Davos 2020 - Climate Finance Partnership

• 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