and structure climate investments in line with international standards.

This facility marks BII’s first climate finance investment in Bangladesh and demonstrates the DFI’s commitment to and supporting its financial institution partners on their Paris alignment journey.

BII’s climate change strategy outlines its pledge to ensure that 30 percent of its total commitment will be in climate finance, which will be deployed to accelerate climate action in markets that are at higher risk of the effect of climate change.

The BII’s capital will also help contribute to Bangladesh’s 2030 carbon emission reduction target set at COP26.

British High Commissioner to Bangladesh, Robert Chatterton Dickson, said, “I am delighted that British International Investment (BII) is backing Bangladesh’s Pubali Bank in developing its green financing capacity and expanding its climate portfolio. This new UK capital, focused on climate action, will direct much-needed climate finance toward Bangladeshi corporations which contribute to reducing greenhouse gas emissions. The UK, including BII, is committed to working with Bangladesh in expanding a trade and investment relationship that will benefit sustainable growth in both our countries.”

Mohammad Ali, MD of Pubali Bank said, “Climate change has resulted in an economic shock in Bangladesh where we’re seeing reduced agricultural yields, damaged infrastructure, and increased commodity cost. Through our existing portfolio of climate-related projects and pipelines, Pubali Bank understands the complex impact of climate change in the country. Our triple-bottom-line management includes a three-pillared framework that focuses on social, environmental and economic growth. Our partnership with BII will enable us to grow our climate finance offering and support a wider range of clients who are preserving the environment and strengthening the economy. Pubali is fully committed to playing a pivotal role in creating greater business value and providing finance which benefits the society and the environment in Bangladesh.”

M Rehan Rashid, country director, Bangladesh, at BII, said, “The landmark climate investment to Pubali Bank marks BII’s commitment to playing a role in supporting economic and environmental transformation in Bangladesh. We are thrilled to deploy our directed lending facility to help increase funding for climate mitigation projects and businesses that help reduce GHG emissions in Bangladesh. By supporting Pubali in becoming a leading participant in climate financing, BII’s capital will facilitate greater resilience and sustainability across communities, businesses and industries in Bangladesh.”

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