Norway’s KLP is to invest USD 25m (NOK 217m) in a new climate fund that focuses on investments in developing countries.

The Climate Investor 2 fund, managed by Dutch company Climate Fund Managers, will invest in projects such as renewable energy, sustainable water supply, good sanitation, waste management and building a circular economy in developing countries in Asia, Africa and Latin America.

KLP director of corporate social responsibility, Heidi Finskas, said: “If we are to achieve the goals in the Paris Agreement, we need more renewable energy – and especially in developing countries where coal is often the alternative. The world must triple investments in renewable energy by 2030 for the energy market to meet the need in a way that is compatible with the Paris Agreement's ambitions, according to the International Energy Agency.”

KLP has previously invested just over NOK 400m, measured at the current exchange rate, in the fund Climate Investor One, which also invests in renewable energy projects.

Both funds are examples of the financing solution referred to as "blended finance", which is an interplay between public and private capital. There, public donors contribute, for example, to development funds in the form of cheap loans. States can provide state-guaranteed loans. These two sources of financing then trigger contributions from investors such as KLP who invest on purely commercial terms and demand a good return on the funds they invest.

“This investment is part of KLP's commitment to increase renewable production in the world. It has been important for us not only to find investment opportunities for our own part, but to help build new partnerships and structures that facilitate more capital to be invested in these markets,” Finskas added.

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