Investment criteria based on EU taxonomy for sustainable activities.
Impact investing initiative for Africa, Asia, Latin America and the Middle East.
The European Investment Bank (EIB) and Allianz Global Investors (AllianzGI), one of the world’s leading active investment managers, today launched the Emerging Market Climate Action Fund (EMCAF) in a public and private partnership with the Governments of Germany and Luxembourg, the Nordic Development Fund, Allianz, Folksam and EIB being anchor investors.
EMCAF is a fund of funds that supports climate-focused investment funds and projects active in emerging markets and developing countries. Its focus will be on climate mitigation, climate adaptation, and access to electricity.
With a target size of €500 million, EMCAF aspires to become a European flagship impact investing initiative, mobilising substantial amounts of private capital to get climate action projects off the ground in Africa, Asia, Latin America and the Middle East. EMCAF investments are expected to support a significant amount of new clean energy capacity globally.
EMCAF invests into specialized investment funds, that could support projects like onshore windfarms and solar photovoltaic plants or small and medium sized hydropower plants. It could also support energy efficiency projects in housing or industry, or projects bringing environmental or resource efficiency benefits. To help emerging and developing countries to adapt to the impacts of climate change, the fund could also finance projects that support cities and their public transport systems to become more resilient against floods or heat.
Alok Sharma, President of COP26 in Glasgow, said: “As world leaders meet in Glasgow, this is a pivotal time for the planet. That’s why I am delighted to see the joint efforts spearheaded by the European Investment Bank and Allianz Group to enhance support for developing countries and help mobilise green finance to meet the Paris Agreement goals.”
EIB Vice-President Ambroise Fayolle added: “Supporting climate projects in emerging and developing countries is the key to meeting the Paris climate goals and to boosting economic activity on the ground. As the EU climate bank, we have a long experience with innovative financial instruments that mobilise private capital at scale. I am delighted that we are announcing this new milestone with Allianz Group today. This sends an important signal to the COP26 conference about the power of public-private partnerships to bridge the climate finance gap.”
Tobias Pross, CEO of AllianzGI added: “The COVID-19 pandemic has revealed some profound inequalities. In developing countries, the pandemic is thought to have magnified the existing funding shortfall needed to meet the UN’s Sustainable Development Goals by 2030. Many investors have become increasingly aware of the role their capital can and should play in addressing these imbalances. Impact investing can help to combine the twin goals of “doing good” and “earning a return” in a single investment.”
As EMCAF’s investment advisor, the EIB is responsible for market analysis, the identification and appraisal of investments, including their environmental and social aspects. AllianzGI will act as the Alternative Investment Fund Manager (AIFM) responsible for the fund’s management and decision-making. EMCAF complies with the new EU taxonomy, and is accredited as an Official Development Assistance vehicle with the OECD. Its investors will receive transparent impact reporting, including key performance indicators such as renewable electricity produced and CO2 emissions avoided.
EMCAF is a layered instrument combining public and private investors. Alongside EIB, Allianz and Folksam, further partners have already committed to investing in the fund: KfW on behalf of the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU), the EIB on behalf of the Government of Luxembourg, and the Nordic Development Fund (NDF). The EIB has committed €50 million, Allianz Group companies up to €200 million and Folksam Group another €150 million. BMU has committed €25 million, the NDF and the Government of Luxembourg each €15 million. The EIB manages the investment in the junior tranche funded by the Government of Luxembourg through the Luxembourg-EIB Climate Finance Platform (LCFP).
The European Investment Bank
The European Investment Bank is active in around 160 countries and is the world’s largest multilateral lender for climate action projects. The EIB Group has recently adopted its Climate Bank Roadmap to deliver on its ambitious agenda to support €1 trillion of climate action and environmental sustainability investments in the decade to 2030 and to deliver more than 50% of EIB finance for climate action and environmental sustainability by 2025. Also, as part of the Roadmap, from the start of 2021, all new EIB Group operations will be aligned with the goals and principles of the Paris Agreement.
About Allianz Global Investors
Allianz Global Investors is a leading active asset manager with over 690 investment professionals in 24 offices worldwide and managing €633 billion in assets for individuals, families and institutions (as of 30 June 2021). AllianzGI is fully committed to supporting the transition to a more sustainable future, and aims to be a global shaper of sustainable investing. This truly complimentary partnership will allow us to leverage joint relationships with effective coverage in emerging and developing countries, cement our sustainability shaping position, and offer our clients new investment opportunities. Climate change is one of our planet’s most pressing challenges and our priority as a global firm is to position our portfolios on a path towards climate transition and a greener, more sustainable future.
During its summit in Elmau (Germany), the Group of Seven (G7) endorsed the Emerging Market Climate Action Fund (EMCAF) as an example of a concrete innovative and market-led approach to mobilise private investments for climate relevant infrastructure and to enhance multilateral finance and collaboration. In addition, Germany announced to increase their investment in the fund.
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.
The Emerging Market Climate Action Fund (“EMCAF”) has announced today a $25 million investment into Alcazar Energy Partners II, a fund providing early-stage equity financing to develop, construct and operate renewable energy projects in the Middle East, North Africa, Eastern Europe and Central Asia. This commitment is in parallel to EIB Global, the dedicated arm for outside the EU of the European Investment Bank (EIB) Group, which provides $75 million to the fund.