Mobilising
institutional capital
towards the SDGs anda Just Transition
SUMMARY REPORT | WORKSTREAM B

W e a r e g r at e f u l to o u r f u n d e r s f o r t h e i r f i n a n c i a l s u p p o r t f o r t h e I m pact Ta s k f o r c e.

Contents
Acknowledgements

3

Executive Summary								Harnessing the power of financial markets for public good5

A Just Transition fit for the future

5

Activating markets towards the SDGs and a Just Transition

6

Mobilising capital at scale towards the SDGs now

6

Recommendations

7

Foreword

9

Introduction
G7 context for Workstream B

10

The Impact Taskforce context for Workstream B

10Workstream B report11

Who is the report for?

12

Why does more capital need to move faster towards the SDGs?

1 An immediate opportunity to advance a Just Transition
1.1 Section summary and key takeaways

13

1.2 Harnessing the power of financial markets for public good15

1.2.1 Leveraging ESG and impact investment for the SDGs

15

1.2.2 Financial market key actors need to move simultaneously

16

1.3 A Just Transition fit for the future17

1.3.1 Net Zero is a start – but it is not enough17

1.3.2 A Just Transition17

1.3.3 Integrated Just Transition Elements fit for the future20

1.4 The opportunity to finance a Just Transition

21

1.4.1 Public funding towards a Just Transition21

1.4.2 Private funding towards a Just Transition21

1.4.3 Possible investment strategies for Just Transition finance

22

What are the units of action for moving markets

2 towards the SDG ?
s

2.1 Section summary and key takeaways

24

2.2 The principal levers and change makers

25

2.2.1 Background to the scope of the report25

2.2.2 Moving markets towards the SDGs

26

2.3 Institutional investors’ key barriers to investing in emerging markets
in private transactions – and how to overcome them27

2.4 The role of blended finance31

2.5 Instruments and tools for accelerating and increasing flow of capital32

2.5.1 Subordinated capital32

2.5.2 Guarantees

33

2.5.3 Insurance

33

1

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

2.5.4 Securitisation

33

2.5.5 Local currency financing

34

2.5.6 Performance data and information

34

2.5.7 Partnerships

34

do we mobilise capital at scale towards the SDG now?
3 How
asset class guidance for Just Transition Financing vehiclessfor institutional investors
3.1 Section summary and key takeaways

36

3.2 Using familiar vehicles for more effective alignment with the SDGs andto deliver a Just Transition37

3.3 Key actors in an investment vehicle38

3.4 Just Transition Blueprint for investment vehicles

40

3.5 Just Transition investment vehicles by asset class45

3.6 Just Transition outcomes46

3.6.1 Threshold questions46

3.6.2 Guidance

47

4 Recommendations

2

Recommendation 1: Urgent and coordinated movement

50

Recommendation 2: Environmental and social integration for a Just Transition

50

Recommendation 3: Mobilisation

51

Recommendation 4: Transparency

54

Note on recommendations

54

5 Main references

55

Appendices
6 6.1
Appendix 1: Individual acknowledgements

57

6.2 Appendix 2: Abbreviations and acronyms

60

Acknowledgements

Report authors• Nick Robins, Professor in Practice for
Sustainable Finance, Grantham ResearchInstitute on Climate Change and the Environment,
London School of Economics•L aurie Spengler, Board Member and Lead
Expert, Impact Investing Institute• S oVonna Day-Goins, Global Head of Social
Sustainability, Credit Suisse

The Impact Investing Institute would like to thankthe following for their contributions to the report:• Leonie Arnoldi, Consultant•R ory Moses, Consultant

Advisory Panel• A aron Levine, Senior Financial Sector Specialist,
International Finance Corporation

Secretariat(Impact Investing Institute)• Adam Wolfensohn, Managing Partner,
Encourage Capital•S arah Gordon, CEO• A isha R. Pandor, Co-Founder, SweepSouth•D
 avid Krivanek, Programme Manager• A lderman Vincent Keaveny, Lord Mayor of theCity of London• A rabella Phillimore, Consultant• Edward Upson, Programme Officer• Roisin Kennedy, Programme Officer• Ivan Tarkhanov, Programme Support• Lizzy Robins, Events, Communications andEngagement Manager• Joe Dharampal-Hornby, Public Affairs andMedia Relations Manager•A dam Werlinger, Operations Manager• A lexandra Basirov, Global Head of Sustainable
Finance for Financial Institutions Coverage, BNP
Paribas• A licia Seiger, Managing Director, Stanford
University Sustainable Finance Initiative• A nne-Marie Chidzero, CIO, FSD Africa
Investments• Audrey Choi, Chief Sustainability Officer,
Morgan Stanley• S u-Fang Hsiao, Relationships Coordinator• E liza Foo, Director, Impact Investing, Temasek•C lare Huggett, Executive Assistant• E lizabeth Boggs-Davidsen, Vice President,
Office of Development Policy, US International
Development Finance Corporation

Impact Taskforce Workstream on
Instruments and Policies to Scale
Impact Investment• E lizabeth Littlefield, Former Chair and CEOof OPIC, now DFC – the US Government's
Development Finance Institution

Chair• E ric Rice, Managing Director and Head of
Impact Investing, BlackRock•D ame Elizabeth Corley, Chair, Impact Investing
InstituteImpact Taskforce Member and Senior
Advisor•L aurie Spengler, Board Member and Lead
Expert, Impact Investing InstituteTechnical Working Group•A
 lessandra Nibbio, Fund Manager, PPP
Mandates, BlueOrchard Finance• A mal-Lee Amin, Climate Strategy Director, CDC• D r. Jeremy Gorelick, Strategic Advisor, Green
Finance Institute• Louisa Mojela, Founder and CEO, WIPHOLD• M arcus Svedberg, Investment Strategist, AP4• N adia Nikolova, Lead Portfolio Manager,
Development Finance, Allianz Global Investors• N aoko Ishii, Director, Center for Global
Commons, Professor and Executive Vice
President, University of Tokyo• Euan Marshall, Manager, Investor Engagement
Syndications, International Finance Corporation• N athalie Gabala, Regional Director, West,
Central, and North Africa, Mastercard
Foundation• M aria Teresa Zappia, Chief Impact andBlended Finance Officer, Deputy CEO,BlueOrchard Finance• N azmeera Moola, Deputy Managing Directorand Head of South Africa Investments, NinetyOne

3

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)•S hami Nissan, Head of Sustainability, Actis•S harmi Surianarain, Chief Impact Officer,
Harambee Youth Employment Accelerator•S tephanie Pfeifer, CEO, Institutional Investors
Group on Climate Change (IIGCC)• S tephen Brenninkmeijer, Chair, Supervisory
Board of the European Climate Foundation, andFounder, Willow Investments•T im Macready, CIO, Brightlight Impact Advisory• Tracy Palandjian, CEO and Co-Founder, Social
Finance US• Uche Orji, Managing Director and CEO, Nigeria
Sovereign Investment Authority (NSIA)

Observers•A mit Bouri, CEO, Global Impact Investing
Network (GIIN)• E mmanuel Faber, Former CEO, Danone,
and Partner, Astanor Ventures• H iro Mizuno, UN Special Envoy on Innovative
Finance and Sustainable Investments• Jamie Broderick, Board Member and Lead
Expert, Impact Investing Institute4• K risztina Tora, Chief Market Development
Officer, The Global Steering Group for Impact
Investment (GSG)• Nick Temple, CEO, Social Investment Business,
and Board Member and Lead Expert, Impact
Investing Institute• O livia Dickson, Board Member and Lead
Expert, Impact Investing Institute• Yushi Nagano, Deputy Director, Office for
Science, Technology and Innovation, and Digital
Transformation, Japan International Cooperation
Agency (JICA)

We would like to thank the Chair, Expert Advisers,
Members and Observers of the G7 Impact
Taskforce Steering Committee, as well as theindividuals listed in Appendix 1 to the present
report, for their valuable input.
We are grateful for funding for the G7 Impact
Taskforce from the Foreign, Commonwealth andDevelopment Office’s IMPACT Programme, theEQT Foundation and BNP Paribas.

Executive SummaryThe achievement of global priorities –delivering the United Nations Sustainable
Development Goals (SDGs) and delivering
an inclusive recovery from the Covid-19
pandemic – will require increased cooperation andinnovative partnerships between governments, theprivate sector and communities.
As part of its presidency of the G7 in 2021, the UK
Government mandated the Impact Taskforce (ITF)

to support the development of scalable financial
vehicles that harness private capital for public
good. The result is a set of actionable pathwaysfor greater amounts of capital to invest in solutions
that meet the long-term and inextricably linked
environmental and social needs of people and theplanet. The present summary report highlights
key insights from the full report of the Workstream
on Instruments and Policies to Scale Impact
Investment (“Workstream B”) of the Taskforce.

Harnessing the power of financial markets
for public goodT

he current momentum moving capital
towards impact needs to be accelerated.
A concerted and urgent effort by all
actors is required to move funding – using
relevant instruments and vehicles – into the SDGs
and transition to a Net-Zero world in which noone is left behind. This applies to investment
opportunities across the world and has particular
relevance for emerging markets.
Combined, environmental, social and governance(ESG) and impact pools of capital can help realise
an inclusive and sustainable world for all. We now

need to see much more of the vast 'traditional’
capital resources move into ESG and impact.
Achieving the SDGs depends on it.
Capital that ignores environmental consequences
and social inequity and dislocation will be
increasingly vulnerable to performance as well as
reputational risk. Conversely, capital that pursues
investment strategies in which environmental andsocial objectives are integrated not only mitigates
exposure to risk, but also expands the opportunity
landscape for capital to generate positive financial,environmental and social returns.

A Just Transition fit for the futureAs climate finance is galvanising attention,
there is an increasing consensus that asingle focus on reducing CO2 emissions
to achieve Net Zero is not sufficient andthat a shift in perspective to also include its socioeconomic impacts is essential. A Just Transition
that pays attention to our planet and its people isneeded in order to address climate change and its
effects on societies in a fair and inclusive way.
This will result in a thriving planet where no one
is left behind.
While the Just Transition needs to be universal andglobal, Just Transition pathways must be groundedin considerations of local needs, capacity andpriorities to ensure that they are inclusive, fair andequitable as well as to avoid poor or disadvantaged
populations becoming worse off. The requirement
to reflect locally-specific context does not dilute theglobal relevance, power of, and need for a common
understanding of what a Just Transition means inpractice.
The report introduces globally applicable Just
Transition Elements which, combined with a tailored
understanding of local implementation scenarios,
will support and drive further alignment acrosspublic and private actors. The three Elements –Climate and Environmental Action; Socio-economic
Distribution and Equity; and Community Voice –5

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)work together to ensure that capital meaningfully
contributes towards a Just Transition.

transparent assessment of where and to whom
capital is flowing.

The Elements make clear ‘what good looks
like’. They will allow the global community to
speak the same language when pursuing a
Just Transition and they invite, encourage andincentivise actions that can have the most impact
in local environments. Only through the adoptionof consistent Just Transition Elements can we
encourage creative and effective investment
approaches by private sector actors while fostering

Accelerating the flow of capital towards a Just
Transition builds on growing public and private
market awareness of the need to consider people
and the planet, offers tangibility to a concept withpositive resonance and strengthens investment
behaviour to integrate environment and social
considerations. The three Just Transition Elements
can be integrated both into existing and newinvestment vehicles and those yet to be designed.

Activating markets towards the SDGs anda Just TransitionThere is significant near-term opportunity
to mobilise and allocate capital at scale
among different investor types across the
spectrum of capital to help achieve theSDGs in general, and a Just Transition in particular.
This opportunity exists in both developed andemerging markets and across asset classes, within
existing investment products and those yet tocome to market.
Large-scale mobilisation of capital into emerging
markets by institutional investors is one of the mostpowerful ways of financing (and so achieving) the
SDGs and delivering a Just Transition. While a
Just Transition offers an immediate and relevant
opportunity to mobilise capital at scale, theinstruments and tools highlighted in the report haveapplication across the SDGs. They can and should
be tapped to accelerate the volume and pace ofcapital flowing to meet the needs of people and theplanet.
Multiple external and internal investor barriers
currently limit the flow of this potentiallytransformational capital. Although it is important toaddress the barriers that institutional investors faceand structure investable vehicles that respond totheir needs, institutional investors themselves needto act for progress to happen at scale.
Many of the barriers holding some institutional
investors back can be overcome with existing
tools and instruments, often used in combination.
Successful approaches and modalities need to be
expanded so that more institutional investors canparticipate and deploy capital. Efforts can, in thefirst instance, be concentrated on dialling up themany effective existing structures. Perhaps the mostpromising is the increased use of guarantees andinsurance coverage at a portfolio and vehicle level.
Concerted and coordinated action is now requiredby both asset owners and asset managers – andall the other actors that support them – to use
existing, or create, pathways to enable institutional
capital to flow at the scale and pace required towhere it can have most impact. Regardless ofdifferent starting positions among asset owners
and managers, everyone can – and needs to – doa lot more to meet the magnitude of the challenges
confronting people and the planet. Current barriers
to investment must not be an excuse for inaction– they now need to be a catalyst for engagement
and, where needed, innovation.

Mobilising capital at scale towards the SDGs now

T

his is the moment for institutional investors
to move beyond their comfort zones,
utilising and combining the instruments
and tools that will enable them to deploy
increasing amounts of capital into SDG investmentsin emerging markets. Multilateral developmentbanks (MDBs) and bilateral development financeinstitutions (DFIs) play a particularly important rolein mobilising private capital at scale and this roleshould be encouraged and augmented, not only

6by the institutions themselves, but also by theirshareholders.
The Just Transition Blueprint and accompanying
Principles proposed in the report provide a tangible
starting point for developing investment vehicles
that align with the Just Transition Elements and canhelp achieve the SDGs.
The Blueprint provides a robust and comprehensive
framework to shape a vehicle’s ambition, investment

Executive Summary

strategy, structure, outcomes' framework,
governance and operations. It also offers clear,consistent and accessible means to demonstrate
and monitor throughout a vehicle’s lifecycle how it
is helping to deliver Just Transition outcomes.

Case studies and examples featured in the fullreport illustrate how vehicles can pursue boldenvironmental and social impact and be attractive
to institutional investors – at times with the use ofblended finance.

A range of investment vehicles already exist (acrossasset classes) that – while not labelled explicitly as
Just Transition vehicles – successfully demonstrateadherence to some, or even most, of the Just
Transition Elements and the Principles of the
proposed Just Transition Blueprint.

The report also shows how an existing vehicle canundertake modest adjustments to be fully alignedwith the Just Transition Elements and Principles.
It presents ideas that asset managers and owners
can use to develop and participate in new vehicles.

Recommendationst

he report delivers action-oriented
recommendations, tailored for different
public and private financial sector actors.
We call on all parties participating in andinfluencing global financial markets to mobilise
investment to support the achievement of theSDGs in general, and a Just Transition in particular.
Mobilisation will be through vehicles and structuresthat can successfully deliver investment at scale.
These vehicles and structures will mobilise capital toachieve the SDGs with a significant subset fulfilling
the three integrated Just Transition Elements:
Climate and Environmental Action; Socio-economic
Distribution and Equity; and Community Voice.
We call specifically on G7 Foreign and Development
Ministers to amend objectives of MDBs, DFIs
and other development banks and agencies tohave a capital mobilisation objective of equal
weight with balance sheet investment. This entails
structuring incentive mechanisms that promoteevery mobilised dollar as receiving at least as muchrecognition as every dollar invested on its own
account. Making mobilisation a co-equal objective
will have implications for the business models of
the MDBs and DFIs. Therefore, we call on the G7
shareholders to provide additional financing support:
to expand project pipeline capabilities; to expand
the investment tools within these institutions;
including capital to be used by the MDBs and DFIs
for risk mitigation instruments that address the risk
(perceived and real) of institutional investors; andto provide concessional capital where needed to
expand blended finance solutions.
We call on the G7 Foreign and Development
Ministers to significantly expand the use ofguarantees, particularly in emerging markets.

Building on the established track record andexisting models of guarantee providers, werecommend investing to strengthen the balance
sheets of existing providers of guarantees. We
also recommend funding new entities at scale
to be domiciled in emerging markets to address
the specific challenges (e.g., risk barriers, real or
perceived) limiting investment of more institutional
capital, domestic and international, in thosemarkets including specifically Africa.
We call on asset managers to use the examples
offered in the report to design and bring tomarket more SDG and Just Transition productswith the objective of attracting more private
institutional capital. If they commit to this, as they
have to reducing portfolio carbon footprints by
2030, asset managers have the opportunity tomaterially increase the amount of capital flowing toinvestments that seek solutions aligned with
the SDGs.
We call on all asset owners to commit to pursuinginvestments in vehicles that demonstrably integrate
environmental and social objectives, including
those that integrate the Just Transition Elements.
They are also encouraged to increase their
exposure to emerging markets.
We call on all parties to take action now.
No matter their starting position, each actor canand should do more to participate in the solutions
that will build a more sustainable and inclusive
world for all. Commitments and pledges now need
to be translated into concrete actions.
The table on the next page provides a roadmap for
individual actions which, when taken together, candeliver an inclusive, resilient and sustainable future
for people and the planet.

7

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Urgent andCoordinatedMovement

Environmental andSocial Integration fora Just Transition

Move together at once
Build momentum
Recognise the imperativeof a Just Transition,
integrating environmental
and social objectives
Engage with and apply the
Just Transition Elements
Accelerate private capital
mobilisation towards the
SDGs

Mobilisation

Demonstrate commitment
to the SDGs
Strengthen the enabling
environment for SDG
investments

Transparency

8

Demonstrate best-inclass Just Transition
investments

Ecosystem
builders

Advisors

Impactinvestors

Assetmanagers

Institutional
asset owners

MDBs/DFIs

G7 policy
makersRecommendations

National policy
makers andregulators

AudienceForewordI
Dame Elizabeth Corley
Workstream Chair

Laurie Spengler
Senior Advisorn 2021, there has been a transformational sharedrecognition of the need to address the crises thatpeople and the planet are facing. These include
climate change, structural inequity and Covid-19.
Even more importantly, there has been a powerfulrealisation of the interconnectedness between
places and people across the globe. Confronting
a pandemic in every corner of the world has
shown that is not possible to view people as living
in separate, disconnected communities. Can we
use this enlightened awareness of our sharedexperience and needs to achieve positive results
for all? Can we invest the effort and resources
required to address the root causes of thesecrises rather than merely treating the most visible
symptoms?

The Impact Taskforce (ITF) has accepted thechallenge to consider these questions. It ispresenting actionable pathways for mobilising
greater amounts of capital to invest in solutions
that contribute to meeting the long-term needsof people and the planet. In developing thesepathways, Workstream B of the ITF has focused
its efforts on an area of activity that is galvanising
global attention – climate finance. We havechallenged ourselves to identify ways to mobilise
more capital that advances social objectives as well
as reduces carbon emissions. Simply put, unlesscommunities are supportive of climate solutions
being advanced, progress won’t happen. The
needs of communities, and the people, households
and businesses that live and work in them, must be
front and centre for climate finance to be effective.

The ITF’s starting imperatives are two-fold:

1 That more institutional capital must be invested ina future that works for all

2 That climate finance must deliver equitable andinclusive pathways to a Net Zero world, in which
no one is left behind
These imperatives, in turn, reflect two fundamental
points:• Deep, sustained and real inclusivity must bridge
the North-South divide as well as power andresource gaps determined by gender, race andother determinants of exclusion• Climate and environmental solutions meet theneeds of the planet only if they address the needsof people, particularly those not always seen orheard
It is key that all actors adopt a simultaneous
approach to achieving the SDGs and a Just
Transition. No one should wait on others to takethe first step. By moving in concert, capital can be
unlocked at the necessary scale and pace. What isparticularly hopeful about the recommendations of
the G7 Impact Taskforce is that the proposed actions
are grounded in tangible examples of what is alreadyworking to move capital towards the SDGs.

Dame Elizabeth Corley Laurie Spengler
Senior Advisor
Workstream Chair

9Introduction

G7 context for Workstream BThe achievement of global priorities –delivering the United Nations' Sustainable
Development Goals (SDGs) and delivering
an inclusive recovery from the Covid-19
pandemic – will require increased cooperationand innovative forms of partnerships between
governments, the private sector and communities.
Many interpret this statement of reality as anopportunity for positive change; others as a way
to avoid existential climate, environmental andsocial risks. Both interpretations lead to the sameconclusion – action is necessary, and on a scale
and pace not yet seen.
G7 members have been at the forefront of thedevelopment of policy and regulatory environmentsthat help increase the flows of private investment
in businesses, social sector organisations andprojects that aim to generate and deliver positive,

measurable outcomes. In particular, since thelaunch of the Social Impact Investment Taskforce
in 2013, the G7 has highlighted the importanceof innovative financial approaches, including
impact investment, to achieve better sustainable
development outcomes.
Eight years later, in 2021, there is a greater needthan ever for governments and investors tocollaborate and use policy instruments, and public
and private financing, to tackle the climate andenvironmental crisis and the long-term impact of
the Covid-19 pandemic. Mainstreaming sustainable
and impact investment would significantly help toaddress social and environmental challenges. At
the same time, the urgency and momentum aroundthe climate crisis create an opportunity to increase– at scale – the amount of capital seeking toachieve a positive environmental and social impact.

The Impact Taskforce context for Workstream B

As part of its presidency of the G7 in 2021,
the UK Government mandated the Impact
Taskforce (ITF) in July to lead actionoriented discussions around two criticaland interrelated areas:

1 Impact transparency, integrity and trust
2 Support for the development of scalable financial
vehicles that harness private capital for public
good
The ITF was further invited to incorporate threecross-cutting themes (International Development
and Development Finance, Green-Social
Interdependence and Diversity, Equity and Inclusion)
throughout its work and outputs.
To achieve the twin objectives highlighted above, the
ITF has divided its work between two Workstreams,
under the overall guidance of a Steering Committee

10

chaired by The Right Honourable Nick Hurd.
• The Workstream on Impact Transparency,
Integrity and Reporting (“Workstream A”) has led
the work on the critical need to harmonise andincreasingly bring transparent and consistentmeasurement to impact and environmental,social and governance investment pools, andprofessionally managed capital in general.
The Workstream has been chaired by Douglas L.
Peterson. See Workstream A full report.
• The Workstream on Instruments and Policies to
Scale Impact Investment (“Workstream B”) has
led the work on outlining actionable pathways tomobilise greater amounts of capital to invest in
solutions that contribute to meeting the long-term
and inextricably linked environmental and social
needs of people and the planet. The Workstream
has been chaired by Dame Elizabeth Corley.

