Addressing climate change will require massive flows of capital toward sustainable and impact investments. While estimates of capital required vary, consensus is that several trillion dollars a year will be necessary to prevent exceeding the 2O Celsius temperature increase laid out in the Paris Agreement. To contribute to this shared outcome, the GIIN has launched a Climate Investing Track to support its members in allocating significant capital towards investments that actively mitigate carbon emissions. Given the breadth of this topic, and the depth of expertise required for each investment thesis, the Climate Investing Track is organized by themes, which allows smaller groups of GIIN members to convene around a given investment strategy. The Track will serve as a testing ground for innovative financial instruments, and as a knowledge hub for newcomers to climate investing to better understand products and impact measurement strategies.
Climate Finance in Sub-Saharan Africa
The GIIN has recently launched a research effort aimed at better understanding capital gaps for climate finance in Sub-Saharan Africa. The report uses the Nationally Determined Contributions under the Paris Agreement as a frame to understand the needs of climate investors, and also tracks existing climate finance flows into these markets. This research is ongoing, and will be released in Q3, 2020.
Clean Energy Access – Objectives and Activities
Core to ensuring we do not exceed the 2O Celsius temperature increase in the next century is the prevention of future emissions as well as the reduction of current emissions levels. Clean energy access—the provision of clean energy to those living in energy poverty or without reliable access to healthy energy sources—still elude billions of individuals who are living in energy poverty. To provide adequate sustainable energy to all, larger, fit-for-purpose investment products are needed. To this end, the GIIN’s Clean Energy Access activities focus on highlighting effective and large-scale structures through a series of webinars, and test emerging solutions with diverse asset owners via product testing workshops. Case studies of funds tested and launched in the sector, can be found here.
Sustainable Forestry – Objectives and Activities
Impact Investments in sustainable forestry have the potential to conserve critical ecosystems, prevent deforestation, sequester carbon, and generate economic activity for local communities. Building on the work of the GIIN and Cambridge Associates Financial Performance of Real Assets Study—wherein impact investments in sustainable timber were shown to compare favorably to the comparative universe—the GIIN’s Research and Market Building Teams developed a research report aimed at reducing the information asymmetry between asset owners and managers of sustainable forestry products. This report includes a standardized due diligence questionnaire, case studies, and analysis of common practice based on a database of more than 35 fund structures. Following this report, the GIIN has also hosted several product structure workshops, which brought together asset owners and fund managers to discuss the design of impact investment products in sustainable forestry. Results of those workshops can be found here.
Potential Future Themes
The GIIN is exploring additional work under the Climate Investing Track, including the following potential themes:
- Food and Agriculture – A set of product testing workshops focused on ensuring food security in emerging markets, organized by impact theses, and that invite asset owners and fund managers to co-create more effective, fit-for-purpose products.
- Resilient Infrastructure – A working group with the aim of mapping the market for resilient infrastructure investments and educating asset owners on available opportunities to meet their investment parameters.
For more information on the Climate Investing Track, please contact the Membership Team at email@example.com.