Share this on social media
Why the World Bank must boost green investment in emerging markets
(EurActiv, 12 Apr 2023) Multilateral Development Banks are currently not fit for purpose when it comes to financing the green transition. With the new incoming leadership of the World Bank, there is an immense opportunity for change, writes Günther Thallinger.
Günther Thallinger is Chair of the Net-Zero Asset Owner Alliance and Board Member of Allianz SE.
The global economy must undergo an unprecedented transition if the world is to avert catastrophic climate change. Major investments in clean technologies, low-carbon infrastructure, sustainable business models and adaptation measures are needed across the entire planet.
Private capital is available but not flowing in sufficient quantities or at an adequate scale, especially to get projects in Emerging Markets and Developing Economies (EMDEs) off the ground. While some institutional investors have already diversified their portfolios by finding investment opportunities in EMDEs with attractive risk-adjusted returns, the number of investors and the investment volumes remain very limited.
At the heart of the problem is the lack of economic incentives for private capital to flow towards decarbonisation in EMDEs.
Given their local knowledge, expertise, and sourcing networks, Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) are uniquely positioned to overcome private investors’ barriers in EMDEs and to scale and enhance existing instruments, vehicles, and facilities to address the same. Therefore, MDBs and DFIs play a key role in catalysing private investments supporting the transition towards net zero in EMDEs. And while they’ve made a lot of strong public commitments, efforts to mobilise private capital have not reached the required levels.
External link
EurActiv, 12 Apr 2023: Why the World Bank must boost green investment in emerging markets
