Investment firms OMERS, CDPQ, and Wiltshire have pledged to support the transition of emerging markets toward sustainable debt.
In a significant move towards supporting the global transition to a low carbon economy, several prominent pension funds have collectively committed $400m to an Emerging Markets Transition Debt (EMTD) fund. The fund is managed by Ninety One, and forms part of the Clops portfolio, a strategy aimed at delivering real-world change.
The EMTD fund will focus on providing commercial financing for energy transition projects in emerging markets. This includes investments in clean infrastructure and technology, as well as decarbonisation initiatives. The fund is one of the investments within the Clops portfolio, which represents 20% of portfolio assets.
Jennifer Devine, head of the Wiltshire Pension Fund, emphasised the importance of investing in emerging markets for meeting the fund's target of reaching net zero by 2050. The Wiltshire Pension Fund has allocated £75m to its Clops portfolio.
Marc-André Blanchard, ILN co-chair and executive vice-president of CDPQ Global, underscored the leadership role institutional investors have in the transition. He stated that funds like the EMTD can provide a solution by focusing on private sector investments.
South African finance minister Enoch Godongwana praised the Investor Leadership Network (ILN) and the Bellagio Private Capital Mobilization Consortium for their efforts.
Ninety One stated that the initial $400m raised for the EMTD fund was from a range of institutional investors, including CDPQ, OMERS, and the Wiltshire local government pension scheme fund.
Hendrik du Toit, ILN Co-Chair and Founder & Chief Executive of Ninety One, emphasised that this is a crucial opportunity to have significant real-world impact for both climate and development goals. He also noted that institutional investors' investment in emerging markets has been largely focused on public listed equities and sovereign debt, but that much of the investment in the energy transition is required in the form of private equity, private debt, project debt, and corporate debt.
Devine explained that although investing in emerging markets can be more challenging due to data availability, environmental, social, and governance risks, it is essential to support emerging markets in transitioning to net zero due to the outsourcing of a large amount of emissions from the western world to these markets.
Lombard Odier's Planetary Transition strategy will manage the listed equities allocation of the Clops portfolio. CDPQ Global and global head of sustainability, Marc-André Blanchard, expressed a desire to actively participate in the energy transition and have an enduring impact.
This strategic investment marks a significant step forward in the global transition to a low carbon economy, with institutional investors playing a pivotal role in supporting emerging markets in their energy transition projects.
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