Read the original interview on the Private Equity International website here.
How is CDC supporting its GPs and portfolio companies with their response to the climate crisis?
Aside from capital commitments, we are driving the 2X Climate Finance Taskforce, an initiative by CDC, the European Investment Bank and the European Bank for Reconstruction and Development on behalf of the 2X Challenge, to leverage the power of gender-smart investments for climate action. A key part of this mission involves developing tools and elevating the knowledge base for GPs and the impact investment community more broadly, to promote gender equality and women’s empowerment in climate finance investments.
Alongside our partner institutions, we have co-developed the Gender-Smart Climate Finance Guide, which provides comprehensive tools and analysis to further investors’ ability to identify and seize opportunities that mitigate gender and climate financing risks. It also comprises 11 sector-specific and thematic insights to help investors mainstream gender in their climate finance investments.
Where is CDC now in its Climate Change Strategy, and what challenges might affect your GPs and portfolio companies as they progress towards net zero?
CDC’s Climate Change Strategy will continue to guide our investment approach for years to come. At COP26, we announced our pledge to invest over £3 billion ($4 billion; €3.6 billion) over the next five years to help support our markets across Africa and South Asia in rising to the climate challenge.
In September, we announced that we will invest $1 billion in climate finance in India, and that 30 percent of our investments will target climate finance. Our ambition is to devote our capital towards accelerating action by diverse stakeholders, industries and investors to ensure an economic transformation that is inclusive and more sustainable, safeguarding nature as well as workers’ and communities’ rights and livelihoods.
The critical challenge with an emergency of this magnitude will be the ability for institutions, nations and broader society to remain responsive and adapt even when other global crises arise. With covid-19, capital was often reprioritised towards addressing the impact of the pandemic.
What could LPs be doing more of to support their emerging markets GPs in addressing the impact of climate change?
Under the Glasgow Finance Alliance for Net Zero, there are an increasing number of institutional investors making net-zero commitments, meaning there is a wall of private capital seeking assets that are consistent with net zero and climate resiliency. There is an urgent need to ensure that these investors start to allocate more of their portfolios to emerging markets.
Partnering with DFIs such as CDC through appropriate financial instruments can help ensure that a significant portion of the $130 trillion of investment GFANZ represents reaches the countries and sectors that are most needed for sustainable development.
Find out how the companies and funds we invest in are responding to climate change in our Emerging Economies Climate Report 2021