Investment giant BlackRock announced today that it has raised $673 million for the Climate Finance Partnership, targeting investments in climate infrastructure in developing markets, in order to help accelerate the global transition to a net zero economy.
Established in 2018 at the One Planet Summit in New York, the Climate Finance Partnership (CFP) is a public-private finance partnership between BlackRock and the governments of France, Germany, and Japan, as well as a number of leading impact organizations, that seeks to accelerate the flow of capital into climate-related investments in emerging markets.
According to BlackRock, the fundraise saw participation from a global consortium of 22 investors including governments, philanthropies, and institutional investors, and significantly surpassed the initial $500 million target, indicating strong investor demand for exposure to climate infrastructure in emerging markets.
Edwin Conway, Global Head of BlackRock Alternative Investors, said:
“The success of this fundraise, with participation from some of the world’s leading governments and institutional investors, demonstrates the pivotal role that public finance can play in helping raise private capital for investing in emerging economies, where climate infrastructure investment is needed most.”
CFP’s investments will focus on key areas of the climate infrastructure sector, including grid connected and distributed renewable power generation; energy efficiency in residential, commercial and industrial sectors; transmission or energy storage solutions, and; ultra-low emission or electrified transportation and mobility services. The fund will target investments in select non-OECD countries in Asia, Latin America, and Africa, which are likely to see significant growth in electricity demand, urbanization and economic development over the coming decades.
Philipp Hildebrand, Vice Chairman of BlackRock, said:
“CFP reflects BlackRock’s commitment to embed sustainability in all parts of the business from index to alpha seeking strategies and all the way to private markets. CFP addresses one of the key challenges of investing in the net-zero transition in emerging markets. This innovative structure, in which each dollar of catalytic funding from public development banks and philanthropy has attracted four dollars of institutional capital, shows the power of public-private innovation in driving clean energy in emerging Asia, Latin America and Africa.”
Today’s announcement follows the recent release of a report from the BlackRock Investment Institute (BII), highlighting the need to significantly ramp the mobilization of capital to emerging markets to finance the transition to net zero emissions, in order to alleviate one of the key barriers to reaching the goals of the global drive to limit the impact of climate change. According to BII, emerging markets, which now account for 34% of global carbon emissions (excluding China), will require at least $1 trillion per year in order to achieve net zero emissions by 2050. This represents 6 times current investment levels.
BlackRock Chairman and Chief Executive Officer Larry Fink also recently authored an opinion piece in the New York Times, urging developed market governments to ramp up public support for public sector financing of emerging market transition investments, in order to address the global climate crisis.
Commenting today on the successful CFP fundraise, Fink said:
“Achieving a just transition to a net zero economy by 2050 requires long-term planning and close coordination between the public and private sectors. This partnership is proof that governments, philanthropic organizations, and institutional investors can come together to mobilize capital at scale into emerging markets, which are most exposed to the impact of climate change. My hope is that leaders across all segments of society will embrace bold, innovative solutions to help meet the climate financing gap.”