CDC Group, the UK’s development finance institution and publicly owned impact investor, unveiled their plan to achieve net zero emissions across its portfolio by 2050 in support of the Paris Agreement on climate change.
As part of its new climate change strategy, launched today, the company said the fight to combat the climate crisis would be at the heart of every new investment it makes.
CDC’s strategy will see it target 30 per cent of its total 2021 commitments to climate finance.
It has already committed more than $1 billion of climate finance over the last three years.
The company will place a special focus on a just transition to make sure the new strategy is socially inclusive of workers’ rights, women and communities and creates new jobs and skills.
The new approach will see a climate lens placed over every sector in which CDC invests to ensure that the companies it supports can reduce emissions and adapt to become more resilient to climate shocks.
Nick O’Donohoe, Chief Executive of CDC, said: “As governments, multinational institutions and private investors plan the global economic comeback from COVID-19, there exists a once in a generation opportunity to build back better for an inclusive, sustainable and resilient recovery.
“Climate change remains the single largest challenge faced by the planet and is the defining issue for our generation and for those that will follow.
“That is why we have launched this ground-breaking climate change strategy that will shape every single investment decision we make moving forward.”
The least developed countries in the world are the most vulnerable to the impacts of the climate emergency.
The World Bank estimates that 100 million people could be driven back into poverty over the next ten years as a result of climate change.
CDC will no longer invest in any business – either directly or through an intermediary fund – that is deemed to be misaligned with the Paris Agreement.
This includes the following:
- coal-fired power plants (including dual-power plants), retrofitting and rehabilitation of existing coal power facilities, coal mining, processing and trading, upstream oil exploration and production, midstream oil (including refineries),
- Heavy Fuel Oil (HFO) only-fired power plants and mini-grids, standalone upstream gas exploration and production as well as transport infrastructure for exclusive crude oil or coal transportation for power generation.
The Paris Agreement recognises that each country has a different pathway to achieving net zero emissions by 2050.
Developing countries, including those within Africa and South Asia, currently have very low levels of emissions driven by lower economic and public sector activity and lower energy access.
This means that emissions in these regions will continue to rise in the coming years before they peak and start to fall.
Even so, investment today needs to lay the foundations for reaching net zero emissions by 2050.
In the few cases where CDC might make a gas-related investment, it would only be to support a country in its transition to a net-zero carbon future, in accordance with its pathway to achieving its Paris goals.
Amal-Lee Amin, Director of Climate Change at CDC, added: “Countries in Africa and South Asia are tackling the climate emergency alongside other urgent needs, most notably the need for economic growth, increased energy access and improved living standards to meet the needs of their citizens and to meet the UN Sustainable Development Goals (SDGs).
“As a DFI we will continue to provide support for private sector investments that contribute towards the Sustainable Development Goals in a way that is consistent with a country’s pathway to net zero emissions by 2050.
“From food to energy and manufacturing to construction, transformational action is required.
“We will also invest in the opportunities and shape markets needed to support the transition is socially just and resilient to climate risks and impacts, as needed to deliver prosperity within a new green economy.”
The company has also signed up to become a member of the Institutional Investors Group on Climate Change (IIGCC), whose mission is to mobilise capital for the transition to a low carbon future and to ensure resilience to the impacts of a changing climate by collaborating with business, policy makers and fellow investors.