Following COP 28, hosted in Dubai, Ninety One reflects on how the conversation has changed and how finance, effectively directed and deployed, can help bring about the energy transition.
Key takeaways:
· Policy and finance – the two critical levers for change: This year’s conference increasingly focused on the role of the private sector and how to actively engage investors in the ecosystem. Strong policies designed to mitigate climate change need to be supported by a committed, active and engaged private sector for those policies to effect change at scale.
· Transition investing has taken centre stage, particularly in emerging markets: Emerging markets are currently responsible for 60% of the world’s emissions today, with this trajectory set to grow. There is increased consensus that addressing the climate crisis requires both investment in solutions as well as transitioning high emitting companies. Backing the companies in emerging markets that have robust transition plans and clear ambition through the provision of transition finance has both return and impact.
· Ninety One announced the launch of its Emerging Market Transition Debt (EMTD) strategy: Focused on catalysing investment into the emerging market energy transition, the strategy will aim to provide EM companies with commercial financing to support efforts in reducing real-world carbon emissions. The firm will work with leading companies in multiple emerging markets when the solution is brought to market in early 2024.
· The UAE announced its $30bn green investment fund, Alterra: The fund has dedicated £25bn to steering institutional capital towards climate investments at scale, and £5bn to incentivise investment into the Global South, one of the biggest commitments ever pledged at any COP. It aims to improve the flow of capital into projects to reduce emissions and to advance international efforts to create a fairer climate financing system.
· The UAE announced the launch of its Global Climate Finance Centre (GCFC), of which Ninety One is a founding member: Based in Abu Dhabi, the independent private sector think tank and research hub will work with developing economies to develop skills and regulatory frameworks that hinder investment flows. It’s essential to have a centre of excellence, unlocking international best practices and connecting dots from businesses around the world.
· Progress made on concessional funding for climate change in the developing world. This includes a strong second replenishment of the Green Climate Fund and $650m commitment to the Loss and Damage Fund from wealthy nations.
Annika Brouwer, Sustainability Specialist, said “We recognise that there are still challenges that go far beyond COP, from fossil fuel phase out, methane capture and equity and social justice. These are topics we expect to see discussed for years to come. We found that COP 28 was a positive experience. We are proud of what we achieved, what the UAE achieved, and we look forward to continuing to mobilise, encourage and innovate private capital across the sustainability finance sector.”
John Green, Chief Commercial Officer, added “At Ninety One, is focused on understanding the global transition, how this will affect the companies we invest in, as well as how we can identify opportunities to make real world impact. Having invested in emerging markets for over 30 years, we feel our voice at the table is imperative to show how the transition is possible and at what rate.
“We have come away from COP 28 positive. What we saw highlighted was the commercial upside of being a transition leader and the abundance of opportunities for private investors.”
For further details, please listen to Ninety One’s podcast ‘The climate challenge is still daunting, but COP28 offered hope’
