Denmark’s ATP in €1bn emerging markets climate investment Copenhagen boost

New fund opened to other institutional investors in climate change fight.

ATP, the Dkr355bn (€48bn) Danish public pensions giant, has made a hugely symbolic seed commitment of €1bn to a new climate change fund for investing in emerging economies, as governments meet in its capital, Copenhagen, to discuss a new global environmental agreement. ATP said its Institutional Investor Climate Change Action Fund for Emerging Economies, will be opened to other global institutional investors who want to make climate change investments in developing markets. It said the fund would operate on private sector conditions and only invest in projects that are expected to deliver relevant risk-adjusted returns. The fund said it had been talking with other leading international institutional investors to discuss how flows of private sector capital can be increased in developing countries. Such initiatives are deemed to be crucial to a successful outcome at the Copenhagen summit. The fund said: “Enhancing and sustaining larger flows of private finance into climate-relevant investments in emerging economies is crucial if serious climate change is to be avoided.” The Danish pension fund, which is already one of Europe’s largest investors in the clean tech space, said the creation of a credible global policy framework on climate change in Copenhagen this week would be key to the fund’s success in terms of returns and risk mitigation. It said another key plank would be the formation of relevantpartnerships with large international financial institutions. ATP said the new fund would invest in existing development structures, aid programmes and funds in developing economies that are overseen by the UN, World Bank and regional development banks. It said a rough outline of how it might invest would be to take a maximum 33% stake in ready-to-implement development projects, and add in 50% of leverage capital.
An initial fund, it said, would typically form part of a national action plan, while potential subsequent funds could address longer-term investments and infrastructure projects.
Earlier this year, ATP rolled out one of the biggest institutional investment programmes in the climate change space, with plans to do more as and when it sees market opportunity. It started with an €292m ($400m) investment in a global clean tech renewable energy fund run by New Jersey-based Hudson Clean Energy Partners, which will be heavily focused on biomass (biological matter used as fuel) and second-generation biofuels. The fund, the fourth largest pension plan in Europe, also announced a commitment of €400m in sustainable forestry with an initial €24m purchase of 38,000 hectares (roughly 95,000 acres) of timberland at Upper Hudson Woodland in New York State.