Günther Thallinger: blended finance will ‘accelerate’ a just energy transition
The chair of the Net-Zero Asset Owner Alliance has suggested that blended finance will help unlock institutional investment into emerging economies
The chair of the Net-Zero Asset Owner Alliance (NZAOA) has stressed that blended finance structures will help unlock private capital to finance and “accelerate” a just energy transition.
In his opening speech at a roundtable discussion at the Munich Security Conference on 17 February, Günther Thallinger outlined that blended finance structures play a critical role in scaling up investments in emerging markets and developing economies (EMDEs) as well as accelerating the green transition.
Blended finance involves leveraging public and philanthropic capital to mobilise private sector funding towards sustainable development.
Thallinger is also a board member of financial services company Allianz SE with responsibility for investment management. He proposed five suggestions on how to mobilise investments towards climate-focused blended finance vehicles, which included governments helping to de-risk investments in EMDEs.
“To close the gap between high investment risk in EMDEs and investors’ obligations to earn risk-adjusted returns, governments and philanthropists must create sizeable and flexible pools of concessional capital to de-risk investments to bring them within investors’ risk limits,” Thallinger said.
He also called on governments to support accurate risk pricing by providing access to core credit risk data and making guarantees eligible for official development assistance.
Thallinger detailed that to mobilise the available long-term institutional capital for the net-zero transition “globally scaling standardised portfolio approaches is therefore key”.
“By scaling blended finance structures that leverage public capital together with the private sector we can accelerate the green transition and counter energy security and geopolitical risk.
“The financial models exist. All of us political decision-makers and investors must now up our game. Currently, there is a will, but also gaps in knowledge and capacity. These must be overcome,” Thallinger added.
Increasing investment activity in blended finance
In his speech, Thallinger detailed that there has been an increase in investment activity into blended finance in the climate area by institutional investors, with their share of investments rising from 18% of private investments between 2016-2018 to 25% between 2019-2021.
He also highlighted that through the NZAOA’s Call to Action to Asset Managers for climate-focused blended finance vehicles, 26 vehicles have been submitted by a diverse set of asset managers.
“With a focus on developing and emerging economies, the proposed private debt and private equity vehicles and platforms cover a broad range of sectors, reflecting the immense universe of investment opportunities in the net-zero transition,” Thallinger said.