- New capital commitments from the United Kingdom and German governments.
- The fund invests in green transition funds and projects in emerging and developing markets worldwide.
- Launched at COP26, EMCAF has already invested more than $100 million in five funds over two years.
- EMCAF on track to hold its third close at €385 million in the coming weeks.
The European Investment Bank (EIB) and Allianz Global Investors (AllianzGI) announced new capital commitments to the Emerging Market Climate Action Fund (EMCAF). The United Kingdom Foreign, Commonwealth & Development Office (FCDO) will commit €10 million (£9 million). In addition, on behalf of Germany’s Ministry for Economic Affairs and Climate Action, Kreditanstalt für Wiederaufbau (KfW) intends to top up its existing commitment with an additional €33 million. Including these new commitments, EMCAF will likely hold its third close with a total of €385 million in the coming weeks. Anchor investors in EMCAF since the start include the governments of Germany and Luxembourg, the Nordic Development Fund, Allianz, Folksam Group and EIB.
EMCAF is an innovative blended finance fund initiated by the EIB and AllianzGI. It provides catalytic early-stage equity financing to greenfield climate mitigation and adaptation projects as well as companies with a green business model in emerging and developing markets. EMCAF is expected to invest in about twelve funds, which should support around 150 climate change mitigation, adaptation and environmental sustainability projects.
During its summit in Elmau (Germany) in June 2022, the Group of Seven (G7) endorsed EMCAF as an important example of a concrete innovative and market-led approach to mobilise private investments for climate-relevant infrastructure and to enhance multilateral finance and collaboration. According to the United Nations, avoiding the worst impacts of climate change could require $4.3 trillion a year by 2030.
“The COP28 Presidency has called for real world solutions to respond to the climate crisis”, said EIB Vice-President Ambroise Fayolle. He added: “With the Emerging Market Climate Action Fund, we are delivering a success story that is showing the way for others to follow in mobilising private finance at scale. As the EU climate bank, we are delighted with the progress achieved in the past two years and we welcome the new capital commitments from Germany and the United Kingdom.”
Tobias Pross, CEO of AllianzGI added: “Trillions of dollars of investment per year is needed to combat the consequences of climate change in emerging markets, which means innovative funding mechanisms are necessary to mobilize the massive amounts of money needed. That's where we as an active asset manager come in, leveraging our market and product know-how to design the type of investment vehicles needed to help bridge this financing gap. EMCAF is a great example of how we are putting our experience in the field to work, and we are delighted to see that being recognised once again through further commitments from the German government and the UK government as a new investor."
The Rt Hon Andrew Mitchell MP, Minister of State (Development & Africa) said: “To tackle climate change and biodiversity loss and deliver economic transformation, mobilising international finance and increasing private sector investment in development is critical. To support this, I am delighted to announce that the UK is investing £9m into the Emerging Market Climate Action Fund.”
Stefan Wenzel, Parliamentary State Secretary at the German Federal Ministry for Economic Affairs and Climate Action „Supporting climate action in developing countries will not only limit the temperature increase but also support a prosperous development and economic benefits with improved living conditions. We therefore intend to top up our contribution to the successful Emerging Markets Climate Action Fund by an additional 33.3 Mio. EUR. This is expected to result in additional installed wind and solar capacity of up to approximately 1.8 gigawatts supporting the goal to triple global renewable energy capacity. We know that the necessary funding for international climate action cannot be raised by the public sector alone. We hence need to make progress on mobilising private finance and aligning financial flows with the Paris Agreement goals.”
Stephanie Lindemann-Kohrs, Global Head Equity and Funds, KfW Development Bank said: “Climate and sustainability are major global issues that will have a decisive impact on our lives in the coming years and decades. We therefore are proud to participate in the third closing of EMCAF on behalf of the BMWK and implement best practices jointly with our existing and new partner investors as well as AllianzGI and EIB.
Launched at the United Nations Climate Change conference COP26 in Glasgow in 2021, EMCAF has committed more than $100 million to five funds. Investments include ARCH Cold Chain Solutions Fund, which aims at establishing a cold-chain infrastructure in East Africa; Alcazar Energy Partners II that invests equity to develop, construct and operate renewable energy projects across several countries in the Middle East and North Africa, Eastern Europe, and Central Asia; Vinci Climate Change, a greenfield climate fund focused on financing expansion of renewable energy and water and wastewater treatment infrastructure in Brazil; and GEF South Asia Growth Fund III that provides equity financing to companies that operate in water, energy efficiency and circular economy sectors primarily in India. Most recently, EMCAF invested in the Inspired Evolution III Fund (“Evo III”), focusing on clean energy greenfield infrastructure, energy access and resource efficiency investments across Africa.
Background information
- In 2019, the EIB’s updated Energy Lending Policy was adopted to end financing to any unabated fossil fuels energy projects, including natural gas, the first Multilateral Development Bank to do so.
- In 2021, the EIB became the first MDB to align our financial activities with the Paris Agreement.
- Through its Climate Bank Roadmap the EIB Group aims to support €1 trillion of investment in climate action and environmental sustainability through the critical decade, 2021-2030.
- The EIB committed to increase investment in climate action and environmental sustainability to more than 50% of the EIB’s annual lending by 2025 – last year that was exceeded with 58%.
EIB Global is the EIB Group’s specialised arm dedicated to operations outside the EU, and a key partner of the EU’s Global Gateway strategy. We aim to support at least €100 billion of investment by the end of 2027, around one third of the overall target of Global Gateway. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions, and civil society. EIB Global brings the Group closer to local communities, companies and institutions through our offices across the world.
Allianz Global Investors:
Allianz Global Investors is a leading active asset manager with over 600 investment professionals in 20 offices worldwide and managing €516 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 2023