Investments required to finance climate solutions that keep temperature increases below 1.5°C and build resilience to unavoidable climate change are daunting. In the energy sector alone, the International Energy Agency (IEA) estimates that in order to put the world on track to reach net-zero emissions by 2050, investments in clean energy in emerging market and developing economies need to expand by more than seven times by the late 2020s, to above US$1 trillion per year. This expansion must happen against a backdrop of challenging macroeconomic and geopolitical circumstances.
This Report, titled “Recommendations on Nordic Pension Fund Investments in Emerging Markets and Developing Economies”, was prepared by the Climate Investment Coalition, a public-private partnership that works to mobilise commitments from asset owners for climate solution investments by 2030, to be reported on annually. At COP26 in Glasgow, the Climate Investment Coalition supported the mobilisation and announcement of a collective Nordic and UK pension fund commitment of
US$130 billion. This notable announcement was made by 41 pension funds and announced by Nordic Heads of State and Government and CEOs of Nordic and UK pension funds. The commitments are to be invested in clean energy and climate solutions by 2030 and reported on annually.
The Nordic region countries are global frontrunners in climate and sustainable finance, as well as in public-private collaboration and its use to successfully accelerate the green transition. In continuation of the commitment made at COP26, and with support from the Nordic Council of Ministers in 2022, the Climate Investment Coalition has had a specific focus on mobilising investments in emerging markets and developing economies.
At COP27, 6-18 November 2022 in Sharm-el-Sheikh, Egypt, the Climate Investment Coalition presented Nordic pension fund progress for climate and clean energy solution investments, shared best practice cases, and provided an overview of key recommendations to policymakers, to support bridging the climate finance gap by 2030 in emerging markets and developing economies.
This Report contains recommendations developed based on the input from Nordic investors alongside successful case studies from Climate Investment Coalition pension fund members. This report highlights the challenges and solutions from experienced investors and funding platforms to help catalyse investments and private finance flows to emerging markets and developing economies. It aims to identify the most fundamental and cross-cutting factors to help enable private climate finance for these markets. Further, it aims to motivate the required collaboration between private finance, public finance, and policymakers to help manage associated risks, expand pipelines of sustainable investment opportunities and scale innovative financing methods.