Introduction

Workstream B reportR

eflecting the inextricable link between the
wellbeing of people and the environment,
combined with the size of the financing
challenge to achieve the SDGs,
Workstream B has adopted a thematic focus
on vehicles and structures that can successfully
mobilise institutional investment at scale. Within
this SDG thematic focus, specific attention has
been given to mobilising capital at scale to advancea transition to a Net Zero world that is inclusive
and socially beneficial for all. Although this has
global applicability, a particular focus is applied toadvancing a Just Transition in middle- and lowerincome countries, including in Sub-Saharan Africa.
This geographic focus is in line with the mandate of
the ITF and reflects the paucity of capital flowing tothese markets.
In considering the parties to be engaged to movecapital at scale, Workstream B has targetedmobilising more capital from institutional investors.
As the holders of the largest pools of investable
capital globally, increased participation of theseinvestors is path critical. Importantly, mobilising
capital from institutional investors catalyses
capital flows from both domestic and international
investors, and stimulates domestic andinternational capital markets. And yet, while they
are essential players in a successful action plan tofinance the SDGs, institutional investors cannot be
expected to act alone.
A central message of the report is that achieving
the SDGs and accelerating the volume and scaleof capital invested in social, climate and humancapital assets, will require concerted action fromall. The report pays particular attention to how
private and public actors can encourage andsupport institutional investors in playing theirpivotal role. The important role in mobilising capitalthat can be played by development banks as wellas bilateral development finance institutions is
specifically highlighted.

Momentum builds momentum when galvanisingmarkets. Market initiatives first honed in private
markets, ranging from thematic investing tostructural innovation, can and should be expected
to influence public markets. Similarly, initiatives
first developed within the impact investing market
with its disciplined approach to risk, return andimpact, can and should be expected to influenceother parts and players of the global financial
markets. These factors of influence, which arehighlighted in the report, are already catalysing
action. They will also continue to be important for
expanding and accelerating flows of capital frominstitutional investors in pursuit of the SDGs and, inparticular, a Just Transition. By a Just Transition wemean a transition to Net Zero and environmental
sustainability that is fair and inclusive. A Just
Transition offers an immediate and relevant

opportunity to mobilise capital at scale, but the
instruments and recommendations put forward in
the report have application across the SDGs. Our
expectation is that they will be tapped to accelerate
the volume and pace of capital flowing to meet theneeds of people and the planet.
In the context of investing capital for public good,
we can build on the pioneering work contributed byexisting impact investing leaders – asset owners,
managers, policy makers, practitioners andecosystem builders – who have created a bodyof deals and results over the past decade. Theirefforts provide a base of tangible activity, examples
and best practice on which to build. Their work
helps to chip away at familiar reasons that haveheld back some investors from acting thus far.
Fundamentally, the type of concerted action
envisaged for a quantum leap in capital deployed
to advance the SDGs invites all parties to take a
step forward now without waiting for others.
As the report sets out, actionable pathways todeploy capital at scale are in our sights. We havethe map; the invitation is for each of us to take atleast one step forward along the path to financing
a sustainable, inclusive and resilient world for all
people and places.
To achieve these objectives and take up
this invitation, Workstream B has produced
this evidence-based report and associatedimplementation recommendations to:• Identify best practice• Stimulate more impact financing mechanisms atscale• Demonstrate to decision makers how to integrate
a Just Transition approach into policy andinvestments
The report first emphasises the importance ofstructuring and marketing of financial instruments
and policies that scale investment which generates
positive impact for people and the planet. The
report further underlines how this supports a Just
Transition. Understanding the different starting
points across the globe for achieving a Just
Transition, the report places particular emphasison emerging markets. Importantly, the reportintroduces an explanation of ‘what good looks
like’ for a Just Transition, providing a common
understanding based on three integrated coreelements – Climate and Environmental Action;
Socio-economic Distribution and Equity; andCommunity Voice. An effective response tothese pressing needs will require determinedcollaboration by all – public and private players,
mainstream and impact investors, environmentalfirst and social-first strategies and managers, andall other actors operating in and influencing thefinancial system (Section 1).

11

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

The report then highlights key features of current
market activity – focused on the expanding
opportunities to address barriers that limit capital
flows to positive impact. The report highlights
the tools, instruments and approaches that are
being used – and can be used at greater scale– to navigate existing barriers to unlock private
institutional capital at scale. More effective use ofexisting tools and instruments to mobilise capital atscale will enable enhanced collaboration between,
and among, actors (Section 2).
Above all, the report is highly practical andshowcases tools for mobilising capital at scale.
These tools take the form of guidance on how to
use existing instruments and ideas about possible
new pathways and instruments that would makeit easier for institutional capital to drive integrated
environmental and social outcomes. The reportprovides guidance that is tailored to different asset
classes and can be applied to existing and future
investment products, with practical examples
across these different dimensions. The examples
and guidance provide ways to foster more efficientand effective collaboration and so to mobilise more
capital at scale (Section 3).
Finally, the report delivers action-oriented
recommendations, tailored for the different
audiences of the report across public and private
sectors. The recommendations provide specificactions each audience can take that strengthen
their individual contributions and bolster greatercollaboration for positive and lasting outcomes.

Who is the report for?

T

he report has been written for all those
who are able to take further action in
response to global priorities. These actors
are invited to step up and contribute toincreasing the volume and pace of capital building
a sustainable and inclusive society for all. The
recommendations offered are constructively
presented, noting near-, mid- and long-term
implications. Reflecting a healthy dose of realism(not all actions can be undertaken immediately),
the recommendations offer a set of actions thatcan be undertaken individually by each identified
group. Actions taken by each group will have an
impact; together, the potential multiplier effect is
exponential.
In the first instance, the report provides
guidance for:• G7 policy makers• N ational policy makers and regulators• Institutional asset owners• M ultilateral development banks (MDBs) andbilateral development institutions (DFIs)• Asset managers• Impact investors• Advisors• Ecosystem builders• A ll other financial market actors

12

To ensure the relevance of the underlying analysis,
guidance and recommendations, the report wasdeveloped based on extensive engagement(see Appendix 1) with representatives from theabove audiences, to whom we would wish to
express our appreciation for their generosity ingiving time and sharing insights. In total, we haveengaged with 170 individuals, representing over
110 organisations.
In particular, we would like to thank the membersof the Technical Working Group and Advisory
Panel, the participants in thematic roundtables(including asset and fund managers, impact
investing National Advisory Boards and ecosystembuilders), as well as the stakeholders engaged
through bilateral discussions, who have provided
review, thoughtful suggestions and expert
feedback.
Our hope for the report is that it serves as a tool for
engagement to drive real change. The examples
shared and actionable pathways presented offer
substantive input to be taken up at decisionmaking tables of all types for those ready andmotivated to act now. Moving from talk to action
is not about promulgating a single policy orlaunching a moon-shot investment instrument or
introducing a capital allocation algorithm; rather, it
is about each of us using the tools we have at our
disposal today to bolster the wellbeing of all people
and the planet.

1

Why does more capital need tomove faster towards the SDGs?
An immediate opportunity toadvance a Just TransitionT

his section outlines why we need to mobilise institutional capital as a matterof urgency if we are to make material progress in achieving the SDGs; why
all actors influencing and participating in financial markets need to movebeyond their respective comfort zones if we are to achieve the SDGs; and why
financing a Just Transition offers a tangible, relevant and urgent opportunity to apply
our collective efforts and demonstrate what is possible in financing an inclusive andsustainable future for all.

1.1 Section summary and key takeaways
The current momentum moving
capital towards impact needs to beaccelerated
Capital currently on the sidelines needs to be
stirred into action towards the United Nations'Sustainable Development Goals (SDGs). A
concerted and urgent effort by all financial
market actors, including investors fromacross the capital spectrum – mainstream;
environmental, social and governance (ESG);
and impact – asset managers, rating agencies,
financial intermediaries and advisors, regulatorsand governments, is required to move the vastfunding amounts needed into the SDGs.

Action needs to be truly global,
spanning developed, emerging andfrontier markets

1

 ased on the World BankB
country classification system,
these include upper-middle
income countries, lower-middle income countries andlow income countries; allother countries are referredto herein as ‘developed’.
See World Bank (2021):“World Bank Country andLending Groups”; https://
datahelpdesk.worldbank.
org/knowledgebase/articles/906519-world-bankcountry-and-lending-groups

Rapid progress is needed on the SDGs
throughout the world. That said, particularemphasis and effort must be put on emerging
and frontier markets, where the funding
gaps are most pronounced and needs – andopportunities – are immense (for the purposeof the report the terms ‘emerging markets’ and'developing countries’ include both emerging
and frontier markets).1

ESG and impact investors areleading the packtraditional capital resources into these poolsof capital. Where and how these investors will
apply and invest those resources will determine
whether we achieve the SDGs.

The investment risks from ignoring,and the investment opportunities
from embracing environmental andsocial strategies are real
Capital that ignores environmental
consequences and social inequity anddislocation will be increasingly vulnerable
to performance as well as reputational risk.
Capital that pursues investment strategies inwhich environmental and social objectives areintegrated expands the opportunity landscapefor capital to generate positive financial,environmental and social returns.

The call for ‘Net Zero’
The unprecedented recognition of the climate
crisis has increased the global appeal forurgent and immediate action. The call for a Net
Zero climate agenda has been gaining traction
across the globe in recent years, moving fromthe fringes to centre stage in politics and has
also moved into the limelight in discussionsof international financing flows, including bothpublic and private capital.

Combined, ESG and impact pools of capitaldemonstrate the potential realisation of an
inclusive and sustainable world for all.

Recognising the green-social
interdependence and resulting needfor a Just Transition

Traditional investors need to follow

Within the climate discussion there is increasingconsensus that a single focus of climate action
on Net Zero is not sufficient and that a shift in

The challenge is to move much more of the vast

13

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)perspective to also include its socio-economic
impacts is essential. A holistic approach to a
Just Transition, paying attention to our planet
and its people, is needed in order to address
climate change and its effects on societies ina fair, inclusive and lasting way – resulting in a
thriving planet where no one is left behind.

Local context matters
While the Just Transition Elements are
relevant globally, local context will determine
how the Elements are put into action. Just
Transition pathways must be grounded in local
considerations of needs, capacity and priorities
to ensure that they are inclusive, fair andequitable, and to avoid poor or disadvantaged
populations becoming worse off. The
requirement to reflect locally-specific context
does not dilute the global relevance and powerof, and need for, a common understanding ofwhat a Just Transition means in practice.

Introducing foundational
considerations of a Just Transition
The report introduces and explains four
foundational considerations that should apply
to any solution that aspires to contribute to, andadvance, a Just Transition. Any Just Transition
action must: be both universal and placebased; apply across all sectors and be sector
specific; be all-inclusive and individually sociallybeneficial; and be dynamic and grounded in thecurrent situation.

Introducing three integrated
Just Transition Elements
The report further introduces three global ‘fit for
the future’ Just Transition Elements: advance
Climate and Environmental Action; improve
Socio-economic Distribution and Equity; andincrease Community Voice. The integrated
combination of the three Elements provides
a common understanding of what a Just
Transition requires. This consistent substantive
explanation will support alignment acrosspublic and private actors and drive concerted
and effective action. Making clear ‘what good
looks like’ will allow the global community to
speak the same language in terms of pursuinga Just Transition while inviting, encouraging andincentivising actions that can have the mostimpact in local environments.

Concerted Just Transition action isrequired across relevant actors
To achieve a Just Transition, simultaneous
effort and action across all segments ofsocieties are needed, in particular with respect
to key actors in the public sector, the private
sector and communities.

14

Just Transition funding needs
and opportunities are vast
By embracing the three Just Transition
Elements, there is a real chance to accelerate
the effectiveness of public and private financedeployed towards climate and socially
positive solutions. Applying the Just Transition
Elements invites investors from every partof the spectrum of capital to allocate capitalacross asset classes in order to contribute to
the change we need to achieve our people andplanet objectives.

MDBs and DFIs must play a leadingrole advancing Just Transition
finance
Multilateral development banks (MDBs) anddevelopment finance institutions (DFIs) canand must continue to go where the private
sector currently cannot using their status,
market networks and local expertise to create
investable pipelines, investment track records
and ultimately functioning markets, so thatprivate capital can follow. Their support isfurther needed at times to provide patient, risktolerant capital and capacity-building support inblended transactions.

Private investors across the
spectrum of capital and all financial
market actors need to support
integrated environmental and socialchange and a Just Transition
Traditional institutional investors, impact
investors, asset managers, intermediaries andadvisors need to contribute to the change
required to achieve our people and planet
objectives and a truly Just Transition.

Just Transition investment
strategies must embrace eachof the three Elements
A Just Transition requires an integrated andintentional financing approach to achieve a
global Net Zero economy that leaves no one
behind. Strategies can vary and have different
areas of priority or emphasis, but all three
Elements must be present to qualify as a Just
Transition investment.

Just Transition investments varyand can span most sectors
As strategies can be anchored in or led by
the climate and environmental or the social
Element, the resulting breadth of possible
Just Transition investments is substantial.
Possibilities go far beyond the (obvious)
renewable energy generation projects, energy
efficiency investments and sustainableinfrastructure; Just Transition investments

Why does more capital need to move faster towards the SDGs?

can extend, for example, to financial
inclusion strategies targeting microfinanceinvestments, fintech and climate adaptation
insurance, healthcare strategies that include
energy efficiency improvements, green built
environment strategies that target educationaland other social infrastructure, as well as
strategies that target the growing pool ofnature-based solutions.

Outlook
There are many initiatives by investors, asset
managers and other financial sector players
recognising the importance and urgency ofclimate and Just Transition action. Accelerating
capital towards a Just Transition builds on
growing public and private market awareness,offers tangibility to a concept with positive
resonance and strengthens investment
behaviour to integrate environmental andsocial considerations. The high level of goodintentions shows that there is widespread
acceptance of the need for concerted financing
action; the current pace, however, is simply
too slow. What are the instruments and tools
to accelerate capital at scale and how they canbe used across asset classes is the subject ofSections 2 and 3 of the report.

1.2 Harnessing the power of financial markets
for public good
1.2.1 Leveraging ESG and
impact investment for theSDGs

2Thinking Ahead Institute(2020): “The world’s largest
asset managers – 2020”;
https://www.thinkingaheadinstitute.org/research-papers/the-worlds-largest-asset-managers-2020/

3

SIFMA (2021): “2021 CapitalMarkets Fact Book”; https://www.sifma.org/wp-content/
uploads/2021/07/CM-FactBook-2021-SIFMA.pdf

4

ICMA (2020): “Bondmarket size”; https://www.
icmagroup.org/Regulatory-Policy-and-Market-Practice/Secondary-Markets/bond-market-size/

56

 loomberg (2021): “ESG
B
assets may hit $53 trillion by2025, a third of global AUM”;
https://www.bloomberg.
com/professional/blog/esgassets-may-hit-53-trillion-by2025-a-third-of-global-aum/SIFMA (2021): “2021 CapitalMarkets Fact Book”; https://www.sifma.org/wp-content/
uploads/2021/07/CM-FactBook-2021-SIFMA.pdf

Financial markets need to change.
Acknowledging that ‘business as usual’will not address the climate and social
challenges the world faces, all investors andfinancial market actors need to be prepared
to go beyond ‘quick wins’ and push pasttheir respective comfort zones to address
seemingly intractable issues of environmental
degradation, social inequity, racial injustice,
the global North-South divide and more.
The resources available are potentially immense.
The world’s 500 largest asset managers collectively
manage over $100 trillion in assets.2 Global equity
markets amount to close to a staggering $106
trillion (of which about 38.5% is located in the US,
the largest capital market in the world).3 Global bondmarkets amount to a further $128 trillion globally.4
Overall, awareness and perception ofenvironmental and social challenges is increasing– as is the recognition of the exciting opportunities
that are coming out of action and innovation.
People are more actively seeking solutions andexpressing their preferences by their consumption
and investment choices. As a result, investmentthat takes into account environmental, social,and governance (ESG) criteria has expanded
and become much more sophisticated over the
past decade. It now includes both ‘responsible
investing’, defined as the use of a negative screen
to inform investment decisions, primarily seeking
to avoid certain investments that conflict with
the investor’s agreed ethical guidelines, as wellas ‘sustainable investing’, defined as the use of
positive screens to seek out investments that score
well on ESG criteria. The global ESG investment
market, including responsible and sustainable
investments, has grown by two-thirds between 2016
and 2020 and is estimated by Bloomberg to hit $53
trillion in 2025.5
Impact-focused investors have been investingin climate and social objectives for decades acrossdeveloped and emerging markets. They havepioneered the integration of intentional impact andsupport for the achievement of the United Nations'Sustainable Development Goals (SDGs) into
investment decisions.
The result is an impact investment universe thatis increasingly familiar and attractive to traditional
private investors. This approach is related, but
distinct from responsible or sustainable investment,
as it seeks to achieve clearly defined and measurablesocial or environmental impact as opposed to simply
avoiding negative externalities (see spectrum ofprivate capital in Figure 1.1 on the next page).
Yet the bulk of private capital still sits on the sidelinesof the most pressing issues of our day – environmental
degradation, social inequity, racial injustice, the global
North-South divide – and hesitates to embrace thechallenges, and the opportunities, ahead.6 Together,pools of ESG and impact capital could help realise an
inclusive and sustainable world for all.
The need for rapid progress on the SDGs is universal
and applies throughout the world. That said,
particular emphasis and, importantly, effort must be
directed towards emerging markets. This is where
the funding gaps are most pronounced andneeds – and opportunities - are immense.

15

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Figure 1.1

The spectrum of private capital

Approach

Traditional

Responsible

Sustainable

Impact Investing'Finance First'

Finance
Goals

Philanthropy'Impact First'

Accept lower Accept partial
capitalrisk-adjusted
financial returns preservation

Accept competitive risk-adjusted financial returns

Acceptfull lossof capital

Avoid harm and mitigate ESG risks
Mitigate or reduce negative outcomes for people and the planet

Benefit stakeholders

Impact
Goals

Generate positive outcomes for people or the planet

Contribute to solutions
Generate positive change for otherwise underserved people or the planet

Intentions“I am aware ofpotential
negative
impact, but do
not try to
mitigate it”“I want
to behave
responsibly”“I haveregulatory
requirements
to meet”“I want
businesses to havepositive effects
on the world,and help sustain
long-term financial
performance”“I want to help
tackle climatechange”“I want to help
tackle theeducation gap”

The ‘Impact Economy’Source: Impact Investing Institute (2020), based on Bridges Fund Management and Impact Management Project

1.2.2 Financial market
key actors need to movesimultaneously
Given the amount of capital they control,
institutional investors (as asset owners) are a front
row audience for the report. Nevertheless, manyother actors are needed to accelerate and expand
the flow of capital to where it is most needed.
Crucially, all actors will need to work together
simultaneously to effect systemic change anddesign and deliver financial solutions that bring thenecessary impact within the timelines required.
Key actors in global financial markets that need toengage and drive change include the following:• I nvestors, including institutional investors; impact
investors; governments and related entities suchas MDBs, DFIs and sovereign wealth funds(SWFs); individuals (as direct investors or indirectly,
e.g., as pension beneficiaries); and other investors
such as corporations•S tewards of capital, including asset managers,
investment consultants and investment banks(buy-side advisory)•R ule setters, including regulators and ratings
agencies

16• Designers and structurers of products,
including asset managers and investment bankers• Ecosystem players, including auditors, legal andother advisers, and corporates
A further explanation of the role of each of thesegroups is available in the full report.
Each type of actor plays a unique and criticalrole in the financial market ecosystem, helping
to ensure the smooth running of local andglobal financial flows. Each of these actors has
the immediate opportunity and responsibility todirect their actions beyond generating shortterm financial returns. Whether motivatedby the reduction of risk or the pursuit of newopportunities, these actions will help deliver abetter and more sustainable future for people
and planet.
The actor types set forth above are active infinancial markets across the globe. To increase
the likelihood of achieving the SDGs where noone is left behind, these actors are encouraged
to increase their focus on emerging markets.

Why does more capital need to move faster towards the SDGs?

1.3 A Just Transition fit for the future
1.3.1 Net Zero is a start –but it is not enoughhas highlighted the urgent need to design climate
solutions that pay attention to our planet and its
people. A holistic approach is needed to address
climate change and its effects on societies in a fairand inclusive way.

The climate crisis is one of the defining and universal
challenges of our time. The impact on our planet isvisible. Sea levels have risen, heat waves have led toextensive droughts across continents, glaciers haveshrunk, and plant and animal ranges have shifted.

1.3.2 A Just Transition

The Intergovernmental Panel on Climate
Change’s 2018 special report rang an alarm bell.
It demonstrated that net CO2 emissions must
be reduced to zero by 2050 to stabilise global
temperatures and limit global warming to 1.5°C or
2°C to avoid the worst climate impacts.7

The ‘Just Transition’ concept originates in circles
linked to trade union and environmental justiceaction and gained nearly universal recognition
when it was incorporated in the historic 2015 Paris
Agreement, which was signed by 196 nations.

