Climate Finance Leadership Initiative details approach for unlocking climate finance in emerging markets
EDFI together with the Climate Finance Leadership Initiative (CFLI) and the Global Infrastructure Facility (GIF) launch new report highlighting opportunity for policymakers to accelerate private climate finance ahead of COP26
The Climate Finance Leadership Initiative (CFLI), founded and chaired by UN Special Envoy for Climate Ambition and Solutions Michael R. Bloomberg, today released Unlocking Private Climate Finance in Emerging Markets: Private Sector Considerations for Policymakers in partnership with EDFI, and the Global Infrastructure Facility (GIF). The report outlines key factors for fostering the public-private collaboration necessary to close the climate finance gap in emerging markets. It also highlights policies governments in emerging markets can advance to attract investment to projects in key areas: clean energy, low-carbon mass transit, climate-friendly water and waste systems, green buildings, and sustainable land use.
Around the world, emerging markets are working to build back from the Covid-19 pandemic in ways that accelerate investments in the low-carbon transition and help meet nationally determined contributions (NDCs) as outlined in the Paris Agreement. With energy transition finance topping $500 billion in 2020, this new report provides emerging markets with potential policy considerations to help attract private capital. These considerations reflect the experience of investors that have deployed billions in clean energy in emerging markets and the progress countries around the world have made in stimulating investment in support of sustainable growth.
“Investments that cut greenhouse gas emissions and fight climate change also spur economic growth,” said Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies, and Chair of the CFLI. “This report outlines steps emerging markets can take, with support from business and the international community, to attract more private capital for green projects, create new public-private partnerships, and ensure a strong recovery from the pandemic.”
Private Sector Considerations for Policymakers makes clear the factors that investors consider when evaluating investments in sustainable infrastructure projects in emerging markets. These factors – the Policy Considerations – offer a menu of potential policy changes available to all countries, regardless of their current investment environment, or position on the path to a low-carbon, resilient economy. The report also offers examples of how different enabling environment mechanisms have succeeded in accelerating the transition across a diverse range of economies.
Private capital has an important role to play in continuing to support the creation of robust and lasting low-carbon, climate resilient markets around the world. Going forward, the CFLI will seek to design, launch, and coordinate a series of “country pilots” in collaboration with local governments, and leading private international and domestic financial institutions. The first pilots are planned for India and Indonesia, with the goal of replicating this model in other countries in the years ahead. This work will drive forward capital mobilization to accelerate the energy transition and will build upon the policy considerations released today to drive policy changes in pilot countries.
The Policy Considerations were informed by a two-month public consultative process and direct outreach to over 6,000 global experts and stakeholders representing business, government, and civil society perspectives.
“As an active asset manager, we are firmly committed to creating a more sustainable future. I am proud that AllianzGI has helped to shape this new approach for unlocking climate finance in emerging markets, underlining our commitment to mobilizing private capital in order to help finance the transition towards a more sustainable tomorrow. We actively structure financial solutions which combine public and private capital with the aim of combatting real world issues.” – Tobias C. Pross, CEO of Allianz Global Investors
“AXA supports the CFLI’s objective to enable the financing of green and low carbon infrastructure projects in emerging economies as a formidable opportunity for private investors to improve the livelihood of local populations. The new CFLI report outlines policy options that can be replicated at scale to better attract financial flows supporting the energy transition. Thanks to the CFLI for setting up this call for action proposing game-changing recommendations; they will help to close the finance gap and boost life-changing infrastructure projects. Low carbon infrastructures can no longer remain a developed market trend if we want to achieve the goals of the Paris Agreement.” – Thomas Buberl, CEO of AXA Group
“Development in emerging markets funded by private capital can be fully sustainable. To achieve this, it is necessary to adopt financing best practices that are now available and engage the private sector with clarity of vision, full transparency of aims and a partnership attitude.” – Francesco Starace, CEO and General Manager of Enel
“Moving to a low-carbon economy will be that much harder until private capital finances far more sustainable infrastructure in emerging markets. This report offers many policy options the public sector can use to attract the private capital that these countries need.” – David M. Solomon, Chairman and Chief Executive Officer of Goldman Sachs
