This week, the Climate Investment Coalition released the report Recommendations on Nordic Pension Fund Investments in Emerging Markets and Developing Economies in collaboration with the Nordic Council of Ministers.
The report provides key recommendations from Nordic investors and successful case studies from the Climate Investment Coalition’s pension fund members on moving institutional investor capital to emerging and developing markets. The recommendations build on the experience from Nordic pension funds and public-private partnerships and aim at the broader global community of investors, including governments of emerging and developing markets, as well as public and private investors.
Emerging markets and developing economies are often neglected in terms of implementing climate solutions whilst they are more vulnerable to climate impacts. The International Energy Agency (IEA) estimates that putting the world on track to net-zero emissions by 2050 requires a sevenfold increase in investments in clean energy for these markets by the end of 2020s.
The report’s aim is to help others to learn from those with experience in mobilising institutional investor capital to help fund the energy transition in emerging and developing markets. Given the substantial amount of institutional investor capital that needs to be mobilised globally, knowledge-sharing and case studies such as the ones in the report will be crucial.
The report follows the Climate Investment Coalition’s session held at the Nordic Pavilion at COP27 in Sharm el-Sheikh, Egypt, where Nordic pension fund members presented their progress in climate and clean energy investments in 2022. The Climate Investment Coalition is managed by the World Climate Foundation.
The following key recommendations were outlined for governments and their development partners on priority areas where increased action would help stimulate investment and private finance in emerging and developing economies:
Foster enabling environments for investment in the energy transition through policy, regulation and planning that create predictable investment opportunities at scale.
Increase the scale and predictability of pipelines of clean energy investment opportunities.
Promote, facilitate and scale innovative public-private financing approaches and instruments.
Unique and specific investment cases included in the report provide successful financing partnership examples and models that can be further applied across different regions and organisations.
“Private equity and investment in the just transition and beyond will require massive sources of funding and finance. Long term savings like pension and provident funds can play a critical role in amassing and directing the flow of such funds,” – Thuli Khumalo, Chief Operations Officer, Presidential Climate Commission, South Africa.
Since 2019, the Climate Investment Coalition has successfully worked with leading high-level stakeholders in climate finance, the public sector and project developers to allocate capital for clean energy and climate solutions globally by 2030 and mobilised US$130 billion from Nordic and UK pension funds as announced in 2021. This is also the case for new investments in emerging markets and developing economies, which are proving to be on track.