Driving Finance in Emerging Markets

At Bloomberg’s Global Business Forum in September last year, a new partnership was announced between the Climate Finance Leadership Initiative (CFLI) and the Association of European Development Finance Institutions (EDFI). The goal is to advance the public-private collaboration vital to closing the climate finance gap in emerging markets. “EDFI and the CFLI will engage their members with the aim of building project pipelines, managing risks, and broadening opportunities for private-sector financing and investment in emerging and frontier markets,” the business, financial information and news company Bloomberg gave account.

The members of the Climate Finance Leadership Initiative include seven of the largest institutions in the world from across the investment chain, including project developers, banks, insurers, asset managers and asset owners, representing trillions of US-Dollar in financial flows. The Association of European Development Finance Institutions represents 15 bilateral development finance institutions from across Europe that jointly manage a portfolio of more than 50 billion US-Dollar of impact-oriented investments in emerging and frontier markets.

According to the information, this partnership is a response to the solutions outlined in the report “Financing the Low-Carbon Future”, released from the CFLI, which offers a private-sector perspective on the actions needed to accelerate climate finance. As part of the partnership, the CFLI and EDFI would work with their members on efforts to:

• “Originate, structure and co-finance low-carbon opportunities on a deal-by-deal basis or through pooled investment vehicles;
• Explore the development of structured finance and portfolio investment solutions to meet the needs of institutional investors and increase the availability of efficient financing for developers;
• Identify and deploy incremental risk mitigation tools, such as first loss cover available from concessional capital providers; and
• Support policy engagement efforts on enabling environments to attract private sector capital and use joint projects wherever possible to help highlight sound policy standards.”

Underpinning this partnership is a new set of CFLI-developed Investment Readiness Guidelines (Appendix 1 in the mentioned report), which will be used by the CFLI and EDFI to foster dialogue and engage outside stakeholders, such as governments and concessional capital providers, on targeted issues that advance sound policy standards. Using the Investment Readiness Guidelines, the CFLI also plans to convene policy leaders across geographies with representatives from major financial institutions to drive public sector engagement on the solutions outlined in the CFLI report. These meetings will be held throughout 2020; the purpose is to facilitate the scaling of low-carbon investment opportunities to meet the goals of the Paris Agreement. Additionally, through 2025, CFLI financial institutions collectively were prepared to facilitate the deployment of more than 20 billion US-Dollar in emerging market climate financing and investment to help realize the opportunity in the low-carbon transition, Bloomberg informed.

www.bloomberg.com/CFLI
www.data.bloomberglp.com/company/sites/55/2019/09/Financing-the-Low-Carbon-Future_CFLI-Full-Report_September-2019.pdf

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