The call for a ‘Net Zero’ climate agenda has been
gaining traction across the globe in recent years,
moving from the fringes to centrestage in politics.
Net Zero has also moved into the limelight indiscussions of international financing flows, including
both public and private capital.
However, there is increasing consensus that a single
focus on Net Zero is not sufficient. It has generated
push-back due to perceived or actual negative socialand economic effects of actions resulting from Net
Zero commitments, including job losses in affectedindustries or changes to commodity prices resulting
in higher household expenses. These negativesocio-economic effects have led to social tensions,dissatisfaction or even unrest across the globe.
7

IPCC (2018): “Special Reporton Global Warming of 1.5°C”;
https://www.ipcc.ch/sr15/

A shift in perspective to include socio-economic
aspects is paramount. The Covid-19 pandemic“Core to Just Transition is
the recognition that climate
success will be contingent
on designing a transition
that is both fair and seen
to be fair across regions
and across the socioeconomic spectrum.”
Source: LSE Grantham Institute andUniversity of Leeds (2021): “Financing
climate action with positive social impact– How banking can support a Just Transition in the UK”

Figure 1.2

Net Zero by 2050: What does it mean?
Based on research conducted by the IPCC, to limit global warming to 1.5°C vis-à-vis pre-industrial levels(and hence avoid the worst climate impacts), global CO2 emissions will need to reach Net Zero – or carbon
neutrality – by around 2050.
BUSINESS AS USUALEmissions
Reduction

NET ZERO
Gross Emissions
Net Emissions
Carbon Removal

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

Source: IPCC (2019): “SR15 Full report, Section 2”

17

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

Its inclusion was an acknowledgment that
decarbonising objectives need to be combinedwith attention to affected workers in a shift to a
resilient economy. The Paris Agreement noted
the disparities across countries, regions andcommunities and the related need for assistance,
both financial and capacity building, to countries
that are both less wealthy and more vulnerable tothe climate crisis. The Just Transition concept was
explicitly acknowledged, underscoring the need for
different climate transition and planet preservation
strategies across sectors, and for different regions
and communities.
Since the Paris Agreement, the discussion on
a Just Transition has broadened to include amore systemic concept reflecting green-social
interdependence, its dynamic nature and theneed for a holistic approach that breaks down
the often-siloed discussions between climate andsocio-economic considerations. The more recent
discussions recognise that climate action pathways
to Net Zero must lead to a thriving planet where noone is left behind. Particular attention needs to be
paid to segments of societies which are typicallyunderrepresented and discriminated against as
a result of, among other factors, their economic
standing, race or gender.
At COP26 a number of western nations signed a
Just Transition Declaration, stressing the need toensure that no one is left behind in the transition to
Net Zero economies, recognising that the climatetransition will affect those working in sectors, cities
and regions reliant on carbon-intensive industries
and production most acutely, and recognising thatthe effects of climate change disproportionately
affect those in poverty, and can exacerbate
economic, gender and other social inequalities.889European Commission(2021): “France, Germany,
UK, US and EU launch
ground-breaking International Just Energy Transition
Partnership with South
Africa”; https://ec.europa.eu/
commission/presscorner/
detail/en/IP_21_5768
Place-based approaches are
person-centred, bottom-up
approaches used to meetthe unique needs of people
in one given location byworking together to use thebest available resources
and collaborate to gain local
knowledge and insight; see
IRISS (2015): “Place-based
working”; https://www.iriss.
org.uk/resources/irisson/
place-based-working

10

IPCC (2018): “Special
Report on Global Warmingof 1.5°C”; https://www.ipcc.
ch/sr15/11

Just Transition and COP24(2018): “Solidarity and Just
Transition Silesia Declaration”

18

Geographic considerations are integral to a Just
Transition approach. Climate change is a global
problem that will require action across all developedand emerging markets. Implementing an effective
Just Transition requires paying attention not only tothe universal concept but also to the local context
through the use of a place-based lens.9
Countries, regions and communities have different
starting points when it comes to achieving a Just
Transition. They will have different emission legacy
track records; different levels of dependence on
fossil fuels and greenhouse gas emitting sectors
and existing energy infrastructure. Different
exposure to climate-related risks, demographic
footprints and human development indicators
will all have an impact. Countries, regions andcommunities will also have distinct resultant
decarbonisation and development trajectories.
These are influenced by factors that include financial
strength, and local capacity and capabilities toaddress Just Transition imperatives, including
access to global finance flows and international
support.
Given their respective starting points and trajectories,

countries will have different development priorities
which need to be considered when designingsolutions, e.g., meeting rising energy demand,
expanding access to energy, modernising energy
infrastructure, reducing environmental footprint, or,on the social side, providing employment, reducing
poverty, and addressing inequalities.
Similarly, sectoral considerations are key to a Just
Transition. While transition away from coal andfossil fuel divestment will be essential to achieving
Net Zero, a Just Transition must not be limited
to activities specifically focused on fossil fuelreduction. Just Transition efforts should span all
economic sectors, seeking innovation and changes
to business models that improve our climate andplanet and advance the livelihoods of our people.
Efforts must also reach consumers and become
engrained in human awareness and resultant
habits and individual choices.
A Just Transition approach to achieving Net Zeroshould consider:
1 Different climate transition and planetpreservation strategies across sectors
2 Geographic disparities, needs and priorities atinternational, national and regional levels
3 Affected and underserved or marginalisedcommunities, households, individuals, workers,
and enterprises to achieve an inclusive andsocially beneficial transition

International initiatives
Following the 2015 Paris Agreement, there havebeen a number of significant declarations, guidelines
and reports that underline the need for actions that
support a climate transition that is fair and just.
These have included those listed below as well as
more recent announcements coming out of COP26:• The International Labour Organization (ILO)’s
Guidelines for a just transition towards
environmentally sustainable economies andsocieties for all issued in 2015
• The Intergovernmental Panel on Climate
Change’s 2018 Special Report on Global
Warming of 1.5°C, a comprehensive “reporton the impacts of global warming of 1.5°C
above pre-industrial levels and related global
greenhouse gas emission pathways, in thecontext of strengthening the global responseto the threat of climate change, sustainable
development, and efforts to eradicate poverty”10• The Solidarity and Just Transition Silesia
Declaration, signed by 50 countries at COP24 in2018, reaffirming the Paris Agreement, stressing
the required paradigm shift and recognising
the greater and specific needs of developing
countries11• The ILO Climate Action for Jobs Initiative at theWhy does more capital need to move faster towards the SDGs?

United Nations Climate Action Summit in 2019,
under which 46 countries committed to support
a just ecological transition and to formulate
national plans for a Just Transition through social
dialogue, creating decent work as well as green
jobs, thus enabling ambitious action toward asustainable future of work12• The European Union (EU)’s European Green Deal,a plan that intends to mobilise at least €1 trillion
in sustainable investments over the next decade,including the ‘Just Transition Mechanism’ targetinga fair and just green transition13. This includes a€17.5 billion Just Transition Fund, the first pillarof the Mechanism, which is set to support EU
countries as they wind down fossil fuel industries,14with at least €100 billion in investments being
mobilised over the period 2021–2027 to support
workers and citizens of the regions most affectedby the transition away from fossil fuels15• The Task Force on Climate, Development and theInternational Monetary Fund, which recognised“climate change poses significant risks to financial
and fiscal stability, poverty and inequality and thelong-run growth prospects of the world economy.
But climate action presents an opportunity tobuild a green and just 21st century economic
infrastructure, adapting to the changing climate
while raising levels of prosperity across the world.
It is imperative that the global community support
climate resilience and transition to a low-carbon
economy in a just way”16• The G20 Sustainable Finance Roadmap,
developed by the G20’s Sustainable FinanceWorkstream (SFWG) and endorsed by the G20
finance ministers and central bank governors
in 2021, which highlights the “need to advancethe understanding of and support the growth ofmarkets for financing a just climate transition”
Additionally, national initiatives linked to a Just
Transition have been launched in many developedand emerging economies across the globe. A listof select country-level Just Transition initiatives isprovided in the full report.

12

ILO: “Climate Action for Jobs initiative”; https://www.ilo.org/
global/topics/green-jobs/areas-of-work/climate-change/
WCMS_732060/lang—en/index.htm

13European Commission (2020): “The European Green Deal
Investment Plan and Just Transition Mechanism explained”;
https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_24

14Euractiv (2021): “EU lawmakers give final approval to bloc’s
green transition fund”; https://www.euractiv.com/section/energy-environment/news/eu-lawmakers-give-final-approval-toblocs-green-transition-fund/15

European Commission (2020): “The European Green Deal
Investment Plan and Just Transition Mechanism explained”;
https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_24

16

Task Force on Climate, Development and the International
Monetary Fund (2021): “Toward Development-Centered Climate
Change Policy at the International Monetary Fund”; https://www.bu.edu/gdp/files/2021/10/TF_Strategy-Report_FIN.pdf

Financial actors’ initiatives
There has also been a significant show of interest
and commitment by asset owners, asset managers
and the DFI community to Just Transition
opportunities. Significant initiatives include:• The Joint Declaration of All Development Banksin the World at the Finance in Common summit
in 2020, which confirmed that just transition is an
integrated part of international development anddevelopment finance efforts17• The Net Zero Asset Managers Initiative, launched
in December 2020, is recognised by the United
Nations Framework Convention on Climate
Change (UNFCCC) Race to Zero campaign
and now has 128 signatories that manage
approximately $43 trillion of the more than $100
trillion asset management industry18• The Statement of Investor Commitment to
Support a Just Transition on Climate Change
included 161 investors, representing $10
trillion, endorsed Just Transition;19 and the
Global Investor Statement to Governmentson the Climate Crisis included 587 investors,
representing $46 trillion 20• The announcement of the Glasgow Financial
Alliance for Net Zero (GFANZ), a consortium of
450 financial firms across 45 nations, to aligntheir own businesses and their lending andinvesting activities with Net Zero goals 21
Individual institutional investors are also taking
relevant actions, and there are important
supporting initiatives, driving greater disclosureand transparency about impact in companies’ andinvestors’ performance and reporting. The mostnotable of these initiatives is the November 2021
announcement by the IFRS Foundation of theestablishment of the International Sustainability
Standards Board. Impact transparency, integrity
and reporting are specifically addressed in
the report of Workstream A of the G7 Impact
Taskforce.

17

Finance in Common (2020): “Joint Declaration of All Public
Development Banks in the World”; https://financeincommon.
org/sites/default/files/2020-11/FiCS%20-%20Joint%20declaration%20of%20all%20Public%20Development%20Banks.pdf

18

Net Zero Asset Managers initiative (2021); https://www.
netzeroassetmanagers.org/net-zero-asset-managers-initiative-announces-41-new-signatories-with-sector-seeing-net-zero-tipping-point

19

PRI: “Statement of Investor Commitment to Support a Just Transition on Climate Change, originally endorsed by 161 investors”;
https://www.unpri.org/download?ac=10382

20

UNEP Finance Initiative (2021): “Global investor statement:
Investors urge governments to undertake five priority actions
before COP26”; https://www.unepfi.org/news/industries/investment/nearly-600-investors-urge-govts-to-undertake-five-priority-actions-before-cop26/

21

 FANZ (2021): The Glasgow Financial Alliance for Net Zero –G
Our progress and plan towards a net-zero global economy

19

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

1.3.3 Integrated Just Transition Elements fit for the future
The Just Transition concept is used by governments,
labour groups, investors, businesses, civil society,and multilateral agencies to better understand who
will be affected by climate action and where theeffects of related systemic shifts will be felt. It ispivotal, therefore, that these stakeholders embrace ashared view of what constitutes a Just Transition.
The foundational considerations of a Just
Transition are that it should:• Be universal and place-based• A pply across all sectors and be
sector-specific

Actions will only be considered as advancing a Just
Transition if they meet all three of the integrated
Elements: advance Climate and Environmental
Action; improve Socio-economic Distribution andEquity; and increase Community Voice. Only byadhering to a common understanding of a Just
Transition can we ensure that equitable and inclusive
pathways to Net Zero and a thriving planet are
realised and not left to rhetorical aspirations.
By introducing the Just Transition Elements, we canmake clear what ‘good looks like’, which in turn islikely to spur concerted and effective action.

Building on the foundational considerations above
and the need to integrate environmental and social
objectives to achieve a sustainable and inclusivetransition for all, and drawing on current discussions
and thinking, this section sets out the future-fit ‘Just
Transition Elements’.

Ensuring the transition to a sustainable andinclusive world for all requires conscious,
intentional, proactive and concerted action
across the world, from both public and private
actors. Embracing common Just Transition
Elements across all groups will strengthen
efforts under way and encourage new efforts
with sharper clarity and focus. Every global
movement invites moments of collective clarity
to inspire action. By introducing the integrated
Just Transition Elements that build on what hascome before, we are contributing to this clarity
which, in turn, will galvanise action.

The Just Transition Elements integrate three criticaldrivers of a Just Transition applicable acrossgeographies, sectors, policies and investments.

Further guidance on the Just Transition Elements, aswell as a Blueprint for inclusion in financing vehicles
across asset classes, is provided in the full report.

• Be all-inclusive and individually sociallybeneficial• Be dynamic and grounded in thecurrent situation

Figure 1.3

The integrated Just Transition Elements
Advance Climate and Environmental Action
1 Greenhouse gas emission mitigation, reduction and removal
2 Adaptation and resilience
3 Biodiversity and natural capital and climate and environmental effects

The three Just Transition Elements

4 Reduction of pollution or degradation of the natural environment

9 Biodiversity and natural capital and socio-economic effects

AND increase Community Voicea Social dialogue and stakeholder engagement through a participatory
voice and inclusion in decision making for those affected and thosefrequently excluded and/or marginalised, including communities andpeople

20

CE
VO I
U
MM
CO

8 Livelihood enhancement and social justice for all across regions,communities and individuals, including marginalised and underserved
groupsY
NIT

7 Accessibility and affordability of products and services

CLi r o I M AT En me
an taln d
AC T
I ON

6 Inclusive opportunities for decent jobs (including re-skilling where jobs
are lost), delivering fair income, security in the workplace and social
protection for families

env

5 Fair distribution of climate change costs and benefits between developed
and developing countries and between regions and communities withincountries, based on a place-based lens

SOCIO-ECONOMIC
DISTRIBUTION AND EQUITY

Just Tr ansition

AND improve Socio-economic Distribution and Equity

Why does more capital need to move faster towards the SDGs?

1.4 The opportunity to finance a Just TransitionThere is a growing awareness that funding
the transition to Net Zero represents asignificant economic opportunity. At a
global level, the New Climate Economy
initiative estimates that “bold action could yielda direct economic gain of $26 trillion through to2030 compared with business-as-usual”.22 Similar
studies have been conducted at national level.
Just Transition goals can only be met with afundamental shift of global financing, and withwidespread adoption of investments that support
and accelerate a Just Transition. The full range offinancing tools is required, including both public
and private funding across asset classes to obtainthe vast funding amounts needed.
Figure 1.4

Trillion USD (2019)

Clean energy investment required to achieve Net Zero5
End-useEnergy infrastructure

4Electricity generation3

Low-emissions fuels2

In addition to the concerted effort of industrialised
countries to support developing countries, theirmultilateral development banks (MDBs) andbilateral development finance institutions (DFIs)
are needed to expand funding and accelerate
Just Transition-relevant projects, enterprises, andfinancing vehicles. At the Finance in Common
summit 2020, public development banks 24
delivered a Joint Declaration of All Development
Banks in the World, confirming that Just Transition
is an integrated part of international development
and development finance efforts.
MDBs and DFIs play an essential role towards
achieving a global Just Transition. MDBs alone
committed $61.6 billion towards climate financein 2020. In addition to these important capital
allocations, MDBs and DFIs can and need tocontinue to go where the private sector currently
cannot, to create investable pipelines, investment
track record and ultimately functioning markets, sothat private capital can follow. They can help derisk investment by providing patient, risk-tolerant
capital and capacity-building support and creatingtransactions that ‘blend’ public or other impact-first
capital with private institutional capital.

1.4.2 Private funding towards
a Just Transition1

2016-20

2030

2050

Source: IEA (2021): Net Zero by 2050

1.4.1 Public funding towards a
Just Transition
Governments have been called to action toachieve long-term Net Zero objectives and aredeveloping roadmaps to meet these. In addition toclimate action at the national level, in Copenhagenin 2009, developed countries jointly promised
to increase their annual climate-related financesupport to developing countries to $100 billion peryear.
At COP21 in Paris, developed countries confirmed
their intention to continue and increase theircollective support of developing countries withrespect to climate mitigation, adaptation actions
and implementation of transparency to enhance
the provision of urgent and adequate finance,technology and capacity-building support,
considering developing countries’ respective
needs and priorities. At the conclusion of COP26
the Glasgow Climate Pact reconfirmed the needto significantly increase support for developing
countries beyond $100 billion per year.23

Despite substantial funding commitments fromgovernments, MDBs and DFIs, public monies
will not be enough to meet the funding needs toachieve a global Just Transition. Private capitalacross the spectrum of capital is required,including both risk-tolerant pioneering capitalfrom impact investing capital providers and thetransformative large amounts of capital that areheld by institutional investors, estimated at $154
trillion as of end 2020.25 All investors need toembrace the push towards a global transition thatis just and fair for all.
In 2020, in a joint Statement of Investor
Commitment to Support a Just Transition on

22

The New Climate Economy (2019): “Unlocking the Inclusive
Growth Story of the 21st Century”: Accelerating Climate Action
in Urgent Times; https://newclimateeconomy.report/2018/
wp-content/uploads/sites/6/2018/09/NCE_2018_FULL-REPORT.pdf

23

UNFCCC (2021): “Glasgow Climate Pact”; https://unfccc.int/
sites/default/files/resource/cma2021_L16_adv.pdf

24

Public development banks are state-owned financial institutions
that aim to deliver on policy objectives to support the economic
development in a country or region, including MDBs and
DFIs. According to the AFD (https://www.afd.fr/en/actualites/
six-things-know-about-public-development-banks), there arearound 450 public development banks across the globe

25

Thinking Ahead Institute (2021): “Global Pensions Asset Study- 2021”; including in their analysis pension funds, insurancecompanies, sovereign wealth funds, endowments and foundations and mutual funds
21

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

26

27

PRI: “Statement of Investor
Commitment to Support a
Just Transition on Climate
Change, endorsed by 161
investors”; https://www.unpri.org/download?ac=10382
UNEP Finance Initiative(2021): “Global investor
statement: Investors urge
governments to undertakefive priority actions before
COP26”; https://www.
unepfi.org/news/industries/
investment/nearly-600investors-urge-govts-toundertake-five-priority-actions-before-cop26/

consultants) to allocate capital across asset
classes in ways that contribute to the change
we need to achieve our people and planet
objectives.

Climate Change, 161 investors, representing $10
trillion in assets, committed to supporting a Just
Transition.26 In the run up to COP26, 587 investors,
representing $46 trillion in assets, endorsed a 2021
Global Investor Statement to Governments on the
Climate Crisis, which includes a call to governments
to develop Just Transition plans for workers andcommunities affected by the transition to Net Zero.27
On the back of COP26, this commitment is gaining
further traction within the investor community. Thatsaid, investors do not act in isolation. Also, theuniverse of intermediaries, advisors and consultants
need to do their part and move beyond short-term
financial targets in order to achieve long-term andsystemic change.

1.4.3 Possible investment
strategies for Just Transition
finance

Investors have an array of investment opportunities
across all asset classes that are ESG- or impactrelevant. However, currently there are few deals thatfully satisfy all three of the Just Transition Elements
given that Just Transition has been until now either
loosely defined or narrowly used to speak to the lossof jobs arising from a transition from fossil fuels.
Applying the Just Transition Elements allows
investors from every part of the spectrumof capital (and the wider ecosystem of asset
managers, intermediaries, advisors and

A Just Transition requires an integrated andintentional financing approach to achieve a global
Net Zero economy that leaves no one behind.
Financing of Just Transition initiatives, provided byboth public and private investors, should integrate
the three Just Transition Elements outlined in thereport. The Just Transition Elements can be applied
to portfolio allocation strategies and funding
decisions, establishing and following clear andtransparent parameters.
A Just Transition investment will need to include
a combination of target investment objectives,with at least one identified objective within eachof the three Elements, to qualify as such. Possible
strategies that follow the Just Transition Elements’objectives are shown in Figure 1.5.

Figure 1.5

Just Transition Elements and example strategies to meet them
Just Transition

Climate andEnvironmental
ActionExamples of financing strategies

Emission mitigation, reduction and removal

Renewable energy, sustainable infrastructure, electricvehiclesAdaptation and resilience

Resilient infrastructure, resilience insurance

Biodiversity and natural capital andclimate and environmental effects

Sustainable forestry

Reduction of pollution or degradation of thenatural environment

Circular economy

Fair distribution of costs and benefits ofclimate action

Socioeconomic
Distribution
and Equity

Community
Voice

Foundational
Considerations

22

Inclusive opportunities for decent jobs

Job-creation, quality jobs, up/re-skilling, job preservation

Accessibility and affordability

Access to affordable energy strategies, affordable housing

Livelihoods and social justiceFinancial inclusion, gender or racial equity strategies

Biodiversity and natural capital –socio-economic effects

Sustainable agriculture, fishery, wildlife conservation

Dialogue and engagement

Community/employee ownership schemes

A Just Transition must:• Be universal and place-based• Be all-inclusive and individually socially beneficial• Apply across sectors and be sector-specific• Be dynamic and grounded in the current situation

Why does more capital need to move faster towards the SDGs?

When combined, these strategies offer a positive
impact approach to climate and social investing thatcan contribute to achieving a Just Transition thatdelivers the promise of a sustainable and inclusive
society for all.

Community Voice Threshold

The report provides guidance to focus investment
efforts that explicitly integrate all three Elements of
Climate and Environmental Action, Socio-economic
Distribution and Equity, and Community Voice
but does not legislate the manner in which thoseElements are satisfied by an investment. Rather, it
sets out a threshold related to meeting each of the
Elements.

For more detail on the Community Voice Element,
see full report.

Climate and Environmental Action
Threshold
Every Just Transition investment transaction will, asa minimum, include at least one clear component of
Climate and Environmental Action and there should
be a net positive contribution to climate andthe environment.
For more detail on the Climate and Environmental
Action Element, see full report.

Socio-Economic Distribution andEquity Threshold
Every Just Transition investment transaction will, asa minimum, make a net positive contribution toSocio-economic Distribution and Equity.
For more detail on the Socio-economic Distribution
and Equity Element see full report.

Every Just Transition investment transaction will, asa minimum, include meaningful engagement withlocal stakeholders and demonstrate how Community
Voice is reflected.

The relative prominence of the individual Elements will
depend on the respective strategy or funded initiative
being pursued. Certain investments may integrate
positive climate and social action simultaneously witha focus on the stimulation of ‘new’ business models
and innovations of existing models, as for example,
investments that accelerate access to affordable
renewable energy or investments into green microfinance or green affordable housing that is energy
efficient. Other investments may have a clear primary
focus on the Climate and Environmental Action
Element while including consideration of, andengagement in, the other two Elements. Such an
example may include an investment in renewableenergy generation including an explicit focus on decent
jobs and community support (see full report for casestudies and examples of vehicle strategies).
Regardless of the primary area of priority oremphasis, all three Elements should be present
to qualify as a Just Transition investment. When
combined, the three Elements offer a positive impact
approach to climate finance that can contribute toa Just Transition. Application of the Just Transition
Elements to existing investment products in the market
as well as influencing the design of new investment
products is the focus of Sections 2 and 3 of the report.

Figure 1.6

Example strategies from climate-led to social-led

Climate-led

Access torenewableenergyWaste & water

Sustainableinfrastructure
Renewableenergygeneration &distributionGreentransport
Green realestateEnergyefficientconsumerproducts

Nature-based
solutionsSustainable
forestry

Financialinclusionincl. climate
insurance

Resilience
insurance

Healthcareincl. energy
efficiency

Affordable
green housing
Education

Biodiversity in green realGreenagriculture

SustainableoceansSocial-led

estateEquality
strategies
incl. climate
resilience

Circulareconomies

23

2

What are the units of action formoving markets towards the SDGs?

T

his section outlines what the key levers are for ensuring institutional capital
participates in achieving the SDGs in general, and a Just Transition inparticular. It details the key players and parts of the system – financial market
actors, regions, asset classes – and identifies the collective approaches thatcan be better and more expansively utilised to overcome current barriers and mobilise
capital at scale. It lists existing and proven tools and instruments that are available to be
expanded in order to accelerate the flow of capital to achieve the SDGs.

2.1 Section summary and key takeaways
Financing needs to be
stepped up now
There is significant near-term opportunity tomobilise and allocate capital at scale among
investor types across the spectrum of capitalto help achieve the Sustainable Development
Goals (SDGs) in general, and a Just Transitionin particular. This opportunity is found in bothdeveloped and emerging markets and acrossasset classes, within existing investment
products and those yet to come to market.

