A global investment firm with strong ties to South Africa, Ninety One, has secured a massive R7.4 billion (about $400 million) to fund projects that support a just energy transition (JET) in emerging markets. This investment is crucial as it aims to help countries move away from reliance on fossil fuels and shift toward cleaner, greener energy sources.
The funds were pledged by several big-name investors, including Canadian institutions like Caisse de dépôt et placement du Québec and the Ontario Municipal Employees’ Retirement System. Other contributors include UK-based Legal and General Investment Management and Wiltshire Pension Fund. These commitments show a growing interest in financing sustainable projects, particularly in regions where such investments can make a significant impact.
Ninety-One’s strategy called the Emerging Market Transition Debt (EMTD) investment approach, aligns with recommendations from South Africa’s Presidential Climate Commission. This commission recently highlighted the need for the financial world to view investments in clean energy not just as a moral obligation but as a strategic move to manage risks and ensure long-term sustainability.
The EMTD portfolio will focus on three key areas:
- Clean Infrastructure: Building and upgrading systems that support low-emission energy.
- Clean Technology: Investing in new technologies that reduce carbon footprints.
- Decarbonization: Helping companies, particularly those with high emissions, transition to greener operations.
Hendrik du Toit, the CEO and founder of Ninety One, emphasized the importance of these investments. He pointed out that, unlike many developed markets, most emerging markets don’t have the financial resources to fund their energy transitions on their own. This makes external investments like those from Ninety One crucial for supporting the global push toward clean energy.
Du Toit also noted that while there is a lot of potential in emerging markets, many investors are still hesitant due to perceived risks. However, he argues that these fears are often overblown and that actual risks are lower than expected. By gaining more experience in these markets, investors can help bridge the gap between perception and reality, making it easier to finance the energy transition.
This initiative is seen as a significant step forward in directing more private capital into emerging markets, where it’s desperately needed to support the shift to sustainable energy. US Secretary of the Treasury Janet Yellen praised the initiative, stating that it represents real progress in mobilizing private investment for clean energy in these crucial regions.
Ninety One’s work demonstrates that with the right support and investment strategies, emerging markets can play a major role in the global fight against climate change, transitioning to greener economies while providing new opportunities for growth and development.
Source: ESI Africa
