Emerging Markets Climate Action Fund Secures €450 Million, Paving the Way for Major Climate Investments in Developing Countries

Emerging Markets Climate Action Fund Secures €450 Million, Paving the Way for Major Climate Investments in Developing Countries

(IN BRIEF) The Emerging Markets Climate Action Fund (EMCAF), a partnership between the European Investment Bank (EIB) and Allianz Global Investors, has reached a closing total of €450 million with the final €20 million contribution from Germany’s Kreditanstalt für Wiederaufbau (KfW). The fund, which was launched in 2021, is designed to spur climate finance in emerging and developing markets and aims to mobilize up to €7.5 billion for projects focusing on renewable energy, energy efficiency, and other sustainable initiatives. It will invest in around 15 funds, which are expected to support 150 projects aimed at reducing greenhouse gas emissions and increasing climate resilience. Key investors include the EIB, Allianz, KfW, the Nordic Development Fund, and others. The fund is seen as a model for public-private partnerships addressing global climate finance challenges. EMCAF’s impact has already been seen in significant projects in Africa, Asia, and Latin America. The fund’s second impact report, covering 2023, shows strong early results, including a reduction of 800,000 metric tons of greenhouse gas emissions.

(PRESS RELEASE) LUXEMBOURG, 23-Jan-2025 — /EuropaWire/ — The European Investment Bank (EIB) and Allianz Global Investors (AllianzGI) have successfully concluded the final phase of their Emerging Markets Climate Action Fund (EMCAF), which now totals €450 million. The last contribution, amounting to €20 million, was made by Germany’s Kreditanstalt für Wiederaufbau (KfW), representing the German Federal Foreign Office.

Launched in 2021, EMCAF has grown into one of the largest blended finance equity funds in the world, aiming to mobilize up to €7.5 billion for climate-focused initiatives in emerging and developing nations. The majority of EMCAF’s current investments are directed toward renewable energy and energy efficiency, with additional support being provided for sustainable transportation, forestry, and water management projects.

The fund plans to invest in approximately 15 funds, which will in turn back around 150 projects dedicated to reducing greenhouse gas emissions, addressing the impacts of climate change, and promoting environmental sustainability. By investing in such projects, EMCAF aims to significantly contribute to mitigating climate change and boosting resilience in vulnerable regions.

EIB Vice-President Ambroise Fayolle highlighted the essential role of public-private partnerships in addressing the global climate finance gap. “EMCAF is a powerful example of how collaboration can drive forward climate action,” said Fayolle. “As the climate bank, the EIB will continue to innovate with financial instruments to assist developing countries in their transition toward a greener, climate-resilient future.”

The Group of Seven (G7) endorsed EMCAF in 2022, recognizing it as an innovative, market-driven approach to stimulating private investments for climate infrastructure and enhancing multilateral financial cooperation.

Tobias Pross, Chief Executive Officer of AllianzGI, emphasized the significance of the fund’s closing: “As we finalize this fund, we are not only investing in sustainable solutions but in the future of our planet. This milestone presents a unique opportunity to effect change where it’s needed most and reflects the dedication of our partners, our team, and our shared vision for a sustainable future.”

EMCAF was first unveiled at the United Nations Climate Change conference in Glasgow in November 2021. Since then, the fund has provided $100 million to support four key projects in renewable energy, sustainable mobility, and green infrastructure across Africa, Asia, and Latin America. These investments have been made in collaboration with funds such as the Helios CLEAR Fund, AIIF4 Climate Investment Fund, Southeast Asia Clean Energy Fund II, and Exagon Latin America Fund I.

KfW, representing Germany’s Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection, Ministry for Economic Affairs and Climate Action, and Federal Foreign Office, has been an integral investor in EMCAF. Stephanie Lindemann-Kohrs, Director of Global Equity and Funds at KfW, commented: “EMCAF has proven that equity investments in climate projects can create substantial impact. By participating in the fund’s final closure, we’ve successfully leveraged private capital to support projects that bring real benefits to communities and the environment.”

Other contributors to EMCAF include the EIB (on behalf of the Government of Luxembourg), the Nordic Development Fund, the UK Foreign, Commonwealth & Development Office, Allianz insurance companies, Folksam insurance companies, and EIB Global, the EIB’s development arm.

Satu Santala, Managing Director of the Nordic Development Fund, reflected on the collaboration: “We are proud to have been one of the first investors in EMCAF. The fund’s innovative structure has driven significant investment into projects focused on climate change mitigation and resilience. Through this partnership, we are delivering meaningful, long-lasting impact in the world’s most vulnerable regions.”

EMCAF recently released its second impact report, covering 2023. Despite being in the early stages of portfolio development, the fund has shown strong capital mobilization and initial climate impact, with an estimated reduction of around 800,000 metric tons of greenhouse gas emissions.

This report can be accessed on the EMCAF website.

Background information

EIB

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Allianz Global Investors:

Allianz Global Investors is a leading active asset manager with over 600 investment professionals in over 20 offices worldwide and managing EUR 560 billion in assets. We invest for the long term and seek to generate value for clients every step of the way. We do this by being active – in how we partner with clients and anticipate their changing needs, and build solutions based on capabilities across public and private markets. Our focus on protecting and enhancing our clients’ assets leads naturally to a commitment to sustainability to drive positive change. Our goal is to elevate the investment experience for clients, whatever their location or objectives.

Data as at 30 September 2024. Total assets under management are assets or securities portfolios, valued at current market value, for which Allianz Global Investors companies are responsible vis-á-vis clients for providing discretionary investment management decisions and portfolio management, either directly or via a sub-advisor (these include Allianz Global Investors assets which are now sub-advised by Voya IM since 25 July 2022). This excludes assets for which Allianz Global Investors companies are primarily responsible for administrative services only. Assets under management are managed on behalf of third parties as well as on behalf of the Allianz Group.

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SOURCE: European Investment Bank