A climate-focussed investment fund managed by the European Investment Bank and Allianz Global Investors has secured new capital from the UK and German governments. 

The Emerging Market Climate Action Fund invests in green transition funds and projects in emerging and developing markets worldwide.

Announcing the news during the 28th UN Climate Change Conference taking place this week in Dubai, AllianzGI, the active asset manager of German insurer Allianz, said the UK’s Foreign, Commonwealth & Development Office will inject £9m to the fund, while the German government intends to top up its existing commitment with an additional €33m (£28.3m). 

Including the latest commitments, the EMCAF will likely hold its third close with a total of €385m in the coming weeks. Anchor investors in the fund include the governments of Germany and Luxembourg, the Nordic Development Fund, Allianz, Folksam Group and EIB.

EIB vice president Ambroise Fayolle said: “The COP28 presidency has called for real world solutions to respond to the climate crisis. With the Emerging Market Climate Action Fund, we are delivering a success story that is showing the way for others to follow in mobilising private finance at scale.”

Initiated by the EIB and AllianzGI, EMCAF is a fund of funds providing equity financing to greenfield climate mitigation and adaptation projects, as well as companies with a green business model in emerging and developing markets. EMCAF is expected to invest in about 12 funds, which should support around 150 climate change mitigation, adaptation and environmental sustainability projects.

Investments include the ARCH Cold Chain Solutions Fund, which aims at establishing a cold-chain infrastructure in East Africa; and Alcazar Energy Partners II, which invests equity to develop, construct and operate renewable energy projects across several countries in the Middle East and North Africa, Eastern Europe and Central Asia.  

Most recently, the EMCAF invested in the Inspired Evolution III Fund, focussing on clean energy greenfield infrastructure, energy access and resource efficiency investments across Africa.

Tobias Pross, chief executive of AllianzGI, said “trillions of dollars” of investment per year are needed to combat the consequences of climate change in emerging markets, adding: “That's where we as an active asset manager come in, leveraging our market and product know-how to design the type of investment vehicles needed to help bridge this financing gap. EMCAF is a great example of how we are putting our experience in the field to work, and we are delighted to see that being recognised once again through further commitments from the German government and the UK government as a new investor.”