M&G’s impact investing unit responsAbility Investments, together with Germany’s development bank KfW and the Dutch development bank FMO, announced the launch of new climate investment strategy, aimed at actively contributing to CO2 reduction in Asia through targeted investments in low-emission technologies, and seeking to mobilize $500 million in capital.
According to responsAbility, the new strategy is being launched amidst an urgent need for investment in climate-friendly technologies and infrastructure in Asia, which is the largest emitter of greenhouse gases, but also has a projected strong increase in energy demand over the next several years.
The new climate investment strategy focuses on sectors with high CO2 savings potential in Asia, including renewable energy, battery energy storage, electric mobility, energy efficiency and circular economy. A key element of the strategy is the “Climate Impact Assessment and Monitoring Framework,” which ensures high transparency and targets direct CO2 savings of an estimated 10 million tons over the entire lifetime of the investments.
Ewout van der Molen, Head of Climate Finance at responsAbility, said:
“Our investment strategy appeals to institutional investors who are looking for both environmental impact and financial value from their investment. As a key step towards a low-carbon economy in Asia, responsAbility provides a significant opportunity for investors to make a tangible and measurable difference in the fight against climate change. The successful launch will enhance access to capital for Asian businesses that are keen to reduce their carbon footprint.”
According to responsibility, the climate investment strategy will use a blended finance structure that combines public funding with private capital. Blended finance brings together public capital and private funding through a common investment structure, enabling investors to invest in certain types of investments that have high perceived risk profiles, such as new climate mitigation-related technologies. The instruments are designed to attract large-scale institutional capital, allowing public financiers to use a small amount of their own resources as a first loss to mobilize large amount of private capital to reach large number of underlying climate projects needed.
Stephanie Lindemann-Kohrs, Director of Global Equity and Funds at KfW, said:
“KfW Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development, strives to increasingly channel private sector capital into the SDGs. Through its blended finance structure and KfW’s investment into the first loss tranche, the climate investment strategy is ideally positioned to mobilize private funding at scale for investments that foster the energy transition and contribute to greenhouse gas abatement.”