Converting Emerging Markets to Green Finance:Amundiand the IFC
By the end of 2019, the International Finance Corporation (IFC) had been funding a range of environmental projects for several decades, raising approximately $25 billion for this purpose. Recently, much of this effort was focused on climate mitigation and adaptation projects in emerging markets. While these markets carried certain risks for investors, they also offered promising opportunities: IFC had identified about $29 trillion of investment opportunities in emerging markets that could be partially funded by bonds issued for a particular environmental purpose, known as “green bonds.” What was needed, then, was a method of funding that supported and opened up emerging markets for greater investment, stimulating not only global demand for green bonds but also the supply of green bonds in these markets.
With this goal in mind, together, IFC and asset manager Amundi had launched the Amundi Planet Emerging Green One (EGO) fund in March 2018. The fund was the largest green bond fund targeting emerging markets to date, and it already seemed to be delivering excellent results. But would its unique focus and innovative financial structure continue to pay off? What lessons could it offer about climate-smart financing going forward? Were there any factors or limitations that could affect its success? This case considers these questions from the perspectives of two driving forces behind the EGO fund: its architect, IFC Chief Investment Officer Jean-Marie Masse, and Amundi’s Co-Head of Institutional Clients Coverage, Frédéric Samama.