Investment to achieve the SDGs
needs to be activated across all
asset classes, both listed andprivateThere is a dynamic connection between privateand listed markets, where the innovations
generated by nearly two decades of impact
investing vehicles by managers in private
markets are informing public markets andshaping mainstream finance offerings.

Introducing the scope of the report
The report focuses on the mobilisation of
institutional investor capital into investment
vehicles that address funding needs towards
the SDGs in general, and a Just Transition inparticular, with a focus on emerging markets.
While the report acknowledges the relevanceand importance of all asset classes in achieving
the SDGs, it prioritises private equity, private
debt, infrastructure, real estate and fixedincome.

The transformative potential ofinstitutional investor capital
Enabling at-scale mobilisation of capital into
emerging markets from institutional investors,

24

who control vast amounts of capital, presents
one of the most powerful means of financing
to meet the SDGs and, in particular, deliver a
Just Transition to Net Zero. The growing poolsof domestic institutional investor money inemerging markets also have a significant roleto play.

Momentum is there
Interest in applying environmental, social andgovernance (ESG) and impact standards isgaining traction across the institutional investor
community. The asset manager universe thatdelivers impact and offers sizeable investment
vehicles is growing, and includes mainstream
managers moving into impact and impact
managers scaling up.

Institutional investor investment
barriers need to be understoodMultiple external and internal investment
barriers currently limit the flow of institutional
investors’ transformational capital. However,the challenges to investment must not be
an excuse for inaction. Existing and familiar
instruments and tools demonstrate it is possible
to address these barriers.

Simultaneous, concerted andcoordinated action is required byboth institutional asset owners andasset managers – and all the otheractors that support them –to overcome these barriers
It is important to address the investment
barriers that institutional investors face andstructure investable vehicles that respond totheir needs. Importantly, institutional investors
themselves also need to move beyond theirWhat are the units of action for moving markets towards the SDGs?

comfort zones for progress to happen at scale,including amending their existing mandates
and allocation frameworks and adjusting their
incentive structures towards consultants andasset managers where appropriate. Intentional
effort by all financial market actors, includingintermediaries, consultants, advisors andrating agencies, that often act as gatekeepers
to investment, is encouraged. Well-structured
partnerships between investment actors can– and do – overcome current barriers andachieve meaningful capital allocations towards
the SDGs.

Instruments and tools that address
barriers and drive mobilisation exist

MDBs and DFIs need to dial up
their tools and instruments towards
private capital mobilisation

Instruments and tools need to
be fully and further activated toaccelerate mobilisation

Multilateral development banks (MDBs) anddevelopment finance institutions (DFIs), using
their status, market networks and expertise,are crucial for the acceleration of institutional
investor mobilisation given their ability to create
investable pipelines, their ability to provide derisking support such as subordinated capitalor guarantees, and their ownership of years of
relevant performance data.

These now familiar instruments and tools need
to be expanded so that more institutional
investors can participate and deploy capital
into the SDGs in emerging markets. Perhaps
the most promising tools are the increased
use of guarantees and insurance coverage ata portfolio and vehicle level as they allow for
unfunded risk mitigation.

Blended finance plays an importantrole in addressing risk/returnbarriers

Given the diverse range of institutional
investors, there will not be one solution thatfits all. Each may have their own specific setof challenges, depending on the regulatory
framework and jurisdiction under which
they operate, and their individual appetite
for engagement, which may be determinedby their leadership. Early engagement withtargeted investors and distinct partnerships areimportant to move significant money into Just
Transition solutions in emerging markets.

Blended finance is a highly effective and widelyused approach enabling private commercial
capital to invest for social and/or environmental
impact. Blended structures can provide
investors with the opportunity to increase
portfolio exposure into strategies which
demonstrate strong fundamentals but areassociated with high perceived risk.

Many proven instruments and tools alreadyexist (be it within blended finance structuresor others), often combined, to help mobilise
institutional capital. The report showcases thefollowing: subordinated capital, guarantees,
insurance, securitisation, local currency
financing, performance data and informationand partnerships. The potential of these
instruments and tools is evidenced by realexamples that demonstrate how capital can bemobilised at scale.

The need for tailored approaches

2.2 The principal levers and change makers
2.2.1 Background to the scopeof the report28

Thinking Ahead Institute(2021): “Global Pensions
Asset Study – 2021”;
including in their analysis
pension funds, insurancecompanies, sovereign
wealth funds, endowments
and foundations ttand
mutual funds

There is significant near-term opportunity tomobilise and allocate capital at scale among many
investor types across the spectrum of capital tohelp achieve the SDGs. This opportunity exists inboth developed and emerging markets and acrossasset classes, within existing investment products
and those yet to come to market. The reportfocuses on the specific opportunity to mobilise
investments by institutional investors into privateand fixed income vehicles targeting emerging
markets.

Institutional investors
Mobilising institutional investors (as asset
owners, such as pension funds and insurancecompanies) is vital, as the amount of capital
they hold and control, estimated at $154 trillion
as of the end of 2020,28 has the potential to
be transformative if deployed towards positiveenvironmental and social impact. As responsible,
sustainable and impact investing practices gainawareness and traction, now is the time forinvestors to step up their existing commitments to
the SDGs in developed markets and go beyond
their comfort zones and deploy capital into SDG
investments in emerging markets.

25

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

While institutional investors based in developed
markets hold the largest amounts of capital, there
is also a need – and an opportunity – to mobilise
institutional investors based in emerging markets.
Local institutional investors are a critical sourceof funding and will be increasingly important inbuilding domestic capital markets including serving
as a source of local currency financing. To date,their participation has been limited primarily tosovereign bonds.29

Emerging markets
Emerging markets represent the biggest
opportunity (and gap) as they have been
traditionally overlooked by institutional investors.
Additional capital to achieve the SDGs in general,and a Just Transition in particular, is urgently
needed across the world (as highlighted in Section
1.4). The report focuses on emerging marketsas, historically, institutional investors have been
largely on the periphery when it comes to investing
significantly in these geographies.

Investment vehicles

2930

OECD (2021): “Mobilising institutional investors
for financing sustainable
development in developing
countries: Emerging evidence of opportunities andchallenges”; https://www.
oecd.org/dac/financing-sustainable-development/
Mobilising-institutional-investors-for-financing-sustainable-development-final.
pdf
See Section 1 for an
overview of statements byasset owners; Vontobel Asset Management(2020): “Vontobel study
confirms investors want toincrease their allocation to
emerging markets”; https://am.vontobel.com/en/news/
vontobel-study-confirmsinvestors-want-to-increasetheir-allocation-to-emerging-markets, for survey
evidence; and Impact Investing Institute (2021): “Impact investing in emerging
markets: Opportunities
for institutional investors”;
https://www.impactinvest.
org.uk/our-case-studies/emerging-markets/, forcase studies of investmentsin emerging markets byinstitutional investors

26

The focus on institutional investors, on the one
hand, and emerging markets, on the other, has led
the report to concentrate on indirect investmentusing vehicles such as pooled investment
funds as these allow for scale to be achieved byconsolidating investments. Available investmentsin emerging markets tend to be smaller and moredispersed than in developed markets. The ability
to aggregate investments in vehicle structures iscritical to create access for institutional investors
who require scale. Such aggregated investment
offerings also allow for diversification andprofessional management with market accessand expertise and therefore can help to reduce
portfolio risk.

Asset classes
While investment to achieve the SDGs needs tobe activated across all asset classes, private
investments are a powerful entry point forinvestments that seek to achieve meaningfulenvironmental and social objectives owing togreater investor influence and control. This isparticularly true in emerging markets, given thelack of mature public, regulated markets and hence
limited investable volume of publicly listed assets.
Within private asset classes, private equity(including direct and fund of funds vehicles),private debt, infrastructure and real estate
offer actionable pathways that are familiar to asset
owners and managers and can be successfully
expanded to mobilise more capital. They offer
significant and market-ready opportunities to shapethe design of investment vehicles and can further

the SDGs and satisfy the Just Transition Elements
proposed in Section 1.3.
Within publicly listed assets, fixed income
meets high investor appetite for familiar productsthat can produce an attractive and reliable yield andliquidity. There is great potential for emerging market
bonds aligned with the SDGs and Just Transition
objectives, as the growth of green, sustainabilitylinked and other thematic bonds illustrates. (The
opportunity to influence public equity markets inways that advance alignment with the SDGs using
the important levers of transparency, harmonisationand integrity is the subject of the report of the
Impact Taskforce’s Workstream A.)

2.2.2 Moving markets towards
the SDGs
The report calls on asset owners and managers
to step up now; move beyond a siloed focus on
separate climate or social considerations andto integrate these considerations within theirportfolios across asset classes; expand their useof instruments and tools that can address some of
the barriers holding capital back; and proactively
pursue investments in emerging markets, where
the impacts of climate change (largely generated
by developed countries) and socio-economic
challenges are most acute.
The report calls on all actors in financial
markets, whose actions (and inaction) will
influence asset owners and managers in theircapital allocation decisions, to engage andseek ways to use the levers at their disposal toencourage the scaling of capital towards the SDGs.
Only if all actors – those who deploy capital directly
and those who influence that deployment – act
together, will we see a material acceleration andexpansion of capital at scale.
A growing number of actors are stepping up to thischallenge and embracing the opportunity to move
more capital towards the SDGs – they are driving
change and showing their peers the way forward.
More and more institutional investors aremaking commitments and allocations towards
environmental and social impact, as highlighted
in Section 1 and in the context of specificinvestments in Section 3. There is evidence ofgrowing institutional investor interest in emerging
markets specifically – including in investments that
contribute to achieving the SDGs, as reflected instatements, investor surveys and investments.30
This movement has been supported by thepioneering work of impact investors, including
DFIs and MDBs, foundations and certain family
offices. These investors are demonstrating anddeveloping the investability of emerging markets,
including by providing anchor funding or de-risking
support in some cases.
Supporting this movement by asset owners areWhat are the units of action for moving markets towards the SDGs?

a number of trends among asset managers.
An increasing number of mainstream managers
are moving into impact investing to attract capitalfrom institutional asset owners who are interested
in impact and financial performance. This builds
upon the pioneering work of impact managers,
who are themselves growing and building trackrecord, allowing them to attract more institutional
investment. Additional players are institutional
investors’ management arms who are
expanding to offer sustainable products to third
parties, and DFIs and MDBs who are at times
adopting manager roles for third-party institutional
capital. Manager partnerships between

mainstream and impact managers are also forming
and can further increase the appeal of impact
propositions.
Within the wider ecosystem, there is a
growing number of supporting advisors andintermediaries (including placement agents,
investment banks, investment advisors andconsultants) that provide critical support toinstitutional asset owners and managers seeking toinvest for impact. In addition, industry networks,
media and forums are increasingly coveringand hosting impact related events, which more
institutional investors are attending.

2.3 Institutional investors’ key barriers to investingin emerging markets in private transactions –and how to overcome themNotwithstanding the positive trends
highlighted above, institutional investors
continue to face real and perceived
barriers to participating in emerging
markets’ transactions. Such barriers can beclassified as external or internal. Most apply acrossasset classes, but some are more relevant for
certain asset classes. Similarly, while most barriers

Barrier

Relevance acrossinstitutional
investor types
and asset classes

affect all institutional investors, some present moresignificant impediments to certain institutional
investor types because of their regulatory status.
For capital to move at scale, these barriers need
to be acknowledged and adequately addressed.
The table below sets out select barriers andapproaches to overcoming them. See full report for
more detail.

Possible approaches to address the barrier

Actors to support
the proposed approaches

External
Real orperceived
risks ofinvestments
and returns• Real andperceived
macro risks
relating togeography
and market• Insufficient
track recordand data
points• Uncertainty
and/or levelof expected
returns

Universal

Various instruments and tools can help address
the risk/return challenge and bridge the information
asymmetry (for perceived or existing risks). Examples
include (for more details on each of these tools see
Section 2.5):• Impact investors (including
MDBs, DFIs and private impact
investors) across risk mitigating
instruments, performance dataand partnerships• Subordinated capital, including first-loss equity,
junior debt and other• Credit guarantees• Insurance, e.g., political risk
• Concessional returns or shared upside
participation• Insurance companies (insurance
products)•G rant-funded technical assistance facilities, thatprovide direct capacity support to investees andselectively to managers for the establishment of
new vehicles• Donors (for grants)• Hedging• Hedging providers• Provision of relevant (e.g., performance) data
and track record, to help investors in their risk
assessment• Partnership approaches. For example, many
MDBs and DFIs offer syndication platforms, where
institutional investors can participate pari passuin the MDB’s loan, benefiting from their market
knowledge (and even preferred creditor status)
27

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Barrier

Relevance acrossinstitutional
investor types
and asset classes

Possible approaches to address the barrier

Actors to support
the proposed approaches

External
Lack of size
and available
pipeline

Lack ofreliable
information

Universal

Universal

Syndication and co-investment opportunities areoffered by many MDBs and select DFIs (see also
above).

MDBs/DFIs (syndications)

Impact investors, in particular MDBs and DFIs, canconsider selling some of their more mature assets,allowing institutional investors to step into performing
assets with relevant track record.

MDBs/DFIs and larger funds(co-investments)

The increased use of fund of fund structures (orsimilar platforms), aggregating smaller vehicles into
a combined portfolio would enlarge and diversify
transactions.

Asset managers

Investors can engage with dedicated managers
both in order to stay abreast of trends and to inform
investment strategies coming to market.

Asset managers and institutional
investors

National policy makers should ensure their country
provides for an enabling regulatory environmentthat allows for viable investment propositions. For
example, professionally managed infrastructure
project tenders, in particular targeting Net Zero and/or decarbonisation commitments, with clear rulesof engagement and tariff structures, create investor
comfort and enable such projects to become viablepipeline deals. The same applies for professionallymanaged public procurement tenders for social
investments (e.g., affordable housing, healthcare
facilities, education, etc.).

National policy makers

There are also initiatives specifically targeting project
development with the goal of fuelling pipeline
generation of deals that can ultimately attract
institutional capital.

E.g.: PIDG’s InfraCo Africa andInfraCo Asia; IFC’s InfraVentures;
Global Energy Alliance for People
and Planet

Access to and dissemination of reliable, consistent
data is slowly improving, with more and more impact
follow-on funds coming to market that build on the
successful implementation of the marketed strategy,
data and performance of earlier funds.

MDBs/DFIs hold long-term data;also other impact investors haveaccumulated valuable data over
several years

Impact investors, in particular DFIs and MDBs,
need to provide transparent information and data toallow others, including private investors and rating
agencies, to assess the risks of relevant investmentsin emerging markets. They also need to continue tochallenge the traditional perception that there is aninverse relationship between social or environmental
impact and financial return.
Possible approaches that address information
asymmetries include:• Partnership structures, including syndication
platforms (see above)• Sharing of performance data and info (see above)• Use of local advisors• Technology solutions that are showing promise•F unding support to local managers to develop
more efficient information systems to extrapolate
data from operating businesses

28What are the units of action for moving markets towards the SDGs?

Barrier

Relevance acrossinstitutional
investor types
and asset classes

Possible approaches to address the barrier

Actors to support
the proposed approaches

External
Lack ofliquidity

Lack ofecosystem ofsuitable intermediaries

Particularly MDBs and DFIs, but also
other impact investors; supported
by advisors, such as investment
banks

Universal;
uncertainty ofexits is a particularchallenge for private
equity; within
asset classes,
low liquidity may
be a problem forsecurities andrelated vehicles
listed on emerging
markets exchanges

Many investors, such as life insurers or pension
funds, have long-dated liabilities that have theability to sustain longer investment horizons. Suchinvestors are able to get comfortable with private
investments without asking for liquidity premiums.

Universal acrossasset classes andinvestor types

The universe of specialist intermediaries andadvisors is growing. Strengthening the capacity ofthese managers can be encouraged by investors
and by development agencies.

Asset managers, investment
consultants, investment banks andother advisors

Also, partnership models can help overcome thisbarrier.

Across financial market actor types
Law and policy makers andregulators working with asset
managers and engaged institutional
investors

For private equity, more sales of assets by impact
investors, MDBs and DFIs would create a deeper
secondary market, increasing investor confidencein sufficient access and liquidity.

Statutory andgeneral law
duties andregulatory
requirements

Relevant acrossasset classes
with different
implications;different investors
can face specificregulatory
frameworks, also
differentiated byjurisdiction

Law- and policy-makers and regulators need towork closely with the investor and asset manager
community to overcome regulatory barriers.

Credit ratings

Relevant for fixedincome bondissuances or
securitisations;
across investor
types; insurancecompanies areoften the mostrestricted byregulators in holding
sub-investment
grade assets

Credit ratings are a crucial factor in assessing bonds
and securitisations. Emerging markets issuers arechallenged by country ceilings and at times rating
models that may not fully reflect the realities of
emerging markets portfolios.

Efforts to increase awareness among regulators of
emerging market data points and deal dynamics isa necessary first step. Lack of awareness reinforces
conservative assumptions and maintains highbarriers to investment activity in emerging markets.

Ratings agencies working withactors that have data and regional/
sector experience (asset managers,
impact investors, etc.)

Approaches that can be pursued to achieve
investment-grade ratings include:• Diversification across emerging markets but also
across developed and emerging markets• Guarantees, in particular by highly rated MDBs and
DFIs, can provide substantial support to vehicle
portfolios’ ratings• Insurance, including non-payment insurance
coverage or particular risk coverage, such aspolitical insurance• Subordinated capital

Higher costs

Universal, acrossasset classes andinvestor types

Costs of private transactions, particularly inemerging markets, are higher than institutional
investors are used to in listed markets.
Investors prepared to invest in emerging markets
to build a degree of internal capacity to makeinvestment decisions, which can be expected to berealised by greater volume of investment activity.
They also need to fairly assess the fees required bymanagers operating in emerging markets to executeon the strategy.
Grant support may help cover certain transaction
costs that are inherently higher, particularly in private
emerging markets transactions.

Donors or impact investors

29

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Barrier

Relevance acrossinstitutional
investor types
and asset classes

Possible approaches to address the barrier

Actors to support
the proposed approaches

Internal
Limited risk
appetite

Rigid
allocation
policies orframeworks
and mandate
restrictions

In principle
universal, acrossasset classes andinvestor types;
however, risk
appetite varies
by investor type,e.g., life insurers,
pension funds
and also somesovereign wealthfunds typicallyhave more appetite
for longer time
horizons and cantherefore afford to
take more risk

Universal, acrossasset classes andinvestor types; animportant driverfor change is
the institution’s
leadership andthe voice of its
members

Although institutional investors need to satisfy theirrisk/return requirements in making investment
decisions, they need to disaggregate theserequirements to identify the parts of their portfolios
where SDG-aligned emerging markets investments
can fit. They need to quantify their long-term liability
exposures with investment opportunities that matchthese exposures.

Institutional investor leadership(trustees/boards); potentially
specialised advisor support

When allocating to these assets, investors canengage with market actors, including impact
investors, MDB/DFIs and leading managers, toobtain a more informed view on risk and to ensurethat deals and vehicles are structured to satisfy theirrequirements. Early engagement and partnerships
can ensure that concerns are being addressedby using blended structures (including the use ofrisk mitigation and protection through insurance,
guarantees, subordinated capital layers and others).
Institutional investors can amend their mandates,
policies and allocation frameworks, allowing for moreinvestment engagement in emerging markets and tosupport the SDGs.

Institutional investor leadership(trustees/boards) and shareholders

Where the asset owner is a pension fund, themandate should be published to scheme members/
pension holders to highlight the progress in reflecting
a commitment to the SDGs in executing investment
responsibilities.
Incentives should also be set for asset managers
and investment consultants to actively pursue
relevant transactions.

Lack ofawareness
and access

Universal, acrossasset classes andinvestor types

Increase use of partnerships and syndication
platforms, in particular working with MDBs and DFIs
or SDG-focused investment managers.

All, including impact investors(MBDs/DFIs, private), asset
managers, advisors, etc

Engagement with more mature impact managers.
Also, many funds provide for co-investment, allowing
investors to start direct engagement alongside avehicle and its professional manager.
Specialist advisors can support in-house teams andprovide access to relevant deals.
Staffcapabilities,
expertiseand market
familiarity

Universal, acrossasset classes andinvestor types

Same as above.

Incremental
effort

Universal, acrossasset classes andinvestor types

Time and effort are required to underwrite any new
set of opportunities, yet asset owners can resist thecommon request to charge a ‘complexity premium’or similar underwriting fees. It is not unreasonable
to expect asset owners to develop the expertiseand skills needed to consider emerging market
investment opportunities in light of the scale of theopportunity and the need for all actors to movebeyond their comfort zones to help deliver a Just
Transition as set forth in Section 1.3.
Specialist advisors that can support in-house teamsin the review of investments. In addition, as asset
owners become more familiar with such investments,
more available quality data and information should
reduce the required effort over time.

All, including institutional investors
but also asset managers, advisors,
including investment consultants
and investment banks, to invest timeand resources to educate and learn

What are the units of action for moving markets towards the SDGs ?

See full report for specific examples of actors
addressing the barriers highlighted in the table
above.
In order to mobilise private capital at scale,
it is necessary to address the barriers that
institutional investors face and structure
investable vehicles that respond to theirneeds. As pathways for action are created,
institutional investors are encouraged
to commit to proactively explore andtake up these opportunities. This form ofdynamic engagement is an example of thesimultaneous action needed by various actors
for progress to happen at scale.
Other actors in the financial universe, including
asset managers, investment consultants, advisors,
and rating agencies also need to step up, engage
constructively and work together to accelerate
capital flows into emerging markets towards the

SDGs. Collaborative and coordinated action
can ensure that such enhanced capital flows
are not a one-off occurrence but are insteadsustained efforts that will yield lasting andsystemic change.
The challenges to investment that exist today
should not be an excuse for inaction. As
shown in the sections that follow, intentional
effort and well-structured partnerships
between investment actors are overcoming
current barriers to achieve meaningful capital
allocations to address the SDGs. The tools
and instruments needed to mobilise capital
exist today; when used and combined at
greater pace and volume they can mobilise
private capital at scale. Institutional asset
owners can take clear and bold steps toshow that they are ready, willing and able todeploy capital to meet the challenges andopportunities confronting society today.

2.4 The role of blended financeBlended finance is a structuring approach
supporting private commercial capital toinvest in impactful opportunities. It is ahighly effective and widely used approachenabling private commercial capital to invest forsocial and/or environmental impact, particularly inemerging markets.
Blended structures are often used to address oneof the main barriers of private investors highlighted
above: risk (whether actual or perceived) andreturn. See full report for more detail.

