In a bid to reduce the evident risk involved in low carbon investment the Department of Energy and Climate Change (DECC) has set up a working group in partnership with Anglia Ruskin University designed to help mobilise private investment in climate change solutions.

The Capital Markets Climate Initiative (CMCI), Chaired by Dr Aled Jones, Director of the Global Sustainability Institute at Anglia Ruskin, will support private sector investors including banks, pension funds and insurance companies who are considering investment in low carbon technologies, solutions and infrastructure. These organisations often have to manage a number of risks during investment including those associated with currency instability in countries, technology risks and risks associated with changes to policy.

The CMCI Working Group 1, Chaired by Dr Jones, has developed a set of principles designed to forge an understanding amongst policy makers of why and how public sector action can help mobilise private capital by managing some of the risks that make investing in climate solutions difficult. Working Group 2, Chaired by the World Economic Forum, will explore best practice through country partnerships.

“Governments from all nations have committed to tackling climate change under a set of agreements as part of the United Nations Framework Convention on Climate Change (UNFCCC). In particular developed country governments have committed to mobilising US$100 billion in annual investment flows into emerging and developing economies to enable them to deliver on mitigation and adaptation targets,” explained Dr Jones.

“Through chairing Working Group 1 of CMCI, Anglia Ruskin has led on a consultation with private and public sector institutions to understand what makes an investable landscape for private capital whether they are in developing or developed countries.  A set of principles for ‘investment grade policy’ has been developed which is now being used in a wider consultation with various parties to help further discussions around mobilising this private capital.

“The aim of CMCI is to make a practical difference in this space – that is to actually lead to private capital being invested in climate solutions around the world through well managed and diverse mechanisms.”

CMCI’s principles will be tested and further developed through Working Group 2 in order to measure their effectiveness. Long-term use of the principles will also be explored with relevant stakeholders while the principles are used by the private sector to analyse the policy environment of a particular country to help judge whether it is ‘investment grade.’