Jul 21

Bloomberg, Goldman Partner on Climate Fund

Stephen Bierman
Apr 29, 2021
Image: Karsten Würth via Unsplash

Media and financial services platform Bloomberg and Wall Street leader Goldman Sachs are creating a partnership to battle climate change by driving investment to clean energy.

Goldman and Bloomberg will launch an innovation fund that will deploy capital to energy transition projects across developing markets, with a special focus on South and Southeast Asia, according to an article authored by Goldman Chief Executive David M. Solomon and Bloomberg founder and owner Michael Bloomberg.

Bloomberg Philanthropies will expand its global research and policy work, complementing Goldman’s existing efforts to accelerate the movement of capital to climate solutions – including through the Restore Fund it recently created with Apple and Conservation International.

A focus on emerging markets

The partnership will seek to right an investment disparity in clean energy between high-income markets and low-income countries. The pandemic resulted in developing markets cutting such energy investments by more than 20% last year, and from a very low base. Indonesia and India were mentioned as two Asian countries with energy transition investment needs running into the hundreds of billions.

Asian nations are the world’s largest consumers of coal. While coal can provide cheap energy vital to economic growth, it is the worst carbon emissions violator among mainstream fuels. Shifting the world’s most populous region to cleaner energy will constitute a huge undertaking.

At the same time, it is this region where investments into clean energy will arguably make the biggest difference in limiting the rise in global temperatures.

Public-private cooperation is key

The partnership will have to be one among many in order for the energy transition to gain a successful result. It will also have to leverage public-private partnerships and deal specifically with opportunities presented in each country. Renewable energy gains in Europe only came after the market matured under extended periods of subsidy.

In some spots, Asia may be able to use the newest technology to leapfrog previous steps taken in the EU. Yet, all the same, governments in these regions will initiate development with different types of legislation, and investors will require returns. Communication between the two will be key.

Greater investor access to information will provide a tailwind to the effort, according to Goldman and Bloomberg. They cite the successful example of the Task Force on Climate-related Financial Disclosures, which has been welcomed by the U.S. Treasury and will be used as a foundation for the European Commission’s work on global climate reporting standards.

“So it is now possible to provide mainstream investors with greater transparency into how their portfolios are aligned with the climate transition — and we will help do exactly that,” the two business leaders wrote.

Stephen Bierman

Stephen Bierman is a finance and energy reporter with over 15 years of experience, including at Bloomberg News and Energy Intelligence.

Tweets at: @StephenBierman1

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