The City of London is looking to solidify its position as a global hub for climate finance, with a new initiative aimed at combating the climate crisis and increasing investment in emerging economies.
The UK’s development finance institution, British International Investment (BII), has announced a partnership with global investment firm Mercer to promote private capital flow into climate-related projects in these markets.
Last year, the UK Prime Minister revealed a £100 million Mobilisation Facility managed by BII to encourage private investment in countries that are considered high-risk by global investors. As part of this effort, BII has allocated up to £50 million to a groundbreaking initiative designed to bridge the gap between the risk appetite of institutional investors and the returns they expect.
Emerging economies are expected to play a vital role in the global economy, representing over 60% of global GDP and projected to account for 74% of global energy consumption by 2050. This creates significant investment opportunities in sectors like clean energy and infrastructure.
Minister for Development Anneliese Dodds praised the initiative, noting that countries facing the brunt of climate-related disasters urgently need access to finance to combat and adapt to the crisis. She emphasized that UK financial institutions are well-placed to provide leadership in mobilizing capital for these countries while stimulating economic growth both at home and abroad.
The collaboration invites asset managers globally, with a proven track record in climate finance and an interest in emerging markets, to submit proposals for partnership with BII. Successful proposals will have the chance to access up to £50 million in concessional capital and additional non-concessional funding from BII, with a focus on projects that can deliver large-scale climate impact.
Leslie Maasdorp, CEO of BII, highlighted the need to unlock vast pools of capital held by private institutions to address the scale of the climate crisis. Mercer’s UK President and CEO Benoit Hudon noted that the initiative could encourage investment in new projects in emerging economies, supporting their development while tackling climate challenges.
This initiative further cements the UK’s role as a leader in global climate finance and sets the stage for transformative investments that can support sustainable economic growth in emerging economies.
