The UN Green Climate Fund (GCF) will invest €200mn ($233mn) in an initiative backed by the European Investment Bank (EIB), to mobilise private capital "at scale" for climate finance in developing countries.
The GCF will invest in the EU's Global Green Bond Initiative, which aims to marshal private capital for climate finance, as well as provide technical assistance and cut borrowing costs for emerging economies. The initiative's fund, run by European asset manager Amundi, has a target size of €3bn and plans to mobilise up to €20bn in private finance for sustainable infrastructure projects in developing countries.
The GCF investment "will de-risk investments in 10 emerging economies. This equity will stimulate country-led green projects that deliver climate solutions in critical sectors such as energy and transport", GCF chief investment officer Amer Baig said.
The GCF operates under the financial mechanism of UN climate body the UNFCCC. It is the world's largest climate fund and was originally capitalised with $10.3bn in 2015.
The EIB is the EU's lending arm and is owned by EU member states. It is classed as a multilateral development bank (MDB). Governments and campaigners have shifted their focus to MDBs and the private sector to deliver climate finance, as several key donors of international development aid have scaled back or announced cuts to funding in the last 18 months, which is likely to affect projects tackling climate change in developing nations.
