A consortium of leading financial institutions and investors today announced a new partnership under the Catalytic Finance Initiative (CFI), to direct $8 billion in total commitments toward high-impact sustainability investments. Partners joining the CFI include AllianceBernstein (AB); Babson Capital Management LLC, a subsidiary of Massachusetts Mutual Life Insurance Company (MassMutual); Crédit Agricole CIB; European Investment Bank (EIB); HSBC Group; International Finance Corporation (IFC), a member of the World Bank Group; and Mirova, a subsidiary of Natixis Group, all of which have pledged capital and expertise to develop and advance innovative financing structures for investments in clean energy and other sustainability-focused projects. In addition, the Aligned Intermediary, representing a group of long-term institutional investors, will collaborate on specific investment opportunities with members of the partnership. This announcement follows last year’s ratification of the United Nations’ Sustainable Development Goals (SDG) and the historic climate agreement in Paris. It aims to promote the SDG objectives, including acting on climate change and advancing access to clean energy and water.
The CFI was originally launched by Bank of America in 2014 with a $1 billion commitment and a goal to stimulate at least $10 billion in new investment into high-impact clean energy projects through additional partnerships. Today, it has expanded to include the leading financial organizations above with their own capital commitments. By working together, this group of global financial institutions and investors can combine their efforts to increase funding and significantly accelerate the transition to clean energy solutions and advancing the SDGs.
CFI partners bring expertise in a broad range of financial specialty areas. This includes clean energy infrastructure finance, green bonds and asset-backed securities, emerging markets investment and advisory assistance, and approaches to blending public and private finance.
“Financial innovation and capital play a critical role in the transition to a low-carbon economy,” the CFI partner institutions said in a joint statement. “Through the Catalytic Finance Initiative and this joint partnership, together we can support the transition to a low-carbon economy and sustainable growth. By providing $8 billion in commitments, we can help to advance new investment opportunities in clean energy as well as other sustainable development goals and achieve the necessary scale for a positive impact on climate change.”
“A central way in which we are helping to build sustainable economies is through our financing of clean energy,” said Anne Finucane, vice chairman at B of A. “The Catalytic Finance Initiative demonstrates how all partners working together will achieve a greater collective impact.”
Projects announced to date by B of A under the CFI include new energy efficiency financing in partnership with the New York State Green Bank totaling $800 million, arranging a $204 million green project bond for wind developer Energia Eolica S.A. in Peru, and helping to structure a new $100 million facility with the Global Alliance for Clean Cookstoves.
“There is more work to be done, and through this joint partnership, we will continue to find ways to leverage our own capital and spur additional investment from partner institutions to help address climate change and find commercially attractive clean energy solutions for the benefit of future generations,” said Purna Saggurti, chairman of the Global Corporate and Investment Bank at Bank of America Merrill Lynch.
Today’s news follows B of A’s announcement in July — as one of the first companies to sign onto the White House’s American Business Act on Climate Pledge — that the company was increasing its environmental business commitment from $50 billion to $125 billion by 2025 to support low-carbon business through lending, investing, capital raising, advisory services and developing financing solutions for clients around the world.
Since 2007, Bank of America has provided more than $53 billion in financing for low-carbon activities. It continues to play a leading role in the development of the rapidly expanding green bond market, issuing the first benchmark-sized corporate green bond in 2013 — a $500 million offering — followed by a second green bond for $600 million in the spring of 2015. According to Bloomberg New Energy Finance, Bank of America was the No. 1 underwriter of green bond issuances in 2015 and 2014.