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Here’s what caught my attention over the weekend: BlackRock CEO Larry Fink called on governments to develop better climate finance plans to unlock private capital. Current efforts risk being “nothing more than window dressing,” he told a climate-focused conference of finance ministers from the G-20 group of nations. He said there is a $50 trillion investment opportunity — potentially.
• Three challenges he outlined: First, private companies are not under the same pressure as public companies to share information; second, oil and gas companies have an incentive to sell off polluting assets to private or state-owned companies with fewer disclosure requirements; and third, governments could increase inequality and social instability if they don't create demand for greener products and lower costs.
• This is not the first time Fink has spoken out about climate. In his annual letter to CEOs earlier this year, he wrote: “We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.”
• At the G-20 meeting, Fink also called on the World Bank and the International Monetary Fund to change their models to better encourage private sector capital to fund a green transition in emerging markets.
• BlackRock is a major investor in fossil fuels. I found this recent analysis from Morningstar about BlackRock’s own environmental, social, and governance record to be an interesting look at whether the company is taking internal action to match Fink’s comments. It found that the company’s ESG record was “underwhelming” until 2020 but that there were signs of change. BlackRock has joined the Climate Action 100+ investor coalition and started including more voting information and key vote rationales on its website.
Also of note: A coalition of investors that manage more than $4 trillion in assets wrote a letter to some of the world’s biggest banks to demand bolder action for addressing climate change, including publishing short-term climate-related targets and ending all coal finance by 2040.
ICYMI: Climate-vulnerable nations demand urgent boost for delayed funds
Great expectations
"I plan to shortly convene the heads of the MDBs [multilateral development banks] to articulate our expectations that the MDBs align their portfolios with the Paris Agreement and net-zero goals as urgently as possible.”
— U.S. Treasury Secretary Janet Yellen, speaking at the Venice International Conference on Climate.Yellen added: “We also expect them to take steps to more effectively mobilize private capital so that developing countries can increasingly benefit from private sector pledges to support climate-aligned and sustainable investments.”
The European Parliament and civil society activists are pressing both EIB and ERBD on their climate commitments, hoping to speed them into alignment with the Paris Agreement.
Read: European investment banks critiqued on climate commitments
CDC Group plays defense
CDC Group is facing some criticism about its recent investment in a new telecommunication license in Ethiopia, alongside partners including Vodafone and Safaricom. CDC represents about 10% of the consortium that won the license, putting in about $200 million. Its role is to ensure development is central to the project, said CEO Nick O’Donohoe at the organization’s annual review event.
“We know also this is not an easy time for Ethiopia. We’ve attracted some criticism for that reason,” he said, adding that it is a long-term investment. CDC projects that over a 10-year period, some 45 million more Ethiopians will likely gain mobile access. The Ethiopian government estimated the project could create over 1 million jobs in its first year of operation, according to O’Donohoe.
“We thought this was probably the single most transformational thing that we could do to help Ethiopia develop,” he said.
Momentum for the moment
The Financial Stability Board’s Task Force on Climate-Related Financial Disclosures guidelines got a nod of approval from the G-20 in a communiqué. Finance ministers and central bank governors agreed to “work to promote implementation of disclosure requirements or guidance,” building on the TCFD framework to improve global coordination and develop a global reporting baseline.
The G-20 support “adds new momentum to the effort to address the economic risks of climate change,” said Michael Bloomberg, chair of TCFD. He added that it is “a powerful testament to the fast-growing acceptance of the importance of risk disclosure.”
Investments of interest
• The DFC, IFC, EIB, and AFD committed about $14 million to Fondation Institut Pasteur de Dakar, a vaccine manufacturer in Senegal, to support the company in producing COVID-19 vaccines. The technical assistance funding will help the company scale its manufacturing capacity and prepare it to access additional financing.
• French development finance institution Proparco and the Emerging Africa Infrastructure Fund are providing financing and a subsidy to support the construction of the first grid-connected biomass power plant in Côte d’Ivoire.
ICYMI: World Bank to finance vaccine production in Africa, increase fund to $20B
About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
