Climate Finance Partnership Commits $77.5 Million in Catalytic Capital

Climate Finance Partnership Commits $77.5 Million in Catalytic Capital

The Climate Finance Partnership has announced a $77.5 million commitment aimed at mobilizing $500 million in support of sustainable infrastructure in Southeast Asia, Latin America, and Africa.

Launched in 2018 by the governments of France and Germany, the William and Flora Hewlett Foundation, the Grantham Foundation for the Protection of the Environment (formerly the Jeremy and Hannelore Grantham Environmental Trust), and asset manager BlackRock, the public-private partnership will use a blended financial investment vehicle combining philanthropic, government, and private-sector capital to catalyze climate-related investments in emerging markets. The fund will feature a first-loss tranche of at least $100 million in catalytic capital, which BlackRock will leverage its capital to mobilize another $400 million in institutional commitments. The French Development Agency (AFD) and Germany's state-owned development bank, KfW, will contribute $30 million each to the partnership, while the Hewlett and Grantham foundations have committed $10 million and $7.5 million, respectively. The partners also have committed to help raise the additional funds needed to reach the $100 million catalytic capital goal.

CFP will focus its investments on the climate infrastructure sector — including grid-connected and/or -distributed renewable energy generation; energy efficiency initiatives in the residential, commercial, and/or industrial sectors; energy storage solutions; and ultra-low emission or electrified transportation and mobility services — with at least 25 percent of the total to be targeted to countries in Africa.

"The Climate Finance Partnership shows that charitable organizations working in partnership with public- and private-sector entities can mobilize capital to solve climate change and reduce human suffering," said Hewlett Foundation president Larry Kramer. "Populations in Southeast Asia, Africa, and Latin America will benefit from this first-of-its-kind partnership in bringing sovereign, philanthropic, and private capital together to target climate change. We hope it will serve as a model for scaling climate-friendly projects all around the world."

"Emerging market equities are substantially cheaper than those in developed economies and they offer the best choice for growth in an otherwise slow-growth world," said Jeremy Grantham, who signed the Giving Pledge in 2019. "As clean energy's cost advantage continues to spread around the world, clean energy in emerging markets should see substantial growth from its current low base. The Jeremy and Hannelore Grantham Environmental Trust is pleased to support this effort to help institutional investors begin building an allocation to this promising sector."

"Davos 2020 Climate Finance Partnership Press Release." Climate Finance Partnership Press Release 01/22/2020.