responsAbility’s Asia Climate Strategy fund aims to target carbon reduction across the continent, looking at areas such as renewable energy, electric mobility and energy efficiency.
Swiss impact investment manager responsAbility, part of UK-based M&G, has raised an additional $150m (€145m) in the third close of its Asia Climate Strategy fund, which will go towards reducing carbon emissions in Asia.
The investment is part of responsAbility’s climate investment strategy which was launched in November 2023 and now stands at over $350m.
Investment in the fund, which has a target final close of $500m, has been driven by institutional investors including Germany’s development bank KfW, which committed €20m to this latest funding round.
The strategy uses a blended finance structure combining public funding with private capital to support high-impact climate-friendly projects.
According to responsAbility, private sector commitments to the strategy now amount to $200m – more than half of the strategy’s total volume – while public and development finance institution contributions total $154m.
Speaking to Impact Investor, a spokesperson at responsAbility said: “Given the interesting opportunity for asset class and geography diversification and appealing risk adjusted return, several European institutional investors have shown strong interest in this strategy.
“Climate is also on top of their agenda, especially for insurance companies that are well aware of the physical and transition climate risks, take for example the current wildfire in the US, but also pension funds as their beneficiaries are increasingly scrutinising how and where their capital is allocated,” they added.
In addition to European investors from the three first closes, responsAbility told Impact Investor that there is significant interest from institutional investors in the Asian and North American regions.
Energy transition
The need to invest in climate-friendly infrastructure and technology in emerging markets is an urgent one. Asia faces a double challenge, as the continent is already the largest emitter of greenhouse gases, accounting for more than 50% of global CO2 emissions, and facing a projected strong increase in energy demand by 2050.
The responsAbility fund aims to target direct CO2 savings of around 16 million tonnes over the entire lifetime of its investments, which amounts to the equivalent of running four coal power plants continuously for a year.
The impact manager added that it aims to achieve this goal by focusing on sectors with significant CO2 reduction potential, including renewable energy, battery storage and e-mobility, energy efficiency, and the circular economy.
Last year, the fund secured $100m, which was made on behalf of M&G Life business through its $165bn Prudential With-Profits fund, as reported by Impact Investor.
Speaking to Impact Investor at the time, Ciaran Mulligan, chief investment officer at M&G, said there is currently a strong case for investing in private assets with an impact focus across emerging markets, highlighting a growing interest in the energy transition among international investors.
Looking ahead, Stephanie Bilo, chief client and investment solutions officer at responsAbility, said that financing the energy transition in emerging markets like Asia requires close collaboration between the public actors and the private sector.
“Our strategy and blended finance structure provides institutional investors with access to attractive, risk-adjusted investment opportunities that also contribute significantly to decarbonising the region,” Bilo said.
