September 25, 2019
EDFI partners with the Climate Finance Leadership Initiative to drive climate finance in emerging markets
The Climate Finance Leadership Initiative (CFLI) and the Association of European Development Finance Institutions (EDFI) today announced a partnership that will advance the public-private collaboration vital to closing the climate finance gap in emerging markets. EDFI and the CFLI will engage their members with the aim of building project pipelines, managing risks, and broadening opportunities for private-sector financing and investment in emerging and frontier markets.
The CFLI’s members include seven of the largest institutions in the world from across the investment chain, including project developers, banks, insurers, asset managers, and asset owners. EDFI represents 15 bilateral development finance institutions from across Europe that jointly manage a portfolio of more than $50 billion of impact-oriented investments in emerging and frontier markets.
“In tackling the critical issue of closing the climate finance gap in emerging markets, one thing is clear: no entity can act alone. It is through public-private partnerships like this one that we will be able to move the needle on the goals outlined in the Paris Agreement,” said Mary Schapiro, Special Advisor to the Founder and Chairman and Vice Chair for Global Public Policy at Bloomberg LP. “EDFI members have significant experience in successfully investing in emerging markets, and we look forward to combining their insights with the CFLI’s private-sector scale and expertise.”
“Climate finance for emerging and frontier markets is one of our generation’s top commercial and investment opportunities. It is also necessary to mobilize more private institutions to seize this opportunity at scale. That’s the only way fast-growing economies will be able to make a sustainable transition to a low-carbon future,” said Søren Peter Andreasen, CEO of EDFI. “CFLI financial institutions can play a critical role in making this happen. EDFI looks forward to working with CFLI on joint investment opportunities, risk-sharing tools, policy dialogue and exchange of experience. This new partnership also sends a strong signal to other private investors about the significant opportunity before us.”
“Public-private partnership is the key to unlocking a low-carbon future. The alliance between CFLI and EDFI represents not only an important step forward in mobilizing climate finance, but also highlights the importance of collaboration in addressing climate change,” said Rachel Kyte, Chief Executive Officer of Sustainable Energy for All, and Special Representative of the United Nations Secretary-General for Sustainable Energy for All.
This partnership is a response to the solutions outlined in Financing the Low-Carbon Future, the recently-released report from the CFLI, which offers a private-sector perspective on the actions needed to accelerate climate finance.
As part of the partnership, the CFLI and EDFI will work with their members on efforts to:
– Originate, structure, and co-finance low-carbon opportunities on a deal-by-deal basis or through pooled investment vehicles;
– Explore the development of structured finance and portfolio investment solutions to meet the needs of institutional investors and increase the availability of efficient financing for developers;
– Identify and deploy incremental risk mitigation tools, such as first loss cover available from concessional capital providers; and
– Support policy engagement efforts on enabling environments to attract private sector capital and use joint projects wherever possible to help highlight sound policy standards.
Underpinning this partnership is a new set of CFLI-developed Investment Readiness Guidelines that draw on the experience of lenders and investors in emerging markets. The Guidelines identify fundamental factors that many investors consider in low-carbon investment and finance in emerging markets, especially when focusing on investments in renewable energy generation and transmission. The Guidelines will be used by the CFLI and EDFI to foster dialogue and engage outside stakeholders, such as governments and concessional capital providers, on targeted issues that advance sound policy standards.
Using the Investment Readiness Guidelines, the CFLI also plans to convene policy leaders across geographies with representatives from major financial institutions to drive public sector engagement on the solutions outlined in the CFLI report. These meetings will be held throughout 2020 with the goal of facilitating collaboration between policymakers and public and private sector financial institutions. The purpose of these meetings is to facilitate the scaling of low-carbon investment opportunities to meet the goals of the Paris Agreement. Additionally, through 2025, CFLI financial institutions collectively are prepared to facilitate the deployment of more than $20 billion in emerging market climate financing and investment to help realize opportunity in the low-carbon transition.
To learn more about this joint initiative from the CFLI and the EDFI, visit Bloomberg.com/CFLI.
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.