Asset owners urge investment managers to back blended finance

On the 02/16/21 at 11:02AM


Adrien Paredes-Vanheule

The United Nations-supported Net-Zero Asset Owner Alliance is pushing for asset management companies to collaborate in developing blended finance vehicles, in order to boost climate solution investments.

The Organisation for Economic Co-operation and Development defines blended finance as “the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries.”

The asset owners coalition said in a statement that its members will work with a number of select asset managers “to design vehicles that meet certain core criteria and support them in refining their strategy to fit institutional investors’ needs.” It seeks blended finance vehicles with at least $300m to 500m in assets. The vehicles will be opened to both its members and non-members.

According to the Alliance, all vehicles must also focus on climate solution investments; invest in financially viable and sustainable underlying business models; have strong risk (downside) mitigation mechanism for private investors; be suitable for large institutional investors in their set up. In addition, they shall be managed by experienced and established fund managers; and not hamper other SDG goals and/or follow high ESG standards.

Guenther Thallinger, Alliance chair and member of the management board at Allianz SE, said, “We need to ensure asset managers are supporting us in achieving our climate-related targets. Asset management must change and fully incorporate these climate-related targets. Our interactions from the Request for Proposal (RFP), to mandate definition and then to performance dialogues will cover climate impact.”

Fiona Reynolds, CEO PRI, warned, “Without the investment community, the transition to a zero-carbon future, will not happen with scale or the urgency that is required.”