“We need private capital to deliver the scale of finance necessary to meet the goals of the Paris Agreement. That’s particularly true in fast-growing emerging markets, where infrastructure investment today will set the course for emissions over the next several decades. The policies in this report offer a strong menu of options that emerging market governments can use to boost private climate investment in their economies. It is an important contribution in our collective journey towards a sustainable future.” – Noel Quinn, Group Chief Executive, HSBC
“We have seen incredible progress in deploying transformational climate solutions at scale. But that progress has been uneven. Our challenge now is to work together more effectively to radically increase the deployment of private capital to help emerging market countries reach their ever more ambitious NDCs.” – Shemara Wikramanayake, Chief Executive Officer of Macquarie Group
“Policy considerations like those highlighted in this important report can play a major role in stimulating climate finance in energy and other key sectors in the low-carbon transition. They are the product of the partnership between CFLI, GIF and EDFI, as well as the many institutions that contributed to the consultation, and offer an important input in our dialogue with policymakers. Collaboration between private investors and publicly-backed institutions – like the European DFIs – can support reforms in emerging and frontier markets. We believe that this model has immense potential to mobilize climate finance where it’s needed most.” – Bruno Wenn, Chairman, Association of European Development Finance Institutions
“Unlocking greater sources of private capital towards low-carbon, climate-resilient infrastructure in emerging markets aligned with the commitments of the Paris Agreement relies on a robust enabling environment and a pipeline of bankable and sustainable infrastructure investment opportunities that put green recovery front and center. The value of this latest report is that it provides excellent insights from the lens of private finance on how to raise the ambition of enabling environment priorities and identify policies that can truly catalyze private climate finance at scale. The GIF is proud to be partnering with the CFLI and EDFI on this important work.” – Jason Zhengrong Lu, Head, Global Infrastructure Facility
“Private capital has a vital role to play in creating the zero-carbon future the world so badly needs if it is to avoid devastating impacts of climate change. Today’s report highlights the requirement for private and public investment organizations to collaborate to close the funding gap that is hindering efforts to deliver sustainable infrastructure in less developed countries and ensure their economies are resilient and able to adapt to the impacts of the climate emergency.” – Nick O’Donohoe, Chief Executive Officer, CDC Group
READ THE REPORT
About the CFLI
The Climate Finance Leadership Initiative (CFLI) convenes leading companies to mobilize and scale private capital for climate solutions. Michael R. Bloomberg formed the CFLI at the request of the United Nations Secretary-General António Guterres. Members of the CFLI include Allianz Global Investors, AXA, Bloomberg, Enel, Goldman Sachs, Japan’s Government Pension Investment Fund (GPIF), HSBC, and Macquarie. For more information, visit Bloomberg.com/CFLI.
About the Association of European Development Finance Institutions
The Association of European Development Finance Institutions (EDFI) promotes the work of 15 bilateral development finance institutions that invest in the private sector in emerging and frontier markets to create jobs, boost growth, and fight poverty and climate change. Since EDFI was set up in 1992, its members have invested in app. 15,000 projects, and they now manage a combined investment portfolio of US$50 billion across financial services, clean energy, industry and many other sectors in more than 100 countries. A significant share of this portfolio is climate finance. An important part of EDFI’s work is to promote financial cooperation between its members and with the EU institutions, and for this purpose EDFI has established the EDFI Management Company and other joint financing facilities. For more information, visit www.edfi.eu.
About the Global Infrastructure Facility
The Global Infrastructure Facility (GIF) is a G20 initiative with the goal of increasing private investment in sustainable infrastructure in emerging markets and developing economies. Coupling funding with hands-on technical expertise, the GIF supports end-to-end, comprehensive advisory services to client governments and multilateral development bank partners to build pipelines of bankable and sustainable infrastructure investments that are attractive to private capital. A suite of blended finance solutions to de-risk private investment is under design. As a global collaboration platform, the GIF enables collective action among a wide range of partners – including donors, development finance institutions, developing country governments, together with private sector investors and financiers – to leverage both resources and knowledge to find solutions to sustainable infrastructure financing challenges. The GIF is currently supported by Australia, Canada, China, Denmark, Germany, Japan, Singapore, and the World Bank. For more information, visit www.globalinfrafacility.org.