- Climate Finance Partnership commits to investing in sustainable infrastructure in South East Asia, Latin America and Africa, reaching agreement on core terms and structure of the vehicle
- Minimum of 25% of capital to be invested in Africa
- CFP’s unique partnership blends philanthropic, government, and private capital to combat climate risk
Davos Switzerland – Parties to the Climate Finance Partnership (CFP) have taken another step
forward in their partnership to accelerate the flow of capital into climate-related investments in
emerging markets, reaching agreement on the core terms and structure of their flagship blended
finance investment vehicle. The parties to the CFP are France, Germany, the Hewlett and
Grantham foundations, and BlackRock.
Featuring a unique blend of philanthropic, government, and private sector capital, the CFP
showcases the power and catalytic role of philanthropic and public capital to mobilize top-tier
institutional capital investment into climate-related sectors in emerging markets, at scale. And it
is consistent with the shared belief of all CFP parties that aggressive action is necessary in order
to limit climate change to well below 2°C, keeping a view to a 1.5°C limit, in a manner that
harnesses the economic opportunities embedded in the transition to a global low-carbon
economy.
CFP investments will be targeted toward select countries in South East Asia, Latin America, and
Africa. Notably, investments in Africa will account for at least 25% of the total capital invested.
The vehicle’s focus on what is generally referred to as climate infrastructure sector will include;
(i) grid connected and/or distributed generation renewable energy power; (ii) energy efficiency in
residential, commercial and/or industrial sectors; (iii) energy storage solutions; and (iv) ultra-low
emission or electrified transportation and mobility services.
Rémy Rioux, CEO of the French Development Agency (“AFD”), said: “The unique
challenges posed by climate change call for stronger joint action. It is therefore with great
pride that the AFD Group, through its private-sector subsidiary PROPARCO, is
partnering with BlackRock, the largest asset manager worldwide, to accelerate the
mobilization of private-sector financing towards climate. This ambitious partnership,
forged with Germany and leading global foundations, will help redirect financial flows
towards sustainable development investments across the emerging world, and will
include a priority focus on Africa as a key continent to France and one of the most
vulnerable regions to climate change despite contributing the least to global warming.”
The vehicle will feature a first-loss tranche of at least $100 million in catalytic capital, anchored
by government and foundation partners, that BlackRock will use to mobilize a goal of at least
$400 million in institutional capital commitments. This would result in a minimum size of $500
million at first close and CFP parties share a collective goal of further scaling the vehicle going
forward.
State Secretary Jochen Flasbarth from the German Ministry for the Environment,
Nature Conservation and Nuclear Safety, said: “In 2019, Germany approved a national
climate law and an ambitious mid-term climate package to reduce GHG emissions at
home. As an EU member state we are committed to achieve net zero carbon by 2050. We
are fully aware that a worldwide rise in ambition is required to respond to the climate
crisis. Developing countries will need our support to increase their climate action. For
that, both public and private funds will be essential. Therefore, we look forward to work
together with France, philanthropies and BlackRock to mobilize private capital towards
investing in the global transformation of our energy systems. By this we are sending a
strong signal of the importance of shifting financial flows towards a low carbon
development.”
The Governments of France, through the French Development Agency (AFD), and Germany,
with the KfW acting as a trustee, intend to contribute $30 million each to the partnership. The
William and Flora Hewlett Foundation and the Jeremy and Hannelore Grantham Environmental
Trust have committed $10 million and $7.5 respectively. CFP parties have committed to help
raise the additional capital required to reach the $100 million in catalytic capital.
Larry Kramer, President of the Hewlett Foundation, said: “The Climate Finance
Partnership shows that charitable organizations working in partnership with public and
private-sector entities can mobilize capital to solve climate change and reduce human
suffering. Populations in Southeast Asia, Africa, and Latin America will benefit from this
first-of-its-kind partnership in bringing sovereign, philanthropic, and private capital
together to target climate change. We hope it will serve as a model for scaling climate
friendly projects all around the world.”
The CFP demonstrates an unprecedented partnership to bring sovereign, foundation and private
capital together to target 100 percent climate friendly investments at such scale.
Jeremy Grantham, Trustee of the Jeremy and Hannelore Grantham Environmental
Trust, said: “Emerging market equities are substantially cheaper than those in developed
economies and they offer the best choice for growth in an otherwise slow-growth world.
As clean energy’s cost advantage continues to spread around the world, clean energy in
emerging markets should see substantial growth from its current low base. The Jeremy
and Hannelore Grantham Environmental Trust is pleased to support this effort to help
institutional investors begin building an allocation to this promising sector.”
The CFP is BlackRock’s first vehicle focused on climate infrastructure investments in emerging
markets. BlackRock, the world’s largest asset manager, has extensive experience in renewable
power and sustainable investing and is committed to factoring climate- and other environmentalrelated
risks into their investment and risk management processes, including developing new
approaches to measuring physical climate risks, and stress testing portfolios for future carbon
price scenarios. The CFP is part of BlackRock’s ongoing efforts to provide investors with more
and more ways to invest their capital in strategies that accelerate the global low-carbon
transition.
Brian Deese, Global Head of Sustainable Investing at BlackRock, said: “In line with
BlackRock’s recently announced acceleration of a number of sustainable investing
initiatives, we are tremendously excited to launch the Climate Finance Partnership
together with government and foundation partners. We believe creative collaboration is
essential to mobilizing investment into climate infrastructure in emerging markets at
scale, providing our clients with further opportunity to invest in the global low-carbon
transition.”
CFP partners have been engaged in an intensive and collaborative design process since the CFP
was announced at the One Planet Summit in September 2018 under the leadership of French
President Emmanuel Macron. Partners are now committed to finalizing due diligence and
launching this fund with a goal of Q3, 2020.
John E. Morton, Managing Coordinator of the Climate Finance Partnership and
Senior Advisor to Aligned Climate Capital said: “The transition to a global low carbon
economy presents tremendous economic opportunities for those investors willing to lead.
Parties to the CFP should be proud of their collaborative progress over the last year and
of the fact that this partnership provides a replicable template for unlocking private
capital toward climate-related investments in fast growing markets around the world.”
About AFD: The Agence française de développement (AFD) Group funds, supports and
accelerates the transition to a fairer and more sustainable world. Focusing on climate,
biodiversity, peace, education, urban development, health and governance, our teams carry out
more than 4,000 projects in France’s overseas departments and territories and another 115
countries. In this way, we contribute to the commitment of France and French people to support
the Sustainable Development Goals (SDGs). www.afd.fr/en
For the AFD please contact: Magali Mévellec – mevellecm@afd.fr – +33 1 53 44 40 31
For the Federal Ministry of Environment, Nature Conservation and Nuclear Safety of Germany
(BMU) please contact: Stephan Gabriel Haufe, Spokesperson; + 4930183052010;
presse@bmu.bund.de