By combining private capital with other types ofcapital willing to accept different terms, blended
finance can direct private sector capital into
impact investment opportunities in developing
countries that would otherwise remain on thesidelines. The ultimate objective of all these efforts
is to increase development impact and crowd-in
private investments with minimum concessionality(see Figure 2.1 below) and increased trust andtransparency.

Figure 2.1

Blended finance de-risking methods
RISKS
MACRO
Political/
country
risk

Currency
risk

CREDIT/COMMERCIAL
Credit risk

Liquidityrisk

Demandrisk

TECHNICAL
Construction
riskOperation
risk

FINANCE
Access tocapitalINFRA SPECIFIC
Lack ofpipeline

Off-takerisk

1. Guarantees

INSTRUMENTS

2. Insurance
3. Hedging
4. Junior/subordinatedcapital
5. Securitisation
6. Contractual
mechanisms
7. Resultsbased
incentives
8. Grants

Source: Blended Finance Taskforce (2018): Better finance, better world31

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

The use of blended finance has grown in recent
years, particularly to advance an explicit impact
objective or to expand the flow of capital to lessfamiliar places. In addition to risk mitigation andthe resulting capital mobilisation, blending has also
been a powerful tool to engage new investors in
impact transactions, allowing them, with reduced
risk, to familiarise themselves with new territories.
Transactions that incorporate blended finance into
their structures have spanned all alternative subasset classes, including private equity, and private
debt/illiquid credit (including notes and bonds),
and infrastructure. According to Convergence,
the asset classes relevant to blended financeare estimated to account for around $6 trillionof alternative investment portfolios globally.31 To
date, most of these investments have been private
investments, as opposed to publicly listed equities
or bonds.32
Blending and the use of relevant instruments
need to be expanded in order to mobilise
more private capital. A targeted use ofblended capital is to mobilise the large
amounts of capital needed from institutional
investors into SDG-relevant transactions.
However, blending capital is scarce and needs to
be used conscientiously to optimise its potential.
Risk-tolerant capital is only provided by a few
actors within the impact investor community,
including select private impact investors, inparticular foundations and family offices, and tosome extent by DFIs and MDBs.
The market needs to be disciplined in the use ofthis limited capital: use it where it is truly needed tomobilise investors, and maximise the mobilisation
multiples in order for the capital to benefit as manytransactions – and investors – as possible
All investors, in particular the receivers of riskmitigating capital instruments, need to engage toapply blending tools effectively and judiciously.
Scrutiny should be applied during structuring toensure that the blended capital is really necessary
and to outline tangible pathways for how blending
capital will be reduced over time as data andtrack record are generated. In most transactions
blending support should be a temporary measure,decreasing over time as at least perceived risk
asymmetries are addressed with increased
performance data.
Blended finance is a highly effective andwidely used approach enabling privatecommercial capital to invest for social and/or environmental impact. Blended structures
can provide investors with the opportunity toincrease portfolio exposure to asset classes
such as emerging market private debt or
infrastructure, which demonstrate strong
fundamentals but are associated with highperceived risk.

2.5 Instruments and tools for accelerating andincreasing flow of capital

T

31

32

Convergence (2018): “Whois the Private Sector? Key
Considerations for Mobilizing Institutional Capitalthrough Blended Finance”;
https://www.convergence.
finance/resource/1hYbzLsUbAYmS4syyWuqm6/
view lended Finance TaskforceB(2018): “Better finance,
better world”; https://www.
systemiq.earth/wp-content/
uploads/2019/07/BFT_BetterFinance_ExecSummary_FINAL_18012018.pdf

32

his Section presents summaries of thetools and instruments that enable capital
to be mobilised at scale towards theSDGs, in particular in emerging markets.
They can be effectively combined in order todirect significant amounts of institutional capital
into relevant investments. Given that institutional
investors have specific requirements, appetites andchallenges, solutions need to be designed withspecific investors in mind. More details on each of
the instruments, tools and examples mentioned
below can be found in the full report.
These instruments and tools will not solve thecapital mobilisation challenge on their own.
Managers are encouraged to structure investment
vehicles for strategies that advance the SDGs inemerging markets by using one or more of the
instruments and tools that are gaining traction andfamiliarity. MDBs and DFIs feature in nearly all of
the instruments and tools highlighted, underscoring
their vital role in mobilising institutional capital.

2.5.1 Subordinated capital
Subordinated capital tranches are often provided
by impact investors, including public and private
funders. For institutional investors they provide
an important de-risking mechanism, as senior
ranking tranches benefit from loss protection
by their junior counterparts. The core feature ofsubordinated capital structures is that the juniortranche in principle absorbs losses first, so that thesenior tranche is only affected by losses once thesubordinated tranche is ‘wiped out’.
Subordinated capital is probably the most widelyused blended finance tool in vehicle structuring for
impact investing where the perception of risk may
deter participating investors. While syndication
platforms, discussed later in the report, havedemonstrated significant volumes of mobilised
capital, the use of subordinated capital directly
targets risk sharing among investors. Convergencefound in its 2018 report that blended financefunds with concessional first loss capital layers(including grants, debt and equity) showed anWhat are the units of action for moving markets towards the SDGs?

average leverage ratio of 3.3x. So for every $1 offirst loss concessional capital deployed, $3.3 ofsenior commercial capital has been mobilised.
This ratio, however, includes significant amounts of
MDB and DFI commercial capital. When excluding
the mobilisation of MDBs and DFIs, the ratio for themobilisation of purely private commercial capital is
only 1.4x.33 Examples of vehicles that use a layered
capital structure showcased later in the full report
include AllianzGI’s AfricaGrow Fund, BlueOrchard’s
InsuResilience Investment Fund, and Ninety One’s
Emerging Africa Infrastructure Fund.

2.5.2 Guarantees
The OECD defines guarantees as “a type of
insurance policy protecting banks and investors
from the risks of non-payment”.34 The guarantor,
i.e., the provider of the guarantee, agrees to pay
the investor or lender in the event that the investee
or borrower is unable to do so, typically against thepayment of a fee.

33

Convergence (2018):“Leverage of Concessional
Capital”; https://www.
convergence.finance/
resource/35t8IVft5uYMOGOaQ42qgS/view

34OECD (2021): “The roleof guarantees in blended
finance”; https://www.oecd.
org/dac/the-role-of-guarantees-in-blended-finance730e1498-en.htm

35

European Commission(2021): “The EU External
Investment Plan – A rangeof financial guarantees”;
https://ec.europa.eu/eu-external-investment-plan/sites/default/files/documents/efsd_guarantees-feb_2021-en.pdf

36

G uarantCo (2021): “Enabling
long-term infrastructure
finance in local currency
Quarter 3 2021”; https://guarantco.com/wp-content/
uploads/2021/11/GuarantCo-CorporatePresentation-Q3-2021-v101121.pdf

37

A DB and IFC (2019): “MDB
Joint Report – Credit
Insurance Extract”; https://www.eib.org/attachments/press/1257-joint-report-onmdbs-climate-finance-2019.
pdf

Guarantees can enable a proposition to achievea certain (investment grade) rating that allows
investors to come into the deal. Guarantees aremainly issued on specific deals but can also be
assigned at the portfolio or vehicle level. In theirpursuit of the SDGs, such vehicle or portfolio level
guarantees have the potential to mobilise significant
institutional investor support. Guarantees can also
be a useful tool to free up capital on institutions’ (inparticular banks’) balance sheets, allowing them toextend new loans.
For example, the European Fund for Sustainable
Development (EFSD)’s Guarantee from the EU
has stated a mobilisation target ratio of 10x.35
GuarantCo to date has achieved a mobilisation
ratio of up to 3x.36 The multiplier potential ofguarantees to address the risk (actual andperceived) barrier of institutional investors andmobilise capital at scale is significant.
In emerging markets, guarantees are mostly
used directly, in particular with commercial
banks and infrastructure projects. There are as
yet few vehicle-level guarantees, and these are
primarily used in impact investing. One example
is SunFunder’s Solar Energy Transformation (SET)
Fund. The $70 million SET Fund, SunFunder’s third
debt fund, is a nine-year blended finance vehicle for
distributed solar and storage investments in Africanand other emerging economies. Vehicle level
guarantees represent an important opportunity forfurther activation in the pursuit of mobilising capitalat scale.

2.5.3 Insurance
Insurance provides protection against specificrisks, whereby the risk of the insured loss istransferred to a risk pool administered by the

insurer against payment of an insurance premium.
In emerging markets among SDG-relevant
insurance products, the most prevalent examples
are political risk insurance, (short-term) trade credit
insurance and (long-term) non-payment insurance.
Insurance can mobilise private capital into
emerging markets in two main ways. First, it cancover specific risks so that institutional investors
are able to participate in an investment vehicle.
This can enable greater participation of institutional
investors in emerging markets transactions focusedon the SDGs. Second, it can increase the current
lending activity of an institution by expanding thebalance sheet reach of commercial banks andMBDs/DFIs.
In structures where lenders are insured to expand
lending activity, there is significant opportunity
to test the boundaries of efficient balance sheet
management. In 2019, the Asian Development
Bank (ADB) used $921 million of credit insurance
to bring insurance providers into loans or portfolioof loans, of which more than $500 million was
in local currency, and the European Bank for
Reconstruction and Development (EBRD)
used $950 million. The International FinanceCorporation (IFC) used close to $800 million in2020 and expanded its relationships with insurancecompanies under its Managed Co-lending Portfolio
Platform (MCPP) Financial Institutions Group (FIG)
platform significantly in June 2020.37
An example of expanding balance sheet capability
is the IFC’s MCPP’s FIG structure which works
with a number of international insurance providers
who provide partial insurance cover to IFC’s seniorloans, selected in accordance with pre-establishedcriteria. By transferring the risk on part of theeligible loans, the insurance coverage allows the
IFC to effectively take larger loans, increasing reachand impact. An example of specific risk coverageis Actis’ Energy 4 fund, which uses politicalrisk insurance in its investment projects, where
possible.

2.5.4 Securitisation
Traditional (true sale) securitisations are structures
where a special purpose vehicle (SPV) acts as
an issuer and purchases loans or loan portfolios
from one or more lenders (banks or otherfinancial institutions), and then sells its cashflows
as securities to investors, typically rated andtranched, backed by the loan portfolio. In synthetic
securitisation structures, risk is transferred
via credit derivatives or guarantees, while theexposure remains on the originator’s balance
sheet. Securitisations have historically been usedpredominantly in developed markets, but arestarting to be considered for emerging markets,particularly with respect to MDBs’ and DFIs’
loan portfolios.

33

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Securitisation, whether true sale or synthetic, has
the power to free up substantial amounts of funding
on MDBs’ and DFIs’ balance sheets, allowing
them additional capital to reinvest. This allows
private players to get access to MDBs’ andDFIs’ portfolios by purchasing securities beyond
individual syndication efforts as they canparticipate in the deals originated, managed andserviced by MDBs, which is otherwise generally
not possible as they cannot invest directly in
MDBs. By offering different tranches of risk,
securitisations can address and satisfy some of
the risk challenges that currently deter institutional
investors from investing in emerging markets.
An example is Room2Run, the African
Development Bank (AfDB)’s synthetic structure,that securitises a portfolio of AfDB private sectorloans. The securitisation was anchored by Mariner
Investment Group, a US asset manager, alongside
the Africa50 infrastructure fund.38 Room2Run
provides a risk protection agreement for a $1
billion pan-African loan portfolio. It is the first-eversynthetic portfolio securitisation between an MDB
and private sector investors. The securitisationtransfers the mezzanine credit risk on a diversified
portfolio covering 47 AfDB non-sovereign loans
across sectors including power, transportation,
financial, and manufacturing in Africa.39

2.5.5 Local currency financing
In many emerging markets, there is little longterm local currency financing available, due tounderdeveloped, poorly regulated and volatile local
financial markets and the absence of appropriate
financing instruments. Many local currency funding
solutions can only be achieved by MDBs andsome bilateral agencies, as special approvals andprivileges to access local currency in domestic
markets are required (as opposed to specialised
funds such as The Currency Exchange Fund, TCX).

38PRI (2019): “PRI Awards
2019 case study: Room2Run”; https://www.unpri.
org/showcasing-leadership/
pri-awards-2019-casestudy-room2run/4848.
article39

 frica50: “Room2Run SynA
thetic Securitisation”

40European Commission(2021): “The EU External
Investment Plan – A rangeof financial guarantees”;
https://ec.europa.eu/eu-external-investment-plan/sites/default/files/documents/efsd_guarantees-feb_2021-en.pdf

34

The current lack of local currency solutions,
including local currency facilities, guarantees or
hedging solutions is a major challenge for thedevelopment of capital markets in developing
countries. More needs to be done – and MDBs and
DFIs must be called upon to increase their support.
An example is the European Union (EU) Market
Creation Facility, which has a multi-tool approachto enable TCX to take on more risk and grow its
risk coverage even in challenging circumstances
like the Covid-19 pandemic, by adding a guarantee.
The increased capacity of TCX allows its clientsto provide more funding to financial institutions.
These are in turn able to lend more to people
and businesses in Sub-Saharan Africa and the
EU neighbourhood. The facility makes financial
institutions more stable by shielding end-clientsfrom foreign exchange risk.40

2.5.6 Performance data andinformation
Many institutions, especially MDBs and DFIs, havebeen working in emerging markets for many years
and therefore hold a large volume of relevant data,
including crucial data on investment performance.
Sharing data has the power to make a fundamental
change to the flow of capital to emerging markets– both with respect to actual amounts invested but
also by reducing the risk premium demanded on
emerging market securities, potentially providing
billions of actual savings. The mobilisation effectof data can also allow for the fair and realistic risk
assessment and pricing of other instruments, such as
subordinated capital, guarantees, insurance products
or securitisations. Data held by impact players should
thus be perceived as a core tool to the furtherance of
the SDGs and a global public good.
An example is the Global Emerging Markets(GEMs) database, which was established in 2009
and today counts 24 member MDBs and DFIs.
Members have access to aggregated GEMs
statistics encompassing, for example, observed
default rates, rating migration matrices andrecovery rates by geography, sector, time-period
and various other dimensions. That said, GEMs
data is currently only available to its member
institutions.

2.5.7 Partnerships
Syndication partnerships
Syndications are used by many MDBs and some
DFIs. In a syndicated transaction, the lead investor,
such as an MDB, syndicates part of its loan tothird-party investors through a so-called ‘B-loan’.
The B-loan holder sub-participates in the MDB loan,
while the MDB typically remains the sole contractual
counterparty of the borrower. The institutional
investor benefits from the MDB’s sourcing
capabilities, market network and expertise and fromits expressly developmental focus. The participation
structure also allows for clear alignment of interests
and also for the B-loan holder to benefit from the
MDB’s preferred creditor status.
Examples include the IFC’s MCPP which isprobably the largest syndication platform focusedon the SDGs and emerging markets. The ILX Fund,an SDG-focused emerging markets credit fund,is another example, whereby the ILX Fund allows
institutional investors to invest in a diversified
portfolio of MDB and DFI loan participations.

What are the units of action for moving markets towards the SDGs?

Co-creation partnerships

Other innovative partnerships

Co-creation partnerships are alliances whereby
institutional investors and impact players, including
MDBs and DFIs and others such as foundations,jointly design and sponsor the establishment of aninvestment structure or vehicle with the objectiveof catalysing more capital towards an impact
objective.

There are varied other forms of partnerships thatlink return payments to the achievement of targeted
outcomes. Such structures are currently used inparticular in deeper impact investing transactions.
These investments tend to attract limited
institutional capital where the investor has made an
allocation to impact and has an appetite to support
innovation.

A growing number of co-creation efforts can beseen in the market, with players teaming up toestablish tailored solutions. The mobilisation effecttends to be opportunity-specific.
Examples include the Global Investors for
Sustainable Development (GISD) Alliance, agroup of financial institutions and corporations
that is in the process of sponsoring the designof an infrastructure investment platform, and theRockefeller Foundation’s Global Energy Alliance for
People and Planet.

Co-management partnerships
Co-management partnerships are vehicles where
different managers with complementary skill sets
and expertise, e.g., a mainstream asset manager
and an impact manager or a DFI, cooperate. This
cooperation can be fund-specific or an actual
acquisition. The aim is to leverage respective
capabilities, with a view to a combined offering thatis attractive to institutional investors allowing thefunds to scale.
Examples include the partnership between NN
Investment Partners and FMO on the Emerging
Markets Loans Fund, a $272 million private debt
fund, GSII and MAPFRE’s partnership on the
Global Social Impact Fund, Schroders’ acquisitionof BlueOrchard in 2019 and Goldman Sachs’
acquisition of Imprint Capital in 2015.

The instruments and tools presented
in this Section are familiar and tested.
The immediate opportunity is for these
instruments and tools to be activatedmore expansively and applied at scale forstrategies that mobilise more capital toachieving the SDGs.
Managers are encouraged to structure
investment vehicles for strategies that
advance the SDGs in emerging markets byusing one or more of the instruments andtools that are gaining traction and familiarity.
MDBs and DFIs are critical actors in financing
transactions in emerging markets. They
can expand the use of the tools available tothem to accelerate effective and large-scale
mobilisation of capital towards the SDGs.
Institutional investors have an invitation
to allocate time and effort to address theirinternal barriers, cooperate with others and,
where necessary, co-create solutions thatallow them to invest at scale.
Intention and engagement are ingredients for
success. In short, there are actions everyone
can take in the near term that will increase
capital flows for the benefit of people and theplanet. The rewards of coordinated efforts
made now will be enormous.

35

3

How do we mobilise capital atscale towards the SDG s now?
asset class guidance for
Just Transition Financing vehicles
for institutional investorsFocusing on the opportunity of financing a Just Transition, this Section outlines
how we activate the units of action in a systematic manner that takes into
consideration the needs of institutional investors and the integrated applicationof the Just Transition Elements. This Section of the report provides clarity forinvestable vehicles across asset classes.

3.1 Section summary and key takeaways
A Just Transition vehicle is notestablished in isolation but
embraces multiple actors
A successful Just Transition vehicle, typicallydesigned by the prospective asset manager,
will reflect all relevant stakeholders’ (including
investors', investees', communities' and public
actors') considerations, such that the vehicle isboth investable and compatible with the three
Just Transition Elements. Also, all actors needto move with intent and purpose and cooperate
to achieve a meaningful Just Transition vehicle.

Introducing a Just Transition
Blueprint and underlying Principles
The 'Just Transition Blueprint' andaccompanying guiding Principles proposed inthis Section provide a tangible starting point fordeveloping investment vehicles that integrate
the three Just Transition Elements: Climate
and Environmental Action; Socio-economic
Distribution and Equity; and Community Voice.
The Blueprint and Principles are designed,in particular, for vehicles that seek to achieve
scale, mobilising meaningful – and ultimatelytransformative – funding from institutional
investors into Just Transition strategies.

Application of the Just Transition
Blueprint and underlying Principles
As well as providing a robust andcomprehensive framework with which toshape a vehicle’s ambition, investment
strategy, outcomes framework, structure,
governance and operations, these tools alsooffer clear, consistent and accessible means todemonstrate and monitor, throughout a vehicle’s

36

lifecycle, whether and how it is helping to delivera Just Transition. The additional asset classspecificity provided in the Principles highlights
the importance of a nuanced approach basedon asset class particularities and features.

Integration of the Just Transition
Elements into existing and new
vehiclesBy providing actionable pathways, the hopeis to encourage the use of the Just Transition
Elements by, and the resulting adaptation of,existing vehicles and to stimulate the design of
new vehicles that reflect each of the three Just
Transition Elements.

Just Transition investment
opportunities exist
Across the asset classes that the report hasprioritised for delivering a Just Transition andits Elements, a range of investment vehicles
already exist that – while not labelled explicitly
as Just Transition vehicles – successfully
demonstrate adherence to some, or even most,of the Principles of the Just Transition Blueprint
as introduced in this Section.

Case studies and examples
showcase existing and relevant(almost) Just Transition investment
opportunities
The featured case studies and examples
demonstrate how vehicles can pursue boldenvironmental and social impact and be
attractive to institutional investors – at times
with the need of blending or concessional
capital support.

How do we mobilise capital at scale towards the SDGs now?

Case studies and examples showcase
the breadth of Just Transition investment
opportunities

with the Just Transition Elements, Blueprint and underlying
Principles. We aim to inspire asset managers and owners alike todevelop and participate in new vehicles in the future.

The featured case studies and examples demonstrate
the variety of possible Just Transition-relevant investment
strategies, which can be led by climate or socio-economic
motivations.

Overcoming barriers for scaling capital
The Just Transition Blueprint and the showcased case studies
and examples also help to demonstrate how to navigate thebarriers described in Section 2.4.2 in order to mobilise capitalat scale.

The development pathway from a Sustainable
Development Goal (SDG) vehicle to a Just
Transition vehicle that follows the Principles
is possible

A Just Transition lens can be added to existingoutcomes frameworks
The introduced threshold questions and guidance provide
direction for the addition of a Just Transition lens to existing
environmental, social, and governance (ESG) and impact
frameworks without the need to develop an entirely new
framework.

Many of the showcased case studies and examples areclose to meeting the Just Transition Principles. By suggestingareas of potential Just Transition enhancement for each casestudy and example provided, we point out how an existingvehicle can undertake modest adjustments to be aligned

3.2 Using familiar vehicles for more effective alignment
with the SDGs and to deliver a Just TransitionO

ur proposed Just Transition Elements(see Figure 1.3) provide a tangible
starting point for developing a vehicle’s
design, from ambition to strategy tooperations, and across the vehicle’s investment
lifecycle, from screening to execution to monitoring.
Ambition, planning and delivery of Just Transition
parameters should be intentional. At the same time,
for such vehicles to be attractive to institutional
investors, they need to be structured and executedwith target investor parameters, interests andconstraints in mind.

Figure 3.1 shows a summary of key actors in, andcore dimensions of, a generic investment vehicle.
The following Sections will consider how a genericinvestment vehicle can be designed (or amended)
to be a Just Transition vehicle at scale. While thespecific guidance provided is applied in the context
of a Just Transition, the guidance has relevanceacross the SDGs. The guidance can be applied
across a wide range of investment strategies, as
highlighted in Section 1.4.3.

