World Bank seeks to boost climate financing for emerging markets

Highlights:

• World Bank initiative connects with GFANZ finance coalition
• The plan is to 'catalyse private capital more effectively'

The World Bank Group is leading a new initiative aimed at driving more private-sector investment to emerging markets, with an initial focus on renewable energy and energy infrastructure.

The Private Sector Investment Lab will be led by World Bank Group President Ajay Banga, working alongside co-chairs Mark Carney, the former Bank of England governor, and Prudential Plc Chair Shriti Vadera. Carney's involvement connects the World Bank with the the Glasgow Financial Alliance for Net Zero, which he co-chairs. GFANZ's members include more than 550 firms across over 50 countries.

For years, the World Bank and other multilateral organisations have failed to mobilise the vast sums of financing needed to help developing countries cope with the fallout from climate change. As pressure mounts on such groups to consider more drastic measures, the World Bank is now ready to let vulnerable, disaster-hit countries pause their debt repayments, according to the Financial Times.

"Given the urgency and scale of our intertwined challenges, we must try a new approach — and the World Bank Group has a central role to play in this effort by using its resources, convening power and knowledge to catalyse private capital more effectively," Banga said in a statement Thursday.

The Investment Lab will seek to mobilise capital from the World Bank and other institutions to address climate change and to tackle poverty. The goals will include improving financing structures and better aligning the World Bank with the private sector. It also will focus on forming new partnerships and pursuing other areas where opportunities exist "to better catalyse private investment," the group said.

"Public institutions can and must do more to mobilise private finance, and private finance must work with development partners to create blended finance vehicles that can be rapidly scaled," Carney said in the statement.

To help address climate change, investment in emerging markets and developing economies must scale fourfold, said Carney, who is UN Special Envoy on Climate Action and serves as chair and head of transition investing at Brookfield Asset Management. "Business as usual won't work," he said.

The Lab will be comprised of senior leaders from private finance and the corporate sector who have experience in financing, investing and doing business in emerging markets and developing economies. The team, which will be announced in the coming weeks, will work closely with experts from government, regulatory groups and businesses from around the world.

Members of the Lab will report directly to Banga and the World Bank Group's leadership team. Makhtar Diop, managing director of International Finance Corp., will oversee coordination and serve as a day-to-day point of contact into the World Bank Group.

GFANZ is co-chaired by Carney and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.