Danish Pension Funds' $700M Sustainable Fund for Emerging Markets

• The fund plans to invest between 150 to 300 million kroner in around 20 companies.

• Support sustainable development projects in emerging nations such as India and South Africa.

Four Danish pension funds—PFA, PKA, P+, and PenSam—have agreed with the Investment Fund for Developing Countries (IFU) to create the Danish SDG Investment Fund II.

The fund will invest in Africa, Asia, and Latin America, which aims to achieve the United Nations' 17 sustainable development goals, such as reducing poverty, providing clean energy, and building sustainable cities.

It will raise around 5 billion Danish kroner (about $705.8 million). So far, 2.7 billion kroner has been raised, and the rest will be committed by 2025. The fund's main goal is a fair and equitable green transition, including green energy projects in these regions.

To this end, the pension funds will commit to more than half of the fund, approximately 60%, with the rest being funded by the IFU. The money raised will support projects in 13 countries, including Colombia, India, Mexico, South Africa, and Vietnam.

Investing in developing nations is typically associated with risk. This project aims to reduce some of that risk and show how public and private partners can work together to make an impact in regions that need the most financial support to combat climate change.

“Private investors are often reluctant to invest in developing countries due to the high risk involved, and this [is] a huge challenge,” said Lars Bo Bertram, CEO of the IFU, in a statement. “This task cannot be carried out with public funds alone, and we therefore need to remove part of the risk to attract private risk capital. With the Danish SDG Investment Fund II, we are showing a path to public-private partnerships that can make a significant difference in places in the world that need it most.”

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Source: CIO