CDC doubles climate allocation to £3.1bn over five years

The British DFI typically invests around £1.3 billion in total per year.

CDC Group has committed to invest £3.1 billion ($4.2 billion; €3.6 billion) to climate finance in developing countries in Africa and Asia from 2022 to 2027.

The UK’s development finance institution will invest this capital directly and via generalist private equity funds and specialist climate and renewables vehicles. It will also increase its allocation to venture capital, specifically for technologies that can help fight climate change, a statement from CDC said.

This commitment includes the UK government’s £200 million Climate Innovation Facility, announced yesterday by Prime Minister Boris Johnson as part of the UK’s Clean Green Initiative. About a quarter of the £3.1 billion allocation will be fresh capital from the UK government, and the remainder will be derived from CDC’s existing investment funds.

This is double CDC’s allocation to climate finance in the period from 2017 to 2021, according to the UK government’s website.

CDC invested “over $1 billion in climate finance across Africa and South Asia” from 2017 to 2020, according to the institution’s statement. It does not have an annual investment target, but expects its annual investments up to 2026 to be broadly in line with those of recent years. CDC invested £1.06 billion in 2018, £1.66 billion in 2019 and £1.22 billion in 2020.

The news follows an announcement in September that CDC would allocate 30 percent of its investments to climate finance over the next five years. In July, the UK government announced that it would invest £11.6 billion into the energy transition over the next five years via the international climate finance fund.