Figure 3.1

Investment vehicle: Key actors and dimensions

A
B

Asset managers

Local stakeholders(investees, communities)
Informs (targets)

Informs(needs, pipeline)
Drives1

Ambition

Drives2

Investment
strategy
Drives3

Outcomes
framework

4

Structure5

Governance

Informs(accessibility)

D

Other
investors

Drives6
DrivesLaws and regulations;influence, investment

Informs(accessibility)

C

Institutional
investors

Laws andregulations;influence

Operations

E

Publicactors37

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

3.3 Key actors in an investment vehicle

A

41

42

43

UNEP Finance Initiative(2021): “Global investor
statement: Investors urge
governments to undertakefive priority actions before
COP26”; https://www.
unepfi.org/news/industries/
investment/nearly-600investors-urge-govts-toundertake-five-priority-actions-before-cop26/
PRI (2021): “Understanding
and Aligning with Beneficiaries’ Sustainability Preferences”; https://www.unpri.org/
strategy-policy-and-strategic-asset-allocation/
understanding-and-aligning-with-beneficiaries-sustainability-preferences/7497.
article. see also “Make My
Money Matter”; https://makemymoneymatter.
co.uk/. A DFID survey of UK
pension fund members also
found that 25% of savers –rising to 44% of wealthiersavers and 35% of millennials – were supportive ofsome of their assets being
invested in Africa. See DFID
(2019): “Investing in a Better
World”; https://assets.publishing.service.gov.uk/government/uploads/system/
uploads/attachment_data/
file/834207/Investing-in-abetter-wold-full-report.pdf
 overnments also playG
an important role in thedecommissioning of legacy
fossil fuel plants, making
their early retirement
feasible38

successful Just Transition vehicle,
typically designed by the prospective
asset manager, will reflect all stakeholder
considerations such that the vehicle
is both investable and compatible with the Just
Transition Elements that have been proposed
in Section 1 of the report. Proactive outreach,engagement and cooperation across actors, fromasset managers to investors to investee enterprises
to affected communities and workers and also
public actors is needed. Best-in-class managers
are already familiar with this multi-stakeholder
approach to investment vehicle design, proving
the approach is doable and setting the bar forinvestment propositions.

to mitigate any negative impacts through close
dialogue with these communities. Participation
should be as inclusive as possible. A Just
Transition strategy may expressly consider equity
parameters with a view to increasing diversity andsocial justice, including around gender and race.

A Asset managers

Further, to gain traction with institutional investors,
an evidence-based approach to vehicle design,
supported by data combined with a place-based
story expressing the investment opportunity is mostcompelling. Together, these components can provide
clarity around an investment vehicle’s Just Transition
ambition and its targeted outcomes across sectors/
themes, including all three Just Transition Elements.

The asset manager is usually the driver of a newvehicle from idea to execution. To effectively delivera Just Transition vehicle, the starting point shouldbe the demand side of the investment proposition
to ensure that the vehicle’s strategy is relevant.
Relevance is considered based on how the vehicle
addresses both the environmental and social
needs of local communities.
For the Just Transition vehicle to be attractive to
institutional investors, the credibility of the manager
is paramount, including reputation and relevant
investment track record. At the same time, forthe vehicle to deliver a Just Transition strategy,
local expertise combined with local presenceor networks are crucial, particularly for vehicles
investing in emerging markets.

B Local stakeholders
A Just Transition strategy needs to be oriented toreflect the local context of the place (or places) inwhich it is investing or aiming to deliver impact. A
strategy’s envisaged climate and socio-economic
Just Transition pathways should always be
expressed taking into account local needs andopportunities. Engagement with local stakeholders
needs to include investees and communities.
The investment strategy needs to be grounded in
the financing requirements and funding gaps oftarget investee companies (or projects). It should
ensure that the vehicle provides responsive andaffordable support to help the company or project
achieve long-term sustainable growth. Workers in
the targeted companies or projects should be a key
part of strategy considerations.
A Just Transition vehicle needs to consider the
potential effects of its investment objectives andstrategy on local communities and explore ways

C Institutional investors
When designing a Just Transition vehicle with theobjective of attracting institutional investor capital,
recognised investment barriers for institutional
actors need to be addressed to facilitate and scaleinstitutional investor participation.

For investors who have committed to ESG, theSDGs, Net Zero or a Just Transition, such as the587 signatories41 to the Global Investor Statement toGovernments on the Climate Crisis, a Just Transition
vehicle aligns with their stated objectives. Their
reputation will benefit from contributing to societal
goals and achievement of the SDGs, as an investor’s
licence to operate is linked to its demonstration of
responsiveness to both social and environmental
issues. Investors will also demonstrate their
responsiveness to growing beneficiary preferences
for sustainable investments.42

D Other investors
Alongside institutional investors, vehicles often
include other investor types. Important to pointout here are those investors that provide the tools
and instruments, including blending support,
outlined in Section 2. As discussed, these are,in particular, impact investors, including public
players such as development finance institutions(DFIs) and multilateral development banks (MDBs)
and private players such as foundations andfamily offices. When designing and structuring avehicle, depending on the investment strategy, theasset manager may need to consider the use ofrisk mitigation instruments, such as subordinatedcapital, guarantees or insurance, that at times areneeded in order to structure a risk proposition thatis accessible for institutional investors.

How do we mobilise capital at scale towards the SDGs now?

E Public actors
National and local governments and related
institutions can support Just Transition vehicles
directly and indirectly:

National (and regional and local)
governments
Role: Allocation of public funding nationallyand internationally
A core role of governments in the context of a
Just Transition is to allocate funding to projects
and constituents, often through their ministries offinance. An important planning tool for allocations
is a country’s National Development Plan (NDP),
where it exists, which sets out the country’s climate
pathway. The local NDP may be relevant for
financing vehicles that are seeking public monies
to support their structure in a blended transaction.
It may also guide a vehicle’s investment strategy ina certain jurisdiction, based on needs and public
focus.43
Role: Shareholder of public and development
institutions
Governments are often the sole shareholders of
their sovereign wealth funds (SWFs) and DFIs as
well as joint shareholders of MDBs and other quasigovernment institutions. As such, they decide on
the amount of their contributions, the resulting
investable capital of such institutions and set theirinvestment mandate. The investment mandate
expresses the parameters of the risk, return andimpact appetite of an institution. These institutions
have the potential to play a critical role in catalysing
Just Transition investments in emerging markets.
Therefore, shareholders of these institutions canprovide strategic direction to the SWFs, DFIs,
MDBs and others, mandating greater ambition
around, and commitment to deliver, SDG outcomeswith a specific near-term opportunity to deliver Just
Transition outcomes.
In their ownership role, governments canalso consider the inclusion of targeted capital
mobilisation mandates and/or the strengtheningof existing mobilisation mandates with clear
incentive structures. Although mobilisation is often
already included in many institutions’ strategy,
incentivisation of investment teams is often still
geared towards deployment of the institution’s own
balance sheet.
Development institutions such as DFIs and
MDBs can also be incentivised more to seek
aggregating opportunities to package and movewell-performing assets off their balance sheets,
including, e.g, portfolio syndication or securitisation
structures (see Section 2.5). Using the investment
track records of these assets to attract private
capital into emerging markets could stimulate
deeper and functioning secondary markets intargeted jurisdictions. The enhanced use of risk
mitigating capital and guarantee structures tomobilise commercial institutional capital also has
the potential to move more institutional investors
into SDG and Just Transition relevant vehicles inemerging markets (see Section 2.5).
Role: Legal and regulatory framework
National governments set the legal and regulatory
frameworks of their countries. These frameworks
include the laws and regulations covering theenvironment for doing business and aroundnational and international investments. Relevantlaws and regulations also cover social priorities,
such as the Broad Based Black Economic
Empowerment legislation in South Africa. In
emerging markets, however, the local legal andregulatory environment is often not well alignedwith institutional investor requirements, as
discussed in the earlier Section 2.3 on barriers
to investment in these markets. Continued effort
is needed to develop and strengthen emerging
markets’ legal and regulatory systems so they
can be regarded as reliable and accessible for
institutional investment capital.
Role: Convener
Governments are also a crucial convener,
bringing an important voice to the Just Transition
discussion. At the national level, they may push
for transparent and standardised reporting on
environmental and/or social outcomes. Examples
include the UK Government’s proposed Green
Taxonomy. As outlined in the full report andanalysed in more detail in the report of the Impact
Taskforce’s Workstream A, several governments
are supporting the development of international
impact reporting standards that harmonise metrics
across themes and jurisdictions, helping activity
and progress to be more easily compared bycountry, sector or company.
A good understanding of how investment activity isadvancing – or not – the development agendas ofcountries and regions is important for public sector
stakeholders and their planning. Alignment to NDPs
enables further capital flows to essential parts ofthe economy while also supporting the growthof a green economy, with better outcomes for all
stakeholders through, for example, decreased
levels of pollution or climate-aligned job growth.
Clarity around who is being served and who is
being left out of a particular investment opportunity
set allows public decision makers to understandand spotlight which needs and opportunities
remain to be addressed. It can also help them tofurther enable the market by understanding thefunding gaps and building additional opportunities
and redistributing gains/expenses to other worthy
projects.

39

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

3.4 Just Transition Blueprint for investment vehicles

T

he Just Transition 'Blueprint' sets out aset of Principles together with guiding
questions that can inform the design of
any investment vehicle across asset
classes, including those not prioritised in thereport. The Just Transition Blueprint offers
clear, consistent and accessible pathways
to ascertain whether and how an investment
meets the Just Transition Elements aspresented in Section 1.3:•A
 dvance Climate and Environmental Action• Improve Socio-economic Distribution and Equity• Increase Community VoiceThe report identifies six key investment vehicle
dimensions that follow the familiar arc of a genericinvestment vehicle.

1 Ambition
2 Investment strategy
3 Outcomes framework
4 Structure
5 Governance
6 Operations
These six dimensions form the backbone of theJust Transition Blueprint. This Blueprint is intended
to provide guiding Principles, as set out below, foreach of the dimensions for an institutional grade
Just Transition vehicle.
The Principles convey core ideas on which
each dimension can be developed and invite arange of possible actions. They are expressed
as Principles to provide consistency and clarity
for progressive efforts by asset owners andmanagers. Although also applicable to other SDG
strategies, the Principles offer specific guidance
for any investment vehicle that has the intention ofcontributing to a Just Transition.
The Principles, universal questions and guidancenotes set forth in the Blueprint presented here arecomplemented with asset class specificity found in
the full report. As noted in the subsequent section,case studies and examples are provided for each of
the priority asset classes included in the full report,
demonstrating how the Principles can be put into
action to mobilise capital at scale.

40

1 Ambition
Principle 1.1
The ambition is grounded explicitly in the
integrated Just Transition Elements: Climate
and Environmental Action; Socio-economic
Distribution and Equity; and Community Voice
Key question: Is the vehicle sufficiently clear on its
ambition across each of the three Just Transition
Elements to be considered a Just Transition financevehicle?
The ambition statement clearly articulates thethree Elements of a Just Transition that are
being addressed, based on clear and concise
parameters, defining what the vehicle sets out toachieve and who will be affected, including thegeographic scope, environmental scope and socioeconomic scope. It is important to state what thevehicle will contribute to, while understanding thateach vehicle will focus on different opportunities
and challenges and be part of the solution set.
The ‘magnitude’ of the ambition will depend on thevehicle’s size and depth of impact thought.
Not every vehicle, and within a vehicle not every
investment, can achieve all climate or social
objectives at once. Each vehicle needs to express its
transition and development ambition and contribution
clearly, formulating who is being reached, served andaffected by an investment – and who is not.
The ambition expresses quantifiable outcome targets.
These targets are realised within the life of the vehicle.
A clear ambition or purpose will allow the setting of
Just Transition targets ex ante and the measurementof Just Transition achievements post investment foreach investment and on a portfolio level.
See full report for additional asset class specificconsiderations for the realisation of Principle 1.1.

Principle 1.2
The ambition is grounded in the local context
and needs
Key question: How does the vehicle ground
its ambition in the local context of the specified
geographies, including environmental and socioeconomic needs?
The ambition needs to express the local context
and relevance within the context for each of thethree Elements. When setting an ambition, local
context is important.

How do we mobilise capital at scale towards the SDGs now?

In emerging markets, accessibility and affordabilityof solutions are threshold considerations. The
countries themselves, in addition to their internal
regions, communities and individuals, areunderserved and marginalised relative to developed
countries. Inclusion of cross-cutting themes,such as gender, race or other disadvantaged
communities can be valuable components forframing an ambition, ensuring that in particularmarginalised, underserved and affected segmentsof societies are expressly included and theirinterests are addressed.
See full report for additional asset class specificconsiderations for the realisation of Principle 1.2.

2 Investment strategy
Principle 2.1
The investment strategy is Just Transition
relevant
Key question: How is the vehicle’s investment
strategy explicitly aligned with the three Just
Transition Elements?
The investment strategy sets out how the Just
Transition ambition will be met. Starting with themarket opportunity, grounded in market needs andincluding both environmental and socio-economic
factors, the investment strategy of a Just Transition
vehicle expresses a clear and concise Just
Transition intention and progression.
The strategy provides more specific detail to themeaning of the ambition statement: ‘what’ is being
addressed and ‘who’ is being reached and served.
That specificity can be expressed in terms oftarget investee or investee client segment, income
parameters, demographic data or other descriptive
data points. The strategy also acknowledges ‘what’
and ‘who’ are not included, to satisfy transparency
expectations.
A distinct understanding of how the Just Transition
strategy targets selected regions, sectors,
environmental challenges and demographic
groups, and what financial products and additional
support are satisfying market need, is paramount.
Therefore, demand-side considerations will:• Be grounded in place-based demands and need
– and resulting opportunities. The investment
strategy will reflect market opportunity andaddress specific and tangible environmental
and social needs, based on local context andpriorities and include each of the three Just
Transition Elements• Include measures for negatively affectedstakeholders; considered stakeholder groups
will include workers and communities, andspecifically underserved and marginalised
segments of communities, including gender andracial aspects; implications for local supply chain
are also considered• Consider the inclusion of social activities in thestrategy and related costs, e.g., training or reskilling of workers or community support
While all three Elements must be present in a Just
Transition vehicle, the investment strategy can be
expected to be anchored and led by the climate orsocial Element.
One key indicator of the robustness of the strategy
is the clear and transparent inclusion of Just
Transition considerations across the investment
process, from investment screening to due
diligence to investment decision and portfolio
monitoring and potentially divestment decisions(see also under Principle 6.2 below).
See full report for additional asset class specificconsiderations for the realisation of Principle 2.1.

Principle 2.2
The investment strategy is investable byinstitutional investors
Key question: How does the vehicle’s investment
strategy enable institutional investor participation in
the vehicle?
To attract significant amounts of institutional
investor capital, the vehicle’s investment strategy
must be investable by institutional investors,
addressing investor appetite and constraints.
Supply-side considerations, particularly forinstitutional investors, can include (but are notlimited to):• Satisfactory risk/return profile of underlying
investments for targeted institutional investors,
acknowledging that institutional investors’
primary focus is usually on financial performance.
Specifically:~ The proposition allows for satisfactory returns,
complemented by other financial rationales
for an investment, such as a contribution to
portfolio diversification. The risk proposition isdata-based, where possible, and addresses
key emerging markets risks~ If necessary and depending on the strategy,
a vehicle may need to include structuralenhancements that satisfy institutional
investors’ risk/return requirements. Often this41

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)will be in partnership with MDBs or DFIs orother impact-focused and flexible investors
and may employ blended finance structures(including, e.g., layered capital structures,
guarantees or grant-funded capacity support –see Section 2.5 for more detail on subordinatedcapital and guarantees). Where enhancements
are necessary, the vehicle is clear about theamount and use of blended features to deliver
the strategy• Sizable vehicle, enabling institutional investors
to deploy large capital amounts (considering
minimum vehicle size threshold levels; thevehicle can in some cases be smaller with ademonstrable pathway to replicability and scale)• Sizable and viable pipeline, backing up thetargeted vehicle size, demonstrating the viabilityof the vehicle size while meeting the investment
level criteria of a Just Transition vehicle•G eographic target markets, including an analysisof respective macro and market risks•M arket opportunity and viable pipeline,
demonstrating depth of opportunity for a vehicle
to operate at scale•D iversification and target portfolio composition,
showcasing the risk and performance
contributions of diversification within the strategy•C lear and concise story ensuring that the vehicle
effectively communicates the Just Transition
angle of the investment, its opportunity and/or risk considerations in terms that institutional
investors can understand and that is backed up
with data
Applying this Principle to vehicle design requires
iterative engagement and movement by bothmanagers and investors. While the investment
vehicle must seek to satisfy the needs ofinstitutional investors, investors must also challengethemselves to assess new opportunities that
integrate environmental and social considerations.
See full report for additional asset class specificconsiderations for the realisation of Principle 2.2.

A Just Transition outcomes framework will bealigned with the Just Transition ambition and willflow from the vehicle’s strategy. The outcomesframework provides clear targets and outcomes
metrics across all three Just Transition Elements.
A vehicle’s inclusion of the Just Transition Elementsin the outcomes management may build upon theoutcomes framework and reporting methodologies
already utilised by the vehicle manager, particularly
where those are based on existing recognised
standards such as the International FinanceCorporation Operating Principles, the Impact
Management Project, IRIS+ or the SDG Impact
Standards (see full report).
The outcomes framework can be as ‘light touch’as needed or more ambitious, depending on thevehicle’s envisaged impact and the starting pointof the vehicle manager. It includes in all cases clear
and tangible metrics showing adherence to, andthe delivery of, Just Transition Elements.
The vehicle’s outcomes framework and metrics
are applied both at portfolio level and at individual
investment level, where more detailed strategy or
sector-specific metrics may apply.
See full report for additional asset class specificconsiderations for the realisation of Principle 3.1.

Principle 3.2
The outcomes framework fosterstransparency and accountability
Key question: How do the vehicle’s reporting
requirements ensure transparency of Just
Transition targets and achievements and result inaccountability of outcomes?
The vehicle includes transparent reporting andcommunication of targets and actual achievements.
External third-party verification is considered toensure accountability, strengthen the Just Transition
proposition and to avoid green or impact washing.
See full report for additional asset class specificconsiderations for the realisation of Principle 3.2.

4 Structure
3 outcomes framework
Principle 3.1
The outcomes framework has an integrated
focus on each of the three Just Transition
Elements: Climate and Environmental Action;
Socio-economic Distribution and Equity; andCommunity Voice
Key question: What are the targeted outcomesthe vehicle intends to deliver linked to the three
Just Transition Elements?

42

Principle 4.1
The structure and terms enable the capital
invested to advance a Just Transition
Key question: How do the vehicle’s structure andterms enable the capital invested to advance a Just
Transition?
When structuring a Just Transition investment
vehicle, it is important to ensure that the structure,
the choice of asset class and the vehicle’s terms
enable the delivery of a Just Transition strategy andoutcomes targets.

How do we mobilise capital at scale towards the SDGs now?

Examples of possible demand-side considerations
include:~ L ayered capital structure and subordinatedcapital• Vehicle life and whether it is adequate to achieve
the targeted Just Transition outcomes~ Credit guarantees• Distribution of risk and returns between investees
and investors~ If blending is used, the role of blending in
the capital structure is specified, including
the contributions expected as a result of theamount, type and terms of blending• Need for technical assistance support providing
capacity building of investees and local
communities
See full report for additional asset class specificconsiderations for the realisation of Principle 4.1.

Principle 4.2
The structure and terms allow for institutional
investor participation
Key question: How do the vehicle’s structuralcomponents and terms enable institutional investor
participation?

~ Political insurance

Early engagement with targeted institutional
investors in the design process, including at times
co-creation partnership, may be advisable in orderto ensure investor appetite for the vehicle.
See full report for additional asset class specificconsiderations for the realisation of Principle 4.2.

5 GovernancePrinciple 5.1

Vehicle structure and terms address target
investors’ specific investment appetite andinvestment barriers to allow for their participation.

The governance structure holds the vehicle
accountable to its Just Transition ambition
and the Just Transition Elements

Example considerations include:

Key question: How do relevant governancebodies of the vehicle’s structure adhere to Just
Transition Elements with transparency andaccountability?

• Choice of asset class (e.g., private debt vsequity):~ Considering target investors’ allocation‘buckets’ and related targets, mandates andrestrictions~ Considering related features such as ratings (forfixed income offerings) or liquidity considerations• Choice of proven and familiar vehicle structure;adjustments may be appropriate/needed
depending on strategy; simplicity is sought,where possible• Choice of proven and familiar vehicle jurisdiction
and legal form•T
 arget size, providing the scale necessary tomeet institutional investor minimum investment
requirements•T arget returns/yields to be satisfactory toinvestors• Choice of other key terms, including, e.g.:

The governance structure of the vehicle enables
the vehicle to adhere to the Just Transition
Elements. Considerations of the Just Transition
Elements are reflected across the relevant vehicle
bodies (the board, investment committee, advisorycommittee or other applicable formalised bodiesof the vehicle), grounded in the policies that govern
each body.
The vehicle’s governance strives to be transparent
across all levels, holding all bodies accountable
for adherence to, and application of, all three
Just Transition Elements across investments andactions. Transparency and accountability aresought internally and also with respect to the wider
public. Information about the composition of avehicle’s governance bodies is publicly available.
See full report for additional asset class specificconsiderations for the realisation of Principle 5.1.

~ Vehicle life/tenor~ Vehicle currency (including hedging,as relevant)~ Management fees
• R isk mitigation through diversification targets/investment restrictions• Structural risk mitigation or return enhancement(through blended structure, concessional or nonconcessional), where necessary (see Section 2.5
for a more detailed discussion of structural tools).
Examples include:

Principle 5.2
The governance structure enables broad
stakeholder voice
Key question: How does the governance setup
enable broad participation and inclusion of relevant
voices?
The vehicle governance structure demonstrates
how different voices, and particularly the voices ofcommunities, are represented and incorporated
throughout the vehicle life.

43

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Across the governance bodies (board, investmentcommittee, advisory committee or others)
representation of at least one community member
from among the communities the fund is targetingor a person representing such communities isincorporated. For global or multi-regional vehicles
such representation may mean participationof a relevant non-governmental organisationor community expert that can contributecredible community voice and perspective tothe governance table without expecting such
representation to speak for every community thevehicle’s capital may reach. In such a case, theselection of a representative voice will contributea relevant perspective but cannot be expected torepresent all relevant communities targeted by thevehicle.
The governance structure invites intentional
dialogue across stakeholders, including investors
as well as local stakeholders and communities; thisinteraction sparks informed feedback and dialogue
throughout the life of the vehicle.
See full report for additional asset class specificconsiderations for the realisation of Principle 5.2.

6 Operations
Principle 6.1
The vehicle or manager staff are capable andincentivised to implement and execute theJust Transition ambition
Key question: How do the vehicle’s investment
professionals and back-office professionals
demonstrate the necessary training and expertise
to incorporate a Just Transition into their respective
work? How does the vehicle’s staff performance
review and incentivisation scheme account for Just
Transition targets in addition to financial targets?
A vehicle ensures that it provides training forthe relevant staff. This includes investment
professionals but also others including
Just Transition outcomes specialists or risk
management specialists, so that together they
have the necessary training to ensure the delivery
of a Just Transition strategy, from pipeline building
to due diligence and monitoring. This may mean
greater diversity of management teams, reflecting
not only investment expertise but also local market
knowledge as well as socio-economic analysis andexpertise.
Staff performance reviews and bonus or incentive
schemes include not only financial performance44

metrics but also performance metrics tied to thedelivery of Just Transition targets. Application ofsuch schemes can apply in vehicles across all
asset classes.
See full report for additional asset class specificconsiderations for the realisation of Principle 6.1.

