Climate Finance Leadership Initiative details approach for unlocking climate finance in emerging markets

The Climate Finance Leadership Initiative (CFLI), founded and chaired by UN Special Envoy for Climate Ambition and Solutions Michael R. Bloomberg, released Unlocking Private Climate Finance in Emerging Markets: Private Sector Considerations for Policymakers in partnership with EDFI, and the Global Infrastructure Facility (GIF). The report outlines key factors for fostering the public-private collaboration necessary to close the climate finance gap in emerging markets. It also highlights policies governments in emerging markets can advance to attract investment to projects in key areas: clean energy, low-carbon mass transit, climate-friendly water, and waste systems, green buildings, and sustainable land use.

Around the world, emerging markets are working to build back from the Covid-19 pandemic in ways that accelerate investments in the low-carbon transition and help meet nationally determined contributions (NDCs) as outlined in the Paris Agreement. With energy transition finance topping $500 billion in 2020, this new report provides emerging markets with potential policy considerations to help attract private capital. These considerations reflect the experience of investors that have deployed billions in clean energy in emerging markets and the progress countries around the world have made in stimulating investment in support of sustainable growth.

“Investments that cut greenhouse gas emissions and fight climate change also spur economic growth,” said Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies, and Chair of the CFLI. “This report outlines steps emerging markets can take, with support from business and the international community, to attract more private capital for green projects, create new public-private partnerships, and ensure a strong recovery from the pandemic.”

Private Sector Considerations for Policymakers makes clear the factors that investors consider when evaluating investments in sustainable infrastructure projects in emerging markets. These factors – the Policy Considerations – offer a menu of potential policy changes available to all countries, regardless of their current investment environment, or position on the path to a low-carbon, resilient economy. The report also offers examples of how different enabling environment mechanisms have succeeded in accelerating the transition across a diverse range of economies.

“Policy considerations like those highlighted in this important report can play a major role in stimulating climate finance in energy and other key sectors in the low-carbon transition. They are the product of the partnership between CFLI, GIF, and EDFI, as well as the many institutions that contributed to the consultation, and offer an important input in our dialogue with policymakers. Collaboration between private investors and publicly-backed institutions – like the European DFIs – can support reforms in emerging and frontier markets. We believe that this model has immense potential to mobilize climate finance where it’s needed most.” – Bruno Wenn, Chairman, Association of European Development Finance Institutions.

Private capital has an important role to play in continuing to support the creation of robust and lasting low-carbon, climate-resilient markets around the world. Going forward, the CFLI will seek to design, launch, and coordinate a series of “country pilots” in collaboration with local governments, and leading private international and domestic financial institutions. The first pilots are planned for India and Indonesia, with the goal of replicating this model in other countries in the years ahead. This work will drive forward capital mobilization to accelerate the energy transition and will build upon the policy considerations released today to drive policy changes in pilot countries.

The Policy Considerations were informed by a two-month public consultative process and direct outreach to over 6,000 global experts and stakeholders representing business, government, and civil society perspectives.