BlackRock’s Climate Finance Partnership raises US$250M from 10 investors at first close

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BlackRock secured more than US$250 million in commitments from a consortium of 10 global institutional investors, governments and philanthropies for the Climate Finance Partnership (CFP), which will focus on investing in climate infrastructure in emerging markets to accelerate the transition to low-carbon economies, the U.S.-based investment company said Thursday.

The fund was targeting at least US$500 million, and “is delighted to have secured half of its target at first close,” BlackRock said in a press release.

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

That capital is aimed at mobilizing a broader institutional capital raise, starting with commitments from Dai-ichi Life Insurance, a leading European pension fund, and a key strategic banking partner, Standard Chartered Bank, as well as MUFG Bank, which will be the first institutional investors in CFP, the statement said.

Around US$9 trillion in investments will be needed for emerging markets to obtain two-thirds of their energy from renewable power by 2025, BlackRock said, citing the BNEF New Energy Outlook 2020. That transition will require more institutional capital flows into less developed regions, which face challenges from population growth, rising energy demand and climate disruption, the statement said.

CFP will target investments in selected countries in Asia, Latin America and Africa, with a focus on grid-connected and/or distributed renewable power generation; energy efficiency; transmission or energy storage services; and ultra-low emission or electrified transportation and mobility services.

“The unique challenges posed by climate change call for stronger joint action, public and private. 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 toward climate,” Remy Rioux, CEO of AFD, said in the statement.

“This ambitious partnership, forged with Germany, Japan and leading global foundations, will help redirect financial flows toward sustainable development investments across the emerging world, with a priority to Africa as a key continent to France and Europe and one of the most vulnerable regions to climate change despite contributing the least to global warming,” Rioux said.

Seiji Inagaki, president and representative director of Dai-ichi Life Insurance, added the insurer is aiming for zero-carbon by 2050.

“We actively pursue climate-related opportunities by investing in and financing projects such as renewable power to create positive impacts. We believe CFP will greatly contribute to solving various issues in emerging countries such as decarbonization, and we are pleased to invest in this fund,” Inagaki said.