Unexplored sources of funding for climate adaptation in Bangladesh

Addressing Climate Change Challenges in Bangladesh: Leveraging Private Sector, Zakat, and CSR Funds for Climate Adaptation Finance

Bangladesh Faces Climate Change Challenges: Opportunities for Private Sector, Zakat, and CSR Funds

On May 27, 2024, Cyclone Remal wreaked havoc on coastal Bangladesh, leaving a trail of destruction in its wake. The cyclone affected over 4.59 million people, damaged 150,000 households, and caused crop losses worth millions of dollars. This disaster is just one example of the climate change-induced challenges that Bangladesh faces.

According to ReliefWeb, the financial support needed for recovery from Cyclone Remal is estimated to be around $1.64 billion. On average, tropical cyclones cost Bangladesh about $1 billion annually, with the country losing 1.3% of its GDP to climate change each year. Without effective action, these losses could escalate to nine percent of GDP by 2050.

To address these challenges, Bangladesh needs to invest $8.5 billion annually in climate change adaptation efforts. The government has taken proactive measures, such as the Bangladesh Climate Change Strategy and Action Plan (BCCSAP) and the Climate Change Trust Fund (CCTF), to mobilize resources for priority areas like infrastructure, agriculture, water resources, and disaster management. However, the annual funding falls short of the estimated requirement.

In light of this financial gap, Bangladesh can explore alternative sources of finance to bolster its climate adaptation efforts. The private sector, which contributes significantly to the country’s GDP, holds great potential in bridging the climate finance divide. Businesses, financial institutions, and investors can play a crucial role in funding climate resilience projects.

Zakat, a pillar of Islam that involves giving a portion of one’s wealth to those in need, could also be a valuable source of climate finance in a predominantly Muslim country like Bangladesh. Properly managed Zakat funds could significantly benefit the economy and society, covering a substantial portion of the national budget and revenue.

Corporate Social Responsibility (CSR) funds represent another untapped resource for addressing climate change in Bangladesh. The banking sector, in particular, has been active in CSR activities, with a focus on healthcare, education, and environmental issues. However, more emphasis on climate change-related initiatives is needed to meet the targets set by regulatory bodies.

While the potential for private sector, Zakat, and CSR funds involvement in climate finance is vast, several challenges need to be addressed. These include regulatory barriers, capacity and awareness gaps, and risk perception issues. By overcoming these challenges and leveraging the opportunities presented by climate finance, Bangladesh can strengthen its resilience to climate change and ensure sustainable development for future generations.

Md. Abu Nashir Khan, an expert on Climate Adaptation Finance, emphasizes the importance of tapping into these alternative sources of finance to combat climate change effectively. With the right strategies in place, Bangladesh can pave the way for a more resilient and sustainable future.

For more information, contact Md. Abu Nashir Khan at khannashir.pksf@gmail.com.