BlackRock has achieved a US$673 million final fundraise for the Climate Finance Partnership, a flagship public-private finance vehicle focused on investing in climate infrastructure across emerging markets in order to help accelerate the global transition to a net zero economy. A global consortium of 22 investors including governments, philanthropies, and institutional investors committed to the fundraise, which was oversubscribed and exceeded its target of US$500 million.
The BlackRock Investment Institute estimates that the world needs to invest US$1 trillion annually into low-carbon projects in developing countries in order to achieve a just transition to a net zero global economy.1 This is because emerging markets account for an increasingly large share of global emissions due to population growth and economic development. However, in 2020 only a total of US$150 billion was invested in decarbonization in emerging markets, excluding China – a sixth of what is needed. Through the Climate Finance Partnership, the public and private sectors have come together to mobilize significant investment into climate infrastructure in emerging markets that seeks to deliver positive environmental and social impact and allow for attractive risk-adjusted returns.
Climate Finance Partnership employs a unique blended finance structure with a total of US$130 million in catalytic capital raised from the Governments of France, through the French Development Agency (AFD); Germany, through KfW Development Bank (KfW); and Japan, through Japan Bank for International Cooperation (JBIC); together with the Grantham Environmental Trust, the Quadrivium Foundation, and another private foundation; and multi-energy company TotalEnergies. This catalytic capital seeks to insulate investment risks for institutional investors in the fund and was used to mobilize a broader institutional fundraise totaling US$523 million from investors including AXIS Capital, AP2, AXA, Dai-ichi Life Insurance, E.ON, Finnish Church Pension Fund, Mitsubishi UFJ Morgan Stanley, Mizuho Bank, MUFG Bank, the Richter Family Office, Standard Chartered Bank, Sumitomo Life, and a leading European pension fund. BlackRock committed US$20 million to CFP.
“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.”Larry Fink, Chairman and CEO of BlackRock
“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.”Philipp Hildebrand, Vice Chairman of BlackRock
“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.”Edwin Conway, Global Head of BlackRock Alternative Investors
Climate Finance Partnership will target investments in select non-OECD countries in Asia, Latin America, and Africa. These regions present significant investment opportunities for global investors in climate infrastructure over the coming decades due to significant growth in electricity demand, increasing urbanization and rapid economic development. Renewable energy in non-OECD markets are projected to make up 49% of global energy capacity by 2050, compared to 25% for the OECD renewable market.2
The fund’s focus on the climate infrastructure sector include:
(i) grid connected and/or distributed renewable power generation;
(ii) energy efficiency in residential, commercial and/or industrial sectors;
(iii) transmission or energy storage solutions; and
(iv) ultra-low emission or electrified transportation and mobility services.
The Climate Finance Partnership fund is managed by BlackRock Real Assets’ Global Renewable Power team, led by David Giordano, Global Head of Renewable Power. BlackRock Real Assets manages approximately US$12 billion of invested and committed capital in renewable power and over US$40 billion in client assets across all infrastructure strategies spanning equity, debt and listed strategies as of June 30, 2021. The Global Renewable Power platform has invested directly in over 300 projects globally, including onshore wind, offshore wind and solar photovoltaic projects.
Source: Climate Finance Partnership
1 BlackRock Investment Institute, October 2021.
2 BlackRock using data from Bloomberg NEF, New Energy Outlook 2020: Cumulative installed capacity. Data as of February 2021.