Brookfield Asset Management raises $2.4 billion for UAE-backed climate finance fund

The New York Stock Exchange-listed Brookfield Asset Management has raised $2.4 billion for a climate-finance-focused fund to invest in clean energy projects in emerging markets, reaching about half of the fund's $5 billion total capital target.

The Catalytic Transition Fund was launched at the Cop28 climate conference with up to $1 billion of capital provided by Alterra, the UAE’s $30 billion climate fund. Brookfield has also added four new investment partners to its fund, including Quebec's public pension fund CDPQ, GIC, Prudential, and Temasek, the company said in a statement on Monday.

“CTF demonstrates Alterra’s catalytic capital as a powerful multiplier of climate finance to the Global South,” said Majid Al Suwaidi, chief executive of Alterra. “This early momentum around CTF shows strong global demand not just for climate strategies, but for opportunities to invest in climate solutions in emerging markets.”

CTF is focused on deploying capital into clean energy and transition assets in emerging markets in South and Central America, South and South-east Asia, the Middle East, and Eastern Europe. The fund plans to announce its first investments later in 2024, with a formal closing – including more capital from Brookfield's continuing fundraising efforts – expected by early 2025.

“The support from the world’s most sophisticated investors for the CTF strategy underscores the unique combination of the major commercial opportunity and the climate imperative,” said Mark Carney, chair and head of transition investing at Brookfield Asset Management. “We look forward to working with other like-minded investment partners to accelerate the transition in these critical and vastly underserved markets.”

By 2030, emerging markets and developing economies will require $2.4 trillion every year to address climate change, according to the Climate Policy Initiative. Meanwhile, Deloitte estimates that investment of $5 trillion to $7 trillion a year is needed until 2050 in the energy sector to drive the transition. Less than $2 trillion is currently spent each year.

Institutional investors control assets worth more than $200 trillion, only 0.3 per cent of which is going toward climate financing. The International Monetary Fund and the World Bank have identified public-private risk-sharing as key to fostering private climate investment in emerging markets.

“We believe there is an opportunity to drive scalable positive change in emerging markets through investing in the climate transition," said Don Guo, chief investment officer at Prudential. "By supporting a just and inclusive transition, we enable the benefits of sustainable development to be shared widely, contributing to social equity and long-term prosperity."