Principle 6.2
The Just Transition strategy isoperationalised during the investment
horizon and beyond
Key question: How does the vehicle integrate
Just Transition across its investment horizon andbeyond?
An investment vehicle includes Just Transition
considerations across its whole investment
lifecycle, from sourcing to investment to monitoring,seeking to take a long-term view that extends evenbeyond the vehicle’s actual investment life.
• Investments and portfolio construction: Just
Transition considerations form an integral partof strategic portfolio construction parameters,
investment assessment, decision parameters,
expressed clearly and consistently• Monitoring: Just Transition considerations andtargets inform investee-level engagement for
improvement and potentially trigger divestment
decisionsSee full report for additional asset class specificconsiderations for the realisation of Principle 6.2.

Principle 6.3
Just Transition considerations are integrated
across policies and procedures
Key question: How are the vehicle’s Just
Transition ambition and targets reflected acrossrelevant policies and procedures?
To ensure a successful execution of the Just
Transition strategy, Just Transition considerations
not only feature in a vehicle’s ambition and strategy,
but are also integrated across relevant policies andprocedures. These could include:• Investment policy• Risk management policy• ESG policy• Investment committee and board policies• Conflict of interest policy
See full report for additional asset class specificconsiderations for the realisation of Principle 6.3.

How do we mobilise capital at scale towards the SDGs now?

3.5 J ust Transition investment vehicles byasset classC

ertain prioritised asset classes are
considered to be key funding routes
for accelerating and expanding
institutional investor participation in Just
Transition investments in emerging markets. The
table below showcases a number of investment
vehicles by asset class which, while not labelled
explicitly as Just Transition vehicles, demonstrateadherence with several, or in some cases most,of the underlying Principles of the proposed Just
Transition Elements. The referenced vehicles
span strategies from climate-first to social-first,
demonstrating the wide application and relevanceof the Just Transition Elements.
The detailed case studies and examples listed
are presented in the full report. Alongside theirclose alignment with the Just Transition Elements
and Principles, the case studies featured in
the full report in the different asset classes arenotable for their ability to combine compelling

Asset class hierarchy

Private debt

Alternatives

Private equity

Private equity(Note: Forestry
included herein,
however, often
included in real
assets depending
on investor
allocation buckets)

Private debt

Real assets

Further, the case studies are supplemented byadditional examples in the full report to show
the breadth and variety of investment vehicles,
investment strategies and asset managers active
and accessible in the different asset classes.

VehicleCase study

ExamplesPrivate equity
fund (direct)

LeapFrog: Emerging
Consumer Fund III• DPI: African Development Partners III• N ew Forests: Tropical Asia Forest
Fund• TPG: Rise Fund II

Fund of funds

N/A• A llianzGI: AfricaGrow Fund
• Credit Suisse: Climate Innovation
Fund

Private debt
fund

Ninety One: Africa
Credit Opportunities
Fund 2
responsAbility:
Access to Clean Power
Fund

Infrastructure

Fixed income

environmental or social outcomes with strong
institutional investor interest. They demonstrate
how a vehicle can undertake modest adjustments
in order to be fully aligned with the Just Transition
Elements and Principles and also offer inspiration
for the development of new vehicles. To aid further
development and improvement of the investment
vehicles, for each of the case studies the report
includes a few questions suggesting select areasof potential vehicle enhancements that could leadto further traction and more explicit Just Transitionalignment. To be clear, these questions do not
strive to be exhaustive; rather they are offered asfood for thought and encouragement with a view toseeding future Just Transition vehicles.

Infrastructure
fundActis: Energy Fund 4• FMO/NNIP: Emerging Markets
Loans Fund
• B lueOrchard: InsuResilience
Investment Fund• Triodos IM: Triodos MicrofinanceFund• Ninety One: Emerging Africa
Infrastructure Fund• Africa Finance Corporation:
Infrastructure Climate Resilient Fund

Real estate

Bonds

Real estate
fund

IHS: IHS Fund II SA

Bond fund

BlueOrchard:
Schroder International
Selection FundBlueOrchard Emerging
Markets Climate Bondfund (CBF)• D ivercity: Urban Property Fund• S chroders: Schroder Capital UK
Real Estate Impact Fund• A mundi/IFC: Amundi Planet
Emerging Green One• IFC: Masala bond programme(Note: Alternative structure)45

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

3.6 Just Transition outcomesT

he purpose of this Section is not to
introduce a new outcomes framework
nor to provide an overview of outcomesapproaches, methodologies and trends.
Rather, the aim is to provide a Just Transition
lens on how the three integrated Just Transition
Elements can be applied to existing ESG and
impact frameworks.
The credibility of SDG investing generally, and Just
Transition investing specifically, derives in large partfrom the demonstration of results. These resultsmust take the shape of outcomes delivered, notmarketing campaigns announced. As a result, aninvestment vehicle’s ability to demonstrate results
is a high priority undertaking.
The starting assumption is that investors have an
existing ESG and/or impact outcomes frameworkin place. If no such framework is in place, thepresented approach can be used as a starting
point.

when applying a Just Transition lens to the design
and implementation of an investment vehicle• Guidance on what should be considered andaddressed when applying a Just Transition lensto an investment vehicle design and operations

3.6.1 Threshold questions
The following are the key threshold questions a
Just Transition vehicle design should answer interms of outcomes:

1 WHAT
What does the vehicle set out to achieve based on,
and including, each of the three Elements:• Define a clear ambition statement• Define objectives and the targeted outcomes• Define clear and measurable targets across key
indicators

The Just Transition approach covers:• Threshold questions, that should be answered

SPOTLIGHT

Impact Management Project (IMP)The Impact Management Project (IMP) was a forum forbuilding global consensus on how to measure, assess andreport impacts on people and the environment. The IMPreached consensus that impact can be measured across fivedimensions (see below) and has developed 15 categories
that provide information on the dimensions.
In addition, the IMP facilitated standard-setting organisations
that are coordinating efforts to provide comprehensive

standards and guidance related to impact measurement,
assessment and reporting. The launch of the International
Sustainability Standards Board (ISSB) represents the next stepin standard setting efforts. The Impact Management Platform
represents the next stage of the IMP evolution, aiming to provide
the clarity that practitioners have been calling for. The Platform
has created a regularly updated web tool that explains the coreactions of impact management and links to the resources that
support organisations and investors to implement them.

The IMP reached global consensus that impact can be measured across five dimensions:
What, Who, How Much, Contribution and Risk
Impact dimension

Impact questions each dimension seeks to answer• What outcome is occurring in the period?

What• Is the outcome positive or negative?
• How important is the outcome to the people (or planet) experiencing them?

Who• Who experiences the outcome?
• How underserved are the affected stakeholders in relation to the outcome?

How much• How much of the outcome is occurring – across scale, depth and duration?

Contribution• Would this change likely have happened anyway?

Risk• What is the risk to people and planet that impact does not occur as expected?
Source: IMP website

46

How do we mobilise capital at scale towards the SDGs now?

2 WHOWho is benefiting from the vehicle, directly andindirectly; ensuring that the vehicle includes aplace-based lens:• Define the geographic scope (regional, country,
local), including, if relevant, target segments (suchas urban, peri-urban, rural)• Define the environmental scope, including climate
as well as other environmental benefits, whereapplicable• Define the scope of targeted socio-economic
demographic groups, such as targeted
population segments or specific focus on
disadvantaged and/or excluded communities• Define analysis of positive and negative
externalities of the strategy and targeted
investees in the respective regions of investment
and operation

3 HOW
How does the vehicle ensure the delivery of its
ambition and outcomes; describing pathways
that are embedded in the investment strategy andthroughout the investment lifecycle:• Define a clear investment strategy, articulating‘HOW’ the ‘WHAT’ and ‘WHO’ are being
addressed

3.6.2 Guidance
The following guidance is for market participants
when utilising a Just Transition approach:1 E nvironmental and socio-economic target
outcomes are defined from the outset:• The vehicle needs to expressly set its ambition
and targets across all three Just Transition
Elements at the outset• The vehicle can have different priorities, i.e.,
climate or social, while ensuring that all three Just
Transition Elements meet at least the minimum
threshold:~ Climate and Environmental Action
threshold: Every Just Transition investment
transaction will, as a minimum, include atleast one clear component of Climate andEnvironmental Action and there must be a
net positive contribution to climate andthe environment~ S ocio-economic Distribution and Equity
threshold: Every Just Transition investment
transaction will, as a minimum, make a net
positive contribution to Socio-economic
Distribution and Equity~ Community Voice threshold: Every Just
Transition investment transaction will, as aminimum, include meaningful engagementwith local stakeholders and demonstrate how
Community Voice is reflected2 The application of the Just Transition
Elements spans the entire vehicle
lifecycle and is to be delivered throughout
the entire lifecycle of each underlying
investment.
3 	 A mbition and targets may vary dependingon the vehicle; as with the investments
they are able to be contextual to both thevehicle, its size and aims but also to wherethese investments are being made:• They are commensurate with the vehicle’s size
and the depth of impact sought• They are grounded in the local context andbased on needs identified through community
engagement
4 S election of clear, objective metrics:• The vehicle selects measurable and clear
metrics for each of the three Elements• Portfolio-level metrics may be supplemented
with additional and sector- or strategy-specificindicators at asset level• The selection of indicators may depend
on where the vehicle is positioned on the
spectrum between ESG and impact investing.

47

4

Recommendations

The priority objectives guiding therecommendations below are to:recommendations, which are formulated asconcrete steps for specific audiences.

1 Mobilise institutional capital from the fullrange of private and quasi-public institutional
actors, in pursuit of positive impact andadvancing the Sustainable Development
Goals (SDGs) by increasing the use of proveninstruments and tools that can address
real barriers for private capital participation
significantly, and encouraging more private
sector capital to flow to emerging markets

These steps are instrumental to moving capitalat scale in support of achieving the SDGs
generally, and to advancing a Just Transition in
emerging markets specifically.

2 B reak down silos between climatefirst and social-first strategies andtransactions and strengthen theparticipation of local Community Voiceto advance a Just Transition

These steps can and should be taken by all
actors in parallel.
The audiences called upon to take up theserecommendations are G7 policy makers, national
policy makers and regulators, institutional asset
owners, multilateral development banks (MDBs)
and bilateral development institutions (DFIs),
asset managers, impact investors, advisors andecosystem builders.
We call on all parties to seek ways of working
together to meet the urgent needs of people
and the planet and maximise positive impact.

These objectives provide the basis for our

Urgent andCoordinatedMovement

Environmental andSocial Integration fora Just Transition

Move together at once
Build momentum
Recognise the imperativeof a Just Transition,
integrating environmental
and social objectives
Engage with and apply the
Just Transition Elements
Accelerate private capital
mobilisation towards the
SDGs

Mobilisation

Demonstrate commitment
to the SDGs
Strengthen the enabling
environment for SDG
investments

Transparency

48

Demonstrate best-inclass Just Transition
investments

Ecosystem
builders

Advisors

Impactinvestors

Assetmanagers

Institutional
asset owners

MDBs/DFIs

G7 policy
makersRecommendations

National policy
makers andregulators

Audience

Recommendations

Recommendations per audience
AUDIENCE

ACTIONRECOMMENDATIONREFERENCEALL• Move together and at once

• 1a

• Recognise the imperative of a Just Transition, integrating
environmental and social objectives• 2a• Engage with and apply the Just Transition Elements• 2b• Demonstrate best in class Just Transition investments• 4a• Build momentum• 1b• Accelerate private capital mobilisation towards the SDGs
~ By making mobilisation a key objective of development institutions• 3a~ 3a.i~ By significantly expanding the use of guarantees particularly forinvestments in emerging markets~ 3a.iii• Accelerate private capital mobilisation towards the SDGs
~ By making mobilisation a key objective of development institutions• 3a~ 3a.ii• Strengthen the enabling environment for SDG investments~ By ensuring that fiduciary duty considerations are not a barrier toJust Transition considerations~ By unlocking domestic capital• 3c~ 3c.i~ By improving local regulatory environments for environmental andsocial priorities~ 3c.iii• Accelerate private capital mobilisation towards the SDGs
~ By providing more investment risk support in their target emerging
markets• 3a~ 3a.ii• Demonstrate commitment to the SDGs
~ By sharing and engaging around performance data across SDG
themes, asset classes and markets~ By building a strong manager ecosystem• 3b~ 3b.iii• Accelerate private capital mobilisation towards the SDGs
~ By committing to invest in the SDGs and a Just Transition and toincrease emerging markets exposure• 3a~ 3a.vii• Demonstrate commitment to the SDGs
~ By adjusting mandates• 3b~ 3b.i

G7 POLICY MAKERS

NATIONAL POLICY
MAKERS &REGULATORSMDB/DFIs

INSTITUTIONALASSET OWNERS~ By building capabilities~ 3c.ii~ 3b.iv~ 3b.ii

ASSET MANAGERS• Accelerate private capital mobilisation towards the SDGs
~ By expanding the flow of new investments towards SDG solutions
in emerging markets• 3a~ 3a.v

IMPACT INVESTORS• Accelerate private capital mobilisation towards the SDGs
~ By continuing to play a pioneering role

• 3a
~ 3a.iv

INVESTMENT BANKS• Accelerate private capital mobilisation towards the SDGs
~ By structuring vehicles that encourage institutional investor
participation in emerging markets• 3a~ 3a.vi

CREDIT RATINGAGENCIES• Strengthen the enabling environment for SDG investments~ By considering specific parameters of emerging markets in ratingsand driving SDG recognition in credit ratings• 3c~ 3c.iv

49

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

Recommendation 1

Urgent and coordinated movement
Call to action
The only chance of achieving the SDGs, confronting the climate crisis and meeting the needs ofpeople is for each and every party to take demonstrable action now. The risks to our future are
too great for delay or hesitation. No matter one’s starting position, each actor can and should domore to participate in the solutions that will build a more sustainable and inclusive world for all.
Commitments and pledges need to be translated into concrete actions. The momentum that canbe generated by decisive actions from each audience, when taken together, can transform thefuture for people and the planet.

Recommendations
1a For all audiences:
Move together and at once

1b For G7 policy makerS:
Build momentum

Acknowledge that simultaneous and coordinatedchange needs to replace old patterns of sequentialchange, waiting for others, and commit to takespecific action now.
(See Section 1.2.2)

Mark progress against the recommendations in thisreport and hold all actors of the global system toaccount.

NEAR-TERM
6–12 months• Continue momentum, collaborating with the global
community of National Advisory Boards for impact
investment, at successive G7 meetings for the
next five years• Build evidence demonstrating the effectiveness offinancing an inclusive and sustainable society for all
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

Recommendation 2

Environmental and social integration
for a Just Transition
Call to action
Within the overarching ambition to encourage capital at scale to achieve the SDGs, recognise andembrace the imperative of integrating environmental and social objectives across policies andinvestments as a matter of urgency, particularly given current market momentum around climate
solutions. Recognise that the planet and people are inextricably linked. Reducing carbon without an
intentional focus on improving lives and livelihoods in local communities will not build a world thatis sustainable and just for all. Proactively and progressively seek ways to advance a Just Transition.
Utilise the Just Transition Elements within climate and social policies and investments. Strive toinclude Community Voice in policies and investments. (See Sections 1.3.2 and 1.3.3)

Recommendations
2a For all audiences:
Recognise the imperative ofa Just Transition, integrating
environmental and social
objectives
For all, recognise the Just Transition Elements –Climate and Environmental Action; Socio-economic

50

Distribution and Equity; and Community Voice –as the standard for ‘what good looks like’ in building
a more inclusive and sustainable society for all(See Section 1.3.3)
NEAR-TERM

medium-TERM

6–12 months

1-2 years

Recommendations

2b For all audiences:
Engage with and apply the Just
Transition Elements• For asset managers, to expand ways in which
Community Voice can be incorporated into Just
Transition vehicles

For all, as part of an integrated approach toconsider environmental and social objectives,
proactively identify opportunities to apply andintegrate the Just Transition Elements in specificpolicies and investments. (See Section 1.3.3)• For conveners, such as the Global SteeringGroup for impact investment and the growing
community of National Advisory Boards,
to engage with the investment community,
nongovernmental organisations, local
government and civil society around a Just
Transition to build momentum around joint Just
Transition approaches and investment activity
across sectors and geographies•F or asset managers and ecosystem players thatstructure investments, collaborating with MDBs,
DFIs and impact investors where relevant,to advance the design of replicable Just
Transition financing vehicle blueprints(See Section 3.4)

NEAR-TERM

medium-TERM

6–12 months

1-2 years

Recommendation 3

Mobilisation

Call to action
Unlocking private institutional capital depends on concerted action across several key parties:
government shareholders of MDBs and DFIs and the development institutions themselves, asset
owners, asset managers and advisors as well as regulators and rating agencies. A step taken byeach party has the power to exponentially increase the flow of capital in pursuit of positive impact.
Accelerating the pace and volume of capital, and directing it to solutions that meet the needs ofpeople and places, is both a need and opportunity.

Recommendations
3a Accelerate private capital
mobilisation towards the SDG s
3a.i For G7 and other policy makers:

By making mobilisation a key objective ofdevelopment institutions
For G7 and other government shareholders of MDBs
and DFIs, amend the mandates of these institutions
to make mobilisation of private capital an objectiveof equal weight with balance sheet investment. (See
Section 3.3)•S et targets and structure incentive mechanismsthat promote every mobilised dollar as receiving atleast the same recognition as every dollar invested
on its own account•S trengthen, with funding support, the importantrole MDBs and DFIs play in developing local
market infrastructure and in assisting market
actors to establish new investment vehicles•P rovide additional funding to strengthen pipeline
development and generation of primary investable
opportunities in emerging markets•E xpand the investment tools within these
institutions, including capital to be used by MDBs
and DFIs for risk mitigation tools and instrumentsthat address the risk (perceived and real) ofinstitutional investors• E xpand the ability of these institutions to provide,at times, concessionary capital within their risk
mitigation tools and instruments• Encourage these institutions to package and sell
to institutional investors parts of their portfolioof assets directly or through securitisations andrelated instruments to stimulate participation frominstitutional investors and to catalyse secondary
market activity• Support these institutions to adapt their businessmodels to achieve the dual mandate andimplement other specified changes
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

3a.ii For MDBs and DFIs: By providing moreinvestment risk support in their target emerging
markets
For MDBs and DFIs, materially increase commitmentof risk-tolerant capital to accelerate the mobilisationof private institutional investors into emerging
markets and towards the SDGs, in particular tomore challenging investment propositions and to
those that advance a Just Transition. Specifically,
increase each of the following – recognising the
exponential power of combination. (See Section 2.5)
• Increase investment of subordinated capital(including mezzanine capital) in blended financetransactions
51

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)• Increase provision (directly and in partnershipwith others) of guarantees and insurance
coverage in blended finance transactions

3 a.v For asset managers: By expanding theflow of new investments towards SDG solutions
in emerging markets• Increase provision of concessional capital(directly and in partnership with others), where
neededFor asset managers, bring more SDG and Just
Transition products to market with the objective
to attract more private institutional capital. (See
Sections 2.4 and 3.3)

•L aunch a call for proposals in 2022 for asset
managers in which the selected vehicles meeting
the Just Transition Elements receive MDB/DFI
anchor capital with the intention of mobilising
meaningful amounts of institutional capital
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

3a.iii For G7 policy makers: By significantly
expanding the use of guarantees, particularly
for investments in emerging markets
For G7 policy makers, build on the track recordand operational infrastructure of the Private
Infrastructure Development Group (PIDG) andinvest further in existing and new entities that can
provide guarantees. (See Sections 2.3 and 2.5)
• Invest to strengthen the balance sheets ofexisting providers of guarantees over the next
one or two years•F und the replication of existing guarantee entities
at scale (using the models of GuarantCo andInfraCredit), to be domiciled in emerging markets
where risk mitigation remains a material barrier
to institutional capital, with a target of two such
entities per year

• As a companion to stated ambitions to reduce
portfolio carbon footprints by 2030, commit tomaterially increasing the amount of capital flowing
to investments that seek solutions aligned with theSDGs:~ Doubling capital flows from 2021 baseline by2025~ Doubling capital flows from 2025 baseline by2030• Proactively explore how current commitments
to design, implement and manage climate
investments can progressively include social andcommunity elements, both as new vehicles andby adapting existing vehicles to integrate all three
Just Transition Elements; and vice versa, howcurrent commitments to design, implement andmanage social investments can progressively
include climate and community elements, both as
new vehicles and by adapting existing vehicles tointegrate all three Just Transition Elements• Proactively pursue partnerships with parties
that can provide the structuring tools needed toencourage private capital participation in products
NEAR-TERM

medium-TERM

6–12 months

1-2 years• Increase guarantee usage on portfolio level andfor investment vehicles•B olster the balance sheets of existing and newentities to have minimum guarantee capacity of$1 billion and a target guarantee ratio of five to
10 times that capacity
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

3 a.iv For impact investors: By continuing
to play a pioneering role
For impact investors, expand the pioneering role
played in advancing the environmental and social
objectives across sectors and geographies.
•F urther deploy blended capital to mobilise
institutional investors (See Sections 1.4.1, 2.4
and 2.5)•L ead the way in Just Transition financing vehicles
by providing first commitments to launch newvehicles• Increase use of guarantees in vehicles designed
to attract institutional private capital

52

NEAR-TERM

medium-TERM

6–12 months

1-2 years

3 a.vi For investment banks: By structuring
vehicles that encourage institutional investor
participation in emerging markets
For investment banks and other transaction
intermediaries, structure for institutional investor
participation in emerging markets vehicles. (See
Sections 2.4 and 3.3)
• Incorporate one or more of the instruments
referenced in this report that can mobilise capitalat scale (i.e., guarantees, insurance, subordinatedcapital, syndicated loan portfolios)
NEAR-TERM

medium-TERM

6–12 months

1-2 years

Recommendations

3 a.vii For investors: By committing to invest
in the SDGs and a Just Transition and toincrease emerging markets exposure
For investors of all types, commit to intentionallyconsider and proactively pursue investments invehicles that demonstrably integrate environmental
and social objectives, including those that integrate
the Just Transition Elements. (See Section 1.3.3)• As a companion to stated ambitions to reduce
portfolio carbon footprints by 2030, commit tomaterially increase the amount of capital flowing
to investments that seek solutions aligned with
the SDGs:~ Doubling capital flows from 2021 baselineby 2025

3 b.iii For MDBs, DFIs and private impact
investors and asset managers: By sharing andengaging around performance data across
SDG themes, asset classes and markets
For MDBs, DFIs and private impact investors
and asset managers, share historical investment
performance data with the institutional investor
community and rating agencies. (See Sections 2.3
and 2.5.6)• Structure data in a commercially sensitive manner• Indicate market and asset class context toenhance utilisation of data
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years~ Doubling capital flows from 2025 baselineby 2030• Materially increase exposure to emerging markets
across asset classes
NEAR-TERM

medium-TERM

6–12 months

1-2 years

3 b.iv For MDBs, DFIs and private impact
investors: By building a strong manager
ecosystem
For MDBs, DFIs and private impact investors,
build capacity of asset managers pursuing Just
Transition strategies.

