top of page
Search

The $250m climate finance fund by BlackRock

  • Writer: Pooja H Panicker
    Pooja H Panicker
  • Jul 12, 2021
  • 2 min read

The new talk of the sustainable finance space is a story that broke out on July 08th. The biggest asset manager in the world announced that they raised over $250 million through its Climate Finance Partnership (CFP) to invest in selected countries. So let’s break down this story and go into the specifics.



Background

BlackRock pointed to the need for significant capital for climate infrastructure in certain regions to help reduce carbon emissions. BlackRock aims to raise at least $500m (£363m) for the same. These funds will be used to help unlock the energy transition in emerging markets through the Climate Finance Partnership. The fundraising was prompted by expectations of a doubling in energy demand in developing countries by 2050. To help facilitate the global transition towards a net-zero carbon economy, roughly $9 trillion is needed for emerging markets to derive two-thirds of their energy from renewable power by 2050.



Consortium and the ‘Catalytic Capital’

  • The partnership's consortium of ten investors included the governments of France, Germany, Japan, and other philanthropies and institutional investors.

  • The Governments of France, through the French Development Agency (AFD); Germany, through KfW Development Bank (KfW); and Japan, through Japan Bank for International Cooperation (JBIC); together with the Grantham Environmental Trust, the Quadrivium Foundation, and another private foundation committed a combined US$112.5 million in catalytic capital.

  • This catalytic capital is being used to mobilize a broader institutional capital raise. The $137.5m commitments from Dai-ichi Life Insurance, a leading European pension fund, and a key strategic banking partner, Standard Chartered Bank and MUFG Bank, makes them the first institutional investors in CFP.

Countries which are the focus areas

  • This initiative by BlackRock will help redirect financial flows toward sustainable development investments across the emerging world.

  • Asia, Central and Latin America and Africa are forecasted to receive significant investment in renewable power projects.

  • The major priority will be the African continent to France and Europe, as it is one of the most vulnerable regions to climate change and will be receiving at least 25% of the fund's capital.

Sectors


The fund’s focus on the climate infrastructure sector include:

  • Grid-connected and/or distributed renewable power generation

  • Energy efficiency in residential, commercial and/or industrial sectors

  • Transmission or energy storage solutions

  • Ultra-low emission or electrified transportation and mobility services.

Implementation Planning and Impact measurement

  • Considerations of social-environmental impact are integrated with the investment management process and impact will be evaluated along with specific UN Sustainable Development Goals.

  • France and Germany will participate in the fund’s advisory committee in order to help monitor the proper implementation of the investment policy.

Key Takeaways

  • The fundraising highlights how big asset managers are looking to tap into the transition towards cleaner energy through investments in physical assets at a time when many public market securities trade at valuations that are stretched by most measures.

  • Combining the strengths of the public and private sectors is necessary in order to align finance flows with low-carbon and climate-resilient development.

Comments

bottom of page