Charities and World Bank’s Investment Arm Unite to Mobilize $11 bn for Climate Finance

Dollar in Green Business

Leading charities have partnered with the World Bank’s private investment arm to establish the Allied Climate Partners (ACP) platform, aiming to raise a monumental $11 billion in investments destined for developing countries.

The launch of the ACP platform marks a significant leap in blending public and private funds to catalyze climate-related investments in regions that need it most. With an initial investment of $825 million, the coalition envisions leveraging far greater private capital than previous ventures of its kind.

Addressing the critical need to support economically challenged nations in transitioning to low-carbon economies, the ACP initiative aligns with the core agenda of the ongoing COP28 climate talks in Dubai. The staggering global climate-related investment requirements, estimated at $2.4 trillion annually, underline the urgency behind initiatives like ACP.

Distinguished philanthropies such as Mark Gallogly’s Three Cairns Group and the Bezos Earth Fund have pledged $235 million to seed the ACP, while an additional $590 million is anticipated from investors, including the World Bank’s International Finance Corporation (IFC).

Jamie Fergusson, IFC’s Global Head of Climate Business, emphasized the significance of ACP as a breakthrough in philanthropic capital entering a domain traditionally reliant on sovereign sources. The blending of finance becomes paramount, bridging gaps and mitigating risks in public-private partnerships, fostering avenues for sustained investment in climate-related projects, Reuters news report said.

Ventures like ACP play a pivotal role in absorbing risk through philanthropic contributions, laying the groundwork for successful project execution. ACP targets a monumental 14 times multiple of its capital, significantly surpassing conventional ratios observed in similar deals led by development banks.

The venture’s model incorporates assumptions of conservative failure rates, acknowledging potential hurdles in emerging markets’ early-stage projects. However, the structure fortified by philanthropic backers acts as a catalyst, attracting additional investments from multilateral lenders and encouraging sustainable growth in climate finance.

The funds channeled through ACP will be managed by selected fund managers in key regions across Southeast Asia, Africa, the Caribbean, Central America, and India. These managers will identify and develop projects while endeavoring to secure the required billions in debt and equity finance, simultaneously nurturing local asset management industries capable of autonomously financing future projects.

Ahmed Saeed, ACP’s Chief Executive, expressed the venture’s broader ambition to foster the growth of climate finance in developing countries, driving sustainable and impactful initiatives on a global scale.

The consortium boasts other eminent philanthropic supporters, including Arnold Ventures, Ballmer Group, Anita and Josh Bekenstein, the Children’s Investment Fund Foundation (CIFF), and Sea Change Foundation International. Additionally, ACP collaborates with institutions like British International Investment (BII), the African Development Bank (AfDB), and Proparco, a subsidiary of Agence Francaise de Developpement Group, to fortify its mission towards sustainable climate investments in vulnerable regions.