3 b Demonstrate commitment to
the SDG s• Provide specific support to local, emerging andfirst-time fund managers that adopt the Just
Transition Elements

3 b.i For institutional investors as asset
owners: By adjusting mandates• Incrementally increase annual allocations to suchmanagers and showcase these managers toother investors

For those institutional asset owners expressing
general alignment with the SDGs, demonstratecommitment by amending and aligning mandates,
allocation strategies, policies and protocols toallow for investments that integrate social andenvironmental considerations and pursue the SDGs
in general, and a Just Transition in particular, withemphasis on emerging markets. (See Section 2.3)
• Incentivise asset managers and investment
consultants, as applicable, to pursue SDG
transactions, ensuring that incentives are clear
and aligned to fulfil this commitment•S hare commitments publicly

medium-TERM
1-2 years

3c Strengthen the enabling
environment for SDG investments
3c.i For regulators: By ensuring that fiduciary

duty considerations are not a barrier to Just
Transition considerations

Where relevant, national regulators to ensure thatnational definitions of fiduciary duty encourage
investors to consider the impact of investments onsociety and the environment. (See Section 2.3)

3 b.ii For institutional investors as asset
owners: By building capabilities
For those asset owners seeking to align theirinvestment activities with the SDGs, demonstratecommitment by strengthening internal capabilities
or building relevant partnerships. With respect toemerging markets, look to obtain support fromothers with relevant market experience. (See
Sections 2.3 and 3.3)
• Encourage dealflow by eliminating or reducing
the charges typically applied to emerging market
investments with the justification of complexity
or level of effort required to consider suchinvestments
NEAR-TERM

medium-TERM

6–12 months

1-2 years

medium-TERM
1-2 years

3c.ii For regulators: By unlocking domestic

capitalNational regulators to examine current barriers
restricting participation of domestic institutional
investors, with a particular focus on pension funds
and insurance companies, in investment vehicles
that advance the SDGs in general and a Just
Transition specifically. Be willing to take steps toreduce the most significant barriers, progressively,
to stimulate domestic capital participation. (See
Section 2.4)
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years
53

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

3c.iii For regulators: By improving local

regulatory environments for environmental andsocial priorities•N ational regulators of businesses and financial
institutions to require inclusion of Just Transition
Elements in transition plans submitted toregulators. Apply the Just Transition Elements
to all transition plans, whether submitted undervoluntary or mandatory country regimes•N ational regulatory bodies to improve
professional tenders of projects intended tomeet national Net Zero and/or decarbonisationcommitments. These would include energy andinfrastructure projects, and public procurement
tenders for social investments (e.g., affordable
housing, healthcare facilities, education, etc.) withclear rules of engagement and tariff structures
medium-TERM

LONG-TERM

1-2 years

3-5 years

3c.iv For credit rating agencies:
By considering specific parameters of
emerging markets in ratings and driving SDG
recognition in credit ratings• Ensure credit ratings’ processes and models
benefit from relevant emerging markets
performance and correlation data
• Stimulate, through credit ratings, positive
incentives for issuers that demonstrate use ofproceeds that deliver explicit environmental andsocial objectives
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

Recommendation 4

Transparency
Call to action
Expanding the volume and pace of capital towards the SDGs generally, and a Just Transition
specifically, means we must know where the money is flowing and what is happening as a result of
the capital being invested. Each of us needs to ask questions to determine where and to whom thecapital has flowed. Anything labelled as contributing to the SDGs generally, and a Just Transition
specifically, should be able to provide clear answers. Only through collective and consistenttransparency can we assess progress against commitments.

Recommendations
4 For all audiences:
Demonstrate best-in-class Just
Transition investments
Showcase investments that incorporate all three
Just Transition Elements.
•H ighlight application of Just Transition strategies
across sectors and themes• Demonstrate, in particular, how Community Voiceis included in the design and governance of any
Just Transition vehicle• Publish and provide the market with examplesof what ‘best-in-class’ Just Transition looks like inpractice• For asset managers, publish results as a sourceof market differentiation• For investors, publish results for credibility against
commitments• For ecosystem builders, publish results for greaterawareness among investors and policy makers
NEAR-TERM

medium-TERM

LONG-TERM

6–12 months

1-2 years

3-5 years

Note on recommendations
These recommendations draw on the analysis
presented in this report, extensive engagementwith the target audiences as well as themomentum built by several initiatives underway. We are grateful for the many high-quality
inputs that the work group has received from
more than 170 expert practitioners acrossthe globe.

54

Given the short time available to conclude
our work, we have had to focus on coreareas, leaving others for further exploration.
It is our hope that this future investigation
will be catalysed by the growing communityof committed practitioners as well as by thecontinued interest and commitment of G7
policy makers.

5

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file/834207/Investing-in-a-better-wold-full-report.
pdf

Impact Investing Institute (2021): “Impact investingin emerging markets: Opportunities for institutional
investors”; https://www.impactinvest.org.uk/ourcase-studies/emerging-markets/
IPCC (2018): “Special Report on Global Warming of
1.5°C”; https://www.ipcc.ch/sr15/

Euractiv (2021): “EU lawmakers give final approvalto bloc’s green transition fund”; https://www.
euractiv.com/section/energy-environment/news/
eu-lawmakers-give-final-approval-to-blocs-greentransition-fund/

IRISS (2015): “Place-based working”; https://www.
iriss.org.uk/resources/irisson/place-based-working

European Commission (2021): “France, Germany,
UK, US and EU launch ground-breaking
International Just Energy Transition Partnershipwith South Africa”; https://ec.europa.eu/
commission/presscorner/detail/en/IP_21_5768

Make My Money Matter: https://makemymoneymatter.co.uk/— (2021): “The EU External Investment Plan –A range of financial guarantees”; https://ec.europa.
eu/eu-external-investment-plan/sites/default/files/
documents/efsd_guarantees-feb_2021-en.pdf— (2020): “The European Green Deal Investment
Plan and Just Transition Mechanism explained”;
https://ec.europa.eu/commission/presscorner/
detail/en/qanda_20_24

Just Transition and COP24 (2018): “Solidarity andJust Transition Silesia Declaration”.

Net Zero Asset Managers initiative (2021): https://www.netzeroassetmanagers.org/net-zero-assetmanagers-initiative-announces-41-new-signatorieswith-sector-seeing-net-zero-tipping-point
OECD (2021): “Mobilising institutional investors forfinancing sustainable development in developing
countries: Emerging evidence of opportunities andchallenges”; https://www.oecd.org/dac/financingsustainable-development/Mobilising-institutionalinvestors-for-financing-sustainable-developmentfinal.pdf

55

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)— (2021): “The role of guarantees in blended
finance”; https://www.oecd.org/dac/the-role-ofguarantees-in-blended-finance-730e1498-en.htm.
PRI (2021): “Understanding and Aligning with
Beneficiaries’ Sustainability Preferences”; https://www.unpri.org/strategy-policy-and-strategicasset-allocation/understanding-and-aligning-withbeneficiaries-sustainability-preferences/7497.article— (2019): “PRI Awards 2019 case study:
Room2Run”; https://www.unpri.org/showcasingleadership/pri-awards-2019-case-studyroom2run/4848.article— Statement of Investor Commitment to Support
a Just Transition on Climate Change, originallyendorsed by 161 investors; https://www.unpri.org/
download?ac=10382
SIFMA (2021): “2021 Capital Markets Fact
Book”; https://www.sifma.org/wp-content/
uploads/2021/07/CM-Fact-Book-2021-SIFMA.pdf
Task Force on Climate, Development and theInternational Monetary Fund (2021): “Toward
Development-Centered Climate Change Policy
at the International Monetary Fund”; https://www.
bu.edu/gdp/files/2021/10/TF_Strategy-Report_
FIN.pdf
The New Climate Economy (2019): “Unlocking
the Inclusive Growth Story of the 21st Century:
Accelerating Climate Action in Urgent Times”;
https://newclimateeconomy.report/2018/wpcontent/uploads/sites/6/2018/09/NCE_2018_FULLREPORT.pdf

56

Thinking Ahead Institute (2020): “The world’s
largest asset managers – 2020”; Add link: https://www.thinkingaheadinstitute.org/research-papers/
the-worlds-largest-asset-managers-2020/
UK Government (2021): “Truss revamps British
development finance institution to deliver jobs
and clean growth”; https://www.gov.uk/
government/news/truss-revamps-britishdevelopment-finance-institution-to-deliver-jobsand-clean-growth
UNEP Finance Initiative (2021): “Global investor
statement: Investors urge governments toundertake five priority actions before COP26”;
https://www.unepfi.org/news/industries/
investment/nearly-600-investors-urge-govts-toundertake-five-priority-actions-before-cop26/
UNFCCC (2021): “Glasgow Climate Pact”; https://
unfccc.int/sites/default/files/resource/cma2021_
L16_adv.pdf
Vontobel Asset Management (2020): “Vontobel
study confirms investors want to increase
their allocation to emerging markets”; https://am.vontobel.com/en/news/vontobel-studyconfirms-investors-want-to-increase-theirallocation-to-emerging-markets
World Bank (2021): “World Bank Country andLending Groups”; https://datahelpdesk.worldbank.
org/knowledgebase/articles/906519-world-bankcountry-and-lending-groups

6

Appendices6.1 Appendix 1: Individual acknowledgements
We are grateful to the following individuals for their input during the work ofWorkstream B of the Impact Taskforce:
Name

Affiliation

Geography

Abhishek Mittal

Aavishkaar Capital

India

Agustín Vitórica

GAWA Capital

Spain

Alessandra Puglisi

Credit Suisse

Switzerland

Alex Read

Foreign, Commonwealth & Development Office, UK Government

United Kingdom

Allegra Day

CinvenUnited Kingdom

Amanda Young

abrdn

United Kingdom

Amma Lartey

Impact Investing Ghana

Ghana

Andrea Gattini

Enel

Italy

Andrew Carruthers

Novastar Ventures

Kenya

Andrew Kuper

LeapFrog Investments

Australia

Anne-Marie Verstraeten

BNP Paribas

FranceAnnika Brouwer

SYSTEMIQ

United Kingdom

Anokhi Parikh

Yellowwoods

South Africa

Antoine Prédour

responsAbility

Switzerland

Asha Lad

Conduit Capital

United Kingdom

Ashvin Dayal

Rockefeller Foundation

United States

Austin Mwape

Absa Bank Zambia Plc

ZambiaAyaan Adam

Africa Finance Corporation

Multilateral

Baroness Diana Barran

Department for Digital, Culture, Media and Sport, now Department for
Education, UK Government

United Kingdom

Bernard Giraud

Livelihoods Venture

FranceBob Annibale

University of London, SOAS

United Kingdom

Chizi Wigwe

Africa Finance Corporation

Multilateral

Chris Larson

Multilateral

Netherlands

Christopher Nicholson

International Housing Solutions

South Africa

Cyrille Langendorff

Crédit Coopératif

FranceDaniel Klier

ArabesqueUnited Kingdom

Daniel Mminele

Absa GroupSouth Africa

Daniel Stacey

LeapFrog Investments

Australia

David Woods

New Zealand National Advisory Board for Impact Investing

New Zealand

Dolika Banda

Harith General Partners

ZambiaDominique LesaffreInternational Solidarity for Development and Investment

FranceEdith Quintrell

Liberty Specialty Markets

United Kingdom

Elias Masilela

DNA Economics

South Africa

Emily Simso

New Forests

Australia

57

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)Name

Affiliation

Geography

Erik Korsgren

Swedish International Development Cooperation Agency

SwedenFabio Natalucci

International Monetary Fund

Multilateral

Filippo Montesi

Social Impact Agenda per l’Italia

Italy

Fran Seegull

U.S. Impact Investing Alliance

United States

Francesco Starace

Enel

Italy

Franziska Ehm

Global Investors for Sustainable Development Alliance

Multilateral

Geert Peetersmans

IncofinBelgium

Hamdiya Ismaila

Ghana Venture Capital Trust Fund

Ghana

Heather Jackson

Impact Investing South Africa

South Africa

Herman Bril

ArabesqueUnited Kingdom

Hila Katz

The Israeli Forum for Impact Economy

IsraelHuw Owen

Liberty Specialty Markets

United Kingdom

Ibukun Awosika

The Chair Centre Group

Nigeria

James Burton

LeapFrog Investments

Australia

Jeffrey Hodgson

Canada Pension Plan Investment Board

CanadaJessie Duncan

Tipping Point Fund

United States

Jinesh Shah

Omnivore VC

India

Jingdong HuaWorld Bank

Multilateral

Joan Trant

TriLinc Global

United States

Joanne Yoo

Development Partners International

United Kingdom

Joe Hsueh

Taiwan Impact Investment Association

TaiwanJohannes Weber

Bundesinitiative Impact Investing

Germany

Jonathan FirstGFA Climate & InfrastructureSouth Africa

José Luis Ruz de Munain

SpainNAB

Spain

Kalle Hellman

Swedish International Development Cooperation Agency

SwedenKate Cooper

Foreign, Commonwealth and Development Office, UK Government

United Kingdom

Katherine Stodulka

SYSTEMIQ

United Kingdom

Krishnan Sharma

Global Investors for Sustainable Development Alliance

Multilateral

Lamberto Dai Pra

Enel

Italy

Lara Vogt

BlueOrchard

Switzerland

Laure Wessemius-Chibrac

Stichting NAB

Netherlands

Lydia Merry

Schroders Capital

United Kingdom

Magnus Billing

Global Investors for Sustainable Development Alliance

Multilateral

Marco Serena

Private Infrastructure Development GroupMultilateral

Maria KozloskiRockefeller Foundation

United States

Martin Ewald

Allianz Global Investors

Germany

Martin Habel

International Finance Corporation

Multilateral

Maryanne Hancock

Y Analytics

United States

Maxime Mathon

Finance for Tomorrow

FranceMaya Chorengal

TPG Rise

United States

Megumi Muto

Japan International Cooperation Agency

Japan

Michael Adamson

British Red Cross

United Kingdom

Michael Traill

For Purpose Investment Partners

Australia

Michela Pesevento

Social Impact Agenda per l’Italia

Italy

Michele Giddens

Bridges Fund Management

United Kingdom

Misha Joshi

Impact Investing South Africa

South Africa

58

AppendicesName

Affiliation

Geography

Monique Leroux

Fiera Capital Corporation

CanadaMonique Mathys-Graaff

Willis Towers Watson

United Kingdom

Monish Mahurkar

International Finance Corporation

Multilateral

Neil Gregory

International Finance Corporation

Multilateral

Nic Wessemius

FMO Investment Management

Netherlands

Nick O’Donohoe

CDC Group

United Kingdom

Nicola Jenns

Foreign, Commonwealth & Development Office, UK Government

United Kingdom

Pauline Becquey

Finance for Tomorrow

FrancePhillipe Clerc

Finance for Tomorrow

FrancePhillipe Valahu

Private Infrastructure Development GroupMultilateral

Pierre-Alix Binet

Finance for Tomorrow

FrancePrerna Wadikar

CDC Group

United Kingdom

Radana Crhova

Foreign, Commonwealth and Development Office, UK Government

United Kingdom

Ramraj Pai

Impact Investors Council

India

Rekha Unnithan

NuveenUnited States

Romee van Wachem

ACTIAM

Netherlands

Romina Boarini

Organisation for Economic Co-operation and Development

Multilateral

Rosemary Addis

Impact Strategist

Australia

Runa Alam

Development Partners International

United Kingdom

Sabine Fellman

responsAbility

Switzerland

Sabrina Muller

LSE Grantham Research Institute

United Kingdom

Saida Eggerstedt

Schroders

United Kingdom

Sandy Lowitt

Trade & Industrial Policy Strategies

South Africa

Sarah Norris

abrdn

United Kingdom

Simon Bessant

The Texel Group

United Kingdom

Simon Bond

Columbia Threadneedle Investments

United Kingdom

Simon Calvert

Foreign, Commonwealth and Development Office, UK Government

United Kingdom

Simon Meldrum

British Red Cross

United Kingdom

Simone Baur

Allianz Global Investors

Germany

Sir Ronald Cohen

Portland Trust

United Kingdom

Stefanie FairholmeRockefeller Foundation

United Kingdom

Steven Loubser

Ninety One

South Africa

Sunir Goven

International Housing Solutions

South Africa

Tim Crijns

Tridos Investment Management

Netherlands

Tim Hilger

Global Investors for Sustainable Development Alliance

Multilateral

Tim WainwrightCity of London Corporation

United Kingdom

Torben Huss

Investment Fund for Developing Countries

Denmark

Tracey Austin

Impact Investing South Africa

South Africa

Uday Varadarajan

Rocky Mountain Institute

United States

Usha Rao Monari

United Nations Development ProgrammeMultilateral

Vanessa Kacherginsky

The Israeli Forum for Impact Economy

IsraelVeronique Blanc

Schneider ElectricFranceVincent Shen

Taiwan Impact Investment Association

TaiwanYvonne Bakkum

FMO Investment Management

Netherlands

59

Mobilising institutional capital towards the SDGs and a Just Transition (Summary)

6.2 Appendix 2: Abbreviations and acronyms
2X	Referring to the 2X Challenge
ADB

Asian Development BankAFC	

Africa Finance Corporation

AFD	

French Development Agency

AfDB

African Development Bank

AllianzGI	 Allianz Global Investors
APPG

All-Party Parliamentary GroupAR5	Assessment Report 5(Intergovernmental Panel on Climate
Change)ASEAN	 Association of South East Asian	Nations
ATI	

African Trade Insurance Agency

AUM	

Assets under management

BIS	

Bank for International Settlements

CCC	Climate Change Committee (UK)
CDC	CDC Group*
CFAI	CFA Institute
CIF	Climate Investment Funds
CNBC	Consumer News and Business
Channel (United States)
CO2	Carbon dioxide
COP21	21st Conference of the Parties(Paris, France)
COP24	24th Conference of the Parties(Katowice, Poland)
COP26	26th Conference of the Parties(Glasgow, UK)
CPPIB	Canada Pension Plan Investment Board
DAC	OECD Development AssistanceCommittee
DFC	US International Development FinanceCorporation
DFI	Development Finance Institution* CDC Group will rebrandas British International
Investment effective April
2022. See UK Government(2021): “Truss revamps
British development financeinstitution to deliver jobs
and clean growth”; https://www.gov.uk/government/
news/truss-revamps-british-development-finance-institution-to-deliver-jobs-and-clean-growth

60

EFSD	European Fund for Sustainable
Development
EIB	European Investment BankEIOPA	European Insurance and Occupational
Pensions Authority
EM	Emerging market
EMPEA	Emerging Markets Private Equity
Association
ESG	Environmental, social and governanceEU	European Union
FCDO	Foreign, Commonwealth & Development
Office (UK)FIG

Financial Institutions Group (IFC)FMO	Dutch Development Bank
G20	Group of 20 (Argentina, Australia, Brazil,
Canada, China, France, Germany, India,
Indonesia, Italy, Japan, México, Russia,
Saudi Arabia, South Africa, Korea, Turkey,
the UK, the US and the European Union)
G7	Group of Seven (Canada, France,
Germany, Italy, Japan, the UK and theUS) with Australia, India, South Africa
and South Korea joining as guest
countries in 2021
GBP	British pound sterling

GEAPP	Global Energy Alliance for People andPlanetGEMs

Global Emerging Markets (database)

GIIN	

Global Impact Investing Network

GISD	Global Investors for Sustainable
Development Alliance
GNI	

Gross national income

GOGLA

Global Off-Grid Lighting Association

HDI	Human development index
ICMA	International Capital Market Association
IEA	International Energy Agency

DFID	Department for International
Development (UK, now FCDO)IFC	International Finance Corporation

DGGF	Dutch Good Growth FundIFRS	International Financial ReportingStandards Foundation

E&Y	Ernst & Young
EAIF	Emerging Africa Infrastructure Fund
(Ninety One)
EBRD	European Bank for Reconstruction
and Development
EDFI	European Development FinanceInstitutions

IHS	International Housing Solutions
IIGCC	Institutional Investors Group on Climate
ChangeILO	International Labour Organization
IMF	International Monetary FundIMP	Impact Management ProjectAppendices

IPCC	Intergovernmental Panel on Climate
ChangePIDG	Private Infrastructure Development
Group

IRIS+	System for measuring, managing andoptimizing impact (GIIN)

PPPs	Public-private partnerships

Iriss	Institute for Research and Innovation in
Social Services (Scotland, UK)
ISSB	International Sustainability Standards
Board
ITUC	International Trade Union Confederation
JICA

Japan International Cooperation Agency

LSE	London School of Economics andPolitical Science
MCPP	Managed Co-Lending Portfolio Platform(IFC)
MDB	Multilateral development bank
MSCI	Morgan Stanley Capital International
NAB	National Advisory Board for impact
investingNASA	National Aeronautics and Space
Administration (US)PRI	Principles for Responsible Investment
S&P	S&P Global Ratings
SA	South Africa or South Asia
SDGs	United Nations’ Sustainable
Development Goals
SFDR	Sustainable Finance Disclosure
Regulation (EU)SFWG	Sustainable Finance Working Group(G20)
SIFMA	Securities Industry and Financial
Markets Association (US)SWF	Sovereign wealth fund
TCFD	Task Force on Climate-related Financial
Disclosures
TCX	The Currency Exchange Fund
TPG	Texas Pacific Group
Triodos IM	Triodos Investment Management

NBI	National Business Initiative(South Africa)

UK	United Kingdom

ND-GAIN	Notre Dame Global Adaptation Initiative

UN	United Nations

NDCs	Nationally Determined Contributions

UNCTAD	United Nations Conference on Tradeand Development

NDP	National Development Plan
NGO	Non-governmental organisation
NNIP	NN Investment Partners
NRDC	Natural Resources Defense Council

UNDP	United Nations Development
Programme
UNEP	UN Environment Programme

NSIA	Nigerian Sovereign Investment Authority

UNFCCC	United Nations Framework Convention
on Climate Change

N/A	Not available or not applicable

US	United States

ODI	Overseas Development Institute

USD	United States Dollar

OECD	Organisation for Economic Co-operation
and Development

VC	Venture capital

OeEB	Oesterreichische Entwicklungsbank AG(Austrian development bank)
OPIC	Overseas Private Investment
Corporation (US DFI, now DFC)WEFWorld Economic Forum

WFE	World Federation of Exchanges

WWF

World Wildlife Fund

PAGE	UN Partnership for Action on a Green
Economy61

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