Long-term investors must team up with emerging markets governments to create investable decarbonisation plans, according to Allianz board member Günther Thallinger.

Speaking at a conference hosted by the Principles for Responsible Investment (PRI) in Barcelona today, Thallinger was asked whether current emerging market outflows would undermine global climate goals by stopping investment into those countries most in need of access to green private capital.

He told the audience that higher interest rates, which are contributing to those outflows, “is exactly the type of volatility that long-term investors can live through – that’s the point of being long term”.

Instead, the biggest stumbling block for institutional investors keen to allocate capital to climate projects in emerging markets is the lack of suitable projects, said Thallinger, who chairs both Allianz’s sustainability board and the steering group of the UN’s Net Zero Asset Owner Alliance.

In response to criticism that investors aren’t funding the climate transition in emerging markets, investors will say there aren’t any projects to finance, he said. In turn, governments will provide projects.

“And then, all of a sudden, we realise that what governments think of as projects and what investors believe are projects doesn’t necessarily fit together. So both sides need to strengthen enormously their capabilities to develop not only these projects, but entire [national] transition plans,” he said.

“Governments may be well advised to reach out to investors for this transition plan development so that we start to […] talk about the financing.”

He added that development finance institutions and multilateral development banks should also step up to de-risk projects for investors.

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