Fund Exceeds Target, Demonstrating Strong
Investor Demand for Climate Infrastructure Investing in Asia, Latin
America and Africa
Underscores Potential for Public-Private
Collaboration to Advance Net Zero Transition
BlackRock has achieved a US$673 million final fundraise for the
Climate Finance Partnership (CFP), 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.
CFP 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,” said Larry Fink, Chairman and CEO
of BlackRock. “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.”
“CFP reflects BlackRock’s commitment to embed sustainability in
all parts of the business from index to alpha seeking strategies
and all the way to private markets. CFP addresses one of the key
challenges of investing in the net-zero transition in emerging
markets. 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,” said 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,” said
Edwin Conway, Global Head of BlackRock Alternative
Investors.
CFP 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.
Helena Olin, Head of Real Assets of AP2, said, “We are
excited to work with BlackRock and the Climate Finance Partnership
as it offers AP2 the ability to diversify our portfolio for
sustainable infrastructure investments in emerging markets with a
blended finance structure, while meeting our sustainability
goals.”
Pascal Christory, CIO of AXA Group, said, “Climate risk
and sustainability issues have become critical investment risks for
AXA. Today, we are very excited to partner with BlackRock in this
joint effort to steer capital towards climate infrastructure
investments across emerging markets. This initiative will
contribute to AXA Driving Progress ambition by reducing the carbon
intensity of our investment portfolio. We believe that the
partnership will be an accelerator in the climate action and a
great way to move forward concrete solutions to impact transition
efforts across emerging markets.”
Marc Spieker, CFO of E.ON Group, said, “Being a
sustainable company means not only focusing our business on
sustainable activities but making sustainability the core of
everything we do. As a consequence, we also apply the same rigorous
mindset in managing our pension assets. By investing into
BlackRock’s Climate Finance Partnership fund, capital is allocated
to foster growth of renewables in non-OECD countries and thereby
making a tangible difference to the energy transition in emerging
markets.”
Koji Fujiwara, President and CEO of Mizuho Bank, said,
“To achieve a carbon neutral society by 2050, we all should look at
the same goals and act now. CFP’s aim to invest in climate
infrastructure across emerging markets will help promote
decarbonization for the world. We are grateful to take part in
CFP’s action, and will proactively fulfill our role as a leading
financial institution in an effort to develop a climate resilient
society.”
Iwao Matsumoto, Managing Executive Officer of Sumitomo Life
Insurance Company, said, “Sumitomo Life is delighted to
participate in CFP and contribute to supporting decarbonization in
emerging markets as a responsible institutional investor. We
believe climate change is an urgent issue that should be addressed
across national borders, and we commit to achieving net-zero by
2050 and GHG reduction targets by 2030. Climate change and the
development of social infrastructure are one of the focus areas
that we find particularly challenging when making responsible
investment. CFP fits squarely with our policy and provides
appropriate risk and return allocation given its unique structure.
We are glad to be contributing to the realization of a sustainable
society and potentially enhancing return.”
Naoyuki Hamada, Deputy President and Head of Wealth &
Middle Market Business Unit of Mitsubishi UFJ Morgan Stanley,
said, “We are proud to play a distribution role in this very
innovative initiative, and raise more than US$100 million from a
wide range of investors including high-net worth individuals and
institutions. Witnessing how the interest in ESG has inspired a
desire to invest in illiquid alternative products such as CFP, we
realize that providing leading-edge products can help cultivate the
future of investing. We remain focused as ever in developing the
next generation of investors and contributing to the creation of
sustainable portfolios through the advancement of state-of-the-art
products.”
Patrick Pouyanné, Chairman and CEO of TotalEnergies,
said, “TotalEnergies warmly salutes the final close of the Climate
Finance Partnership, under the leadership of BlackRock, which
perfectly illustrates the ambition of TotalEnergies to achieve a
just transition supplying more affordable, more available and
cleaner energy to as many people as possible.”
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.
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______________________________________ 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.
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