New USD 62.26 million initiative aims to unlock private capital for climate projects in emerging economies, reducing investment risks

British International Investment (BII), the UK’s development finance institution, has declared a new partnership with Mercer, a global investment firm, to drive private investment into climate-related projects in emerging economies. The initiative, which forms part of a broader 124.55 million Mobilisation Facility introduced last year by the UK Prime Minister, aims to reduce the financial risks for private institutions investing in areas severely impacted by the climate crisis.

Up to USD 62.26 million of this facility will be allocated to the new initiative, which seeks to bridge the gap between the risk appetite of institutional investors and the need for substantial capital to address climate challenges in emerging markets. This collaboration is designed to catalyze investment in sectors such as clean energy and infrastructure, offering growth opportunities while tackling the urgent climate emergency.

Emerging economies, which make up more than 60 per cent of the global GDP and are expected to account for 74 per cent of global energy consumption by 2050, are seen as key players in global economic development. However, these markets are often perceived as too risky for private investors. By partnering with asset managers and offering concessional capital, BII hopes to unlock significant private sector investment, thus accelerating the transition to a low-carbon economy.

Anneliese Dodds, Minister for Development, praised the initiative, noting that countries vulnerable to climate change urgently need access to finance to combat its impacts. She emphasized that UK financial institutions are in a unique position to lead global efforts in climate finance, generating growth both domestically and abroad.

Leslie Maasdorp, CEO of BII, highlighted the importance of private capital in addressing the scale of the climate crisis. “The partnership we have unveiled today is a truly innovative way of unlocking vast pools of capital held by private institutions,” he stated.

Mercer’s UK President and CEO, Benoit Hudon, added that the initiative will foster economic development in emerging economies by identifying and supporting investment proposals that accelerate the energy transition and address investor hesitancy.

The call for proposals is now open to asset managers globally, offering them the chance to secure concessional funding for impactful climate projects.