Emerging markets climate fund created by EIB and Allianz Global Investors reaches final size of €450 million

This article is published in association with European Investment Bank.

• Emerging Markets Climate Action Fund increases to €450 million with final contribution from Germany.
• Fund to mobilise up to €7.5 billion for climate projects in emerging and developing countries.
• EMCAF created by the EIB and Allianz Global Investors in 2021.

A fund created by the European Investment Bank (EIB) and Allianz Global Investors (AllianzGI) to spur climate financing in emerging markets grew to €450 million with a final contribution from the German government. The closing size of the Emerging Markets Climate Action Fund (EMCAF) results from a €20 million top- up from Germany’s Kreditanstalt für Wiederaufbau (KfW) on behalf of the German Federal Foreign Office.

EMCAF, established in 2021 and now one of the world’s largest blended finance equity funds, is expected to mobilise up to €7.5 billion of climate finance in emerging and developing markets. Renewable energy and energy efficiency represent a majority of EMCAF’s investments to date.
Other areas of support by EMCAF include sustainable transport, forestry, water supply and wastewater.

EMCAF will invest in around 15 funds, which themselves are expected to back about 150 projects to reduce greenhouse gas emissions, cope with the impacts of climate change and promote environmental sustainability.

“EMCAF shows the power of public and private partnerships to bridge the global climate finance gap,” said EIB Vice-President Ambroise Fayolle “As the climate bank, the EIB will continue to prioritise innovative financial instruments to assist developing countries to accelerate a green and climate change resilient transition.”

In 2022, the Group of Seven (G7) endorsed EMCAF as a concrete innovative and market-led approach to mobilise private investments for climate infrastructure and to enhance multilateral finance and collaboration.

“As we close this fund dedicated to climate mitigation and adaptation in emerging markets, we are investing not just in sustainable solutions but in the future of our planet,” said AllianzGI Chief Executive Officer Tobias Pross. “This milestone represents a powerful opportunity to drive meaningful change in the regions where the need is greatest and is testament to the trust of our partners, the dedication of our team and our shared vision for the future.

EMCAF was announced at the United Nations Climate Change conference in Glasgow in November 2021. Last year, EMCAF provided $100 million for four transactions supporting renewable energy, sustainable mobility and green infrastructure across Africa, Asia and Latin America. These investments include Helios CLEAR Fund, AIIF4 Climate Investment Fund, Southeast Asia Clean Energy Fund II and Exagon Latin America Fund I.

KfW invests in EMCAF on behalf of Germany’s Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection, Federal Ministry for Economic Affairs and Climate Action and Federal Foreign Office.

 “EMCAF has proven, that equity investments in climate mitigation and adaptation projects represent a suitable impact investing theme” commented Stephanie Lindemann-Kohrs, Director Global Equity and Funds at KfW. Through our participation in the final close of the fund we were again able to leverage crucial private capital to provide this necessary financial instrument to the targeted regions, enabling private sector players to offer a meaningful contribution to global climate projects with high impact on the ground”.

Other investors in EMCAF include the EIB on behalf of the Government of Luxembourg, the Nordic Development Fund, the United Kingdom Foreign, Commonwealth & Development Office, Allianz insurance companies, Folksam insurance companies and EIB Global, the EIB’s development arm.

 “NDF was proud to be among the first investors in EMCAF, joining forces with other likeminded financiers to support this transformative Fund of Funds”, said Satu Santala, Managing Director of the Nordic Development Fund. “Through its innovative structure, EMCAF has achieved remarkable scale, driving investment into projects that contribute to both climate change mitigation and resilience while profoundly improving lives in the world’s most vulnerable regions. The partnership between Allianz and the European Investment Bank has been effective and collaborative, showcasing the strength of teamwork in building critical assets, catalysing private market ecosystems, and advancing public-private partnerships. Together, we are delivering lasting, tangible impact where it is needed most.”

EMCAF has recently published its second impact report covering the year 2023.  Despite being in its early stages of portfolio construction, it shows the fund’s strong performance on capital mobilization as well as a first set of climate impact performance indicators, including c.800,000 metric tons of greenhouse gas emissions reduced.  You can access the report here.

Background information

EIB

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Allianz Global Investors:

Allianz Global Investors is a leading active asset manager with over 600 investment professionals in over 20 offices worldwide and managing EUR 560 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 2024. Total assets under management are assets or securities portfolios, valued at current market value, for which Allianz Global Investors companies are responsible vis-á-vis clients for providing discretionary investment management decisions and portfolio management, either directly or via a sub-advisor (these include Allianz Global Investors assets which are now sub-advised by Voya IM since 25 July 2022). This excludes assets for which Allianz Global Investors companies are primarily responsible for administrative services only. Assets under management are managed on behalf of third parties as well as on behalf of the Allianz Group.