Macquarie announces commitments to mobilise climate finance

• Macquarie joins leading financial services firms and governments at the UN Climate Action Summit to launch new climate finance reports and commitments 
• Macquarie plans to develop a 20 GW pipeline of renewable energy projects, including 4 GW in emerging markets
• Final close approaching on a $A1 billion agriculture fund targeting improvements in on-farm energy efficiency and reducing carbon emissions
• Plans to extend energy and green impact reporting on assets and projects

This week, during the United Nations (UN) Climate Action Summit in New York, Macquarie Group (Macquarie) joined other public and private organisations to launch two landmark reports, on the low carbon transition and on climate adaptation, and announced a series of new commitments.

Supporting global initiatives

The Climate Finance Leadership Initiative (CFLI) was established in January 2019 by Michael Bloomberg, the UN Secretary General’s Special Envoy for Climate Action, bringing together the Chief Executives of Allianz, Axa, Enel, HSBC, Goldman Sachs and Macquarie with the CIO of Japan’s Government Pension Investment Fund (GPIF), to consider how to mobilize and scale private capital for climate solutions. CFLI members contributed to the report and made a series of group commitments, including a collective commitment to deploy $US20 billion of emerging market climate finance by 2025, and a new partnership to work more closely with publicly funded development finance institutions.

The Global Commission on Adaptation (GCA) was established by Ban Ki-moon, 8th Secretary-General of the United Nations, Bill Gates and Kristalina Georgieva, CEO, World Bank and is guided by over 30 commissioners from OECD and non-OECD governments and the private sector, including Macquarie CEO Shemara Wikramanayake. Its focus is on helping investors, government officials and other stakeholders gain a better understanding of the current and future resilience challenges and accelerating climate adaptation action in areas such as infrastructure, agriculture and supply chains.

Macquarie has drawn on its experience as a world leader in green finance and infrastructure, and its growing role as a developer of renewable energy projects, to support these two global initiatives.

A commitment to develop 20GW pipeline of new renewable energy projects

Speaking during the UN Climate Action Summit in New York, at the Bloomberg Global Business Forum, Ms. Wikramanayake outlined Macquarie’s intention to develop a pipeline of 20 GW of new renewable energy projects over the next five years through its Green Investment Group (GIG). Around a fifth of these projects are expected to be in non-OECD emerging market countries where climate finance flows have historically been weaker. Many of these projects are expected to be backed by power purchase agreements arranged by GIG with corporate clients. This follows Macquarie raising $A1 billion of share capital for investment through an institutional placement in August 2019, following an active period of investment in renewables projects, alongside other sectors.

As part of the CFLI, Macquarie will work to support emerging market countries to create conditions conducive to greater private investment, including in new partnerships with public finance bodies such as Development Finance Institutions and through the development of new green banks. GIG has announced it is working alongside the UN Green Climate Fund to support the Government of Mongolia in developing its own green bank, the Mongolian Green Finance Corporation. GIG is exploring opportunities to extend this green bank advisory offering to other countries. Macquarie is also accredited by the UN Green Climate Fund to deploy concessional finance into climate mitigation and adaptation projects in emerging markets.

Shemara Wikramanayake, Macquarie Group Managing Director and Chief Executive Officer said: “I’m delighted that our Macquarie teams have been able to contribute to these important United Nations initiatives on climate mitigation and adaptation. Over the last decade we have played a leading role in facilitating the shift towards renewables, with a particular focus on trying to address the various challenges that remain to full transition, including the need for a stronger pipeline of projects and integrating these with energy grids.  We are increasingly broadening our focus by seeking new solutions to emissions reduction across agriculture, waste and real estate and working to ensure our infrastructure investments are more climate resilient.”

Strengthening our approach to energy and green impact reporting

Macquarie Infrastructure and Real Assets (MIRA), the world’s largest infrastructure manager, with $A120.2 billion of equity under management, has also announced its intention to introduce carbon and energy reporting for its fund portfolio companies. These metrics will enable MIRA to make better investment and asset management decisions and, over time, set future targets for the businesses within each fund portfolio to achieve a net reduction in greenhouse gas emissions.

GIG today announced a ground-breaking new initiative to increase the availability of standardised, climate-related data. In partnership with BloombergNEF (BNEF) GIG’s pioneering Carbon Score methodology will be combined with BNEF’s market-leading renewable energy project data to build a tool to assess the green impact of over 40,000 wind and solar assets globally, 60% of consented projects.

Supporting energy efficiency and carbon emission reduction in agriculture and real estate

MIRA is also approaching final close of $A1 billion on its most recent agricultural fund, which has a mandate to target improved on-farm energy efficiency and reduced carbon emissions through sustainable farm management practices. Australia’s Clean Energy Finance Corporation (CEFC) is an investor in the fund and is working with MIRA and the Commonwealth Scientific and Industrial Research Organisation (CSIRO), a world-leading scientific institution, to develop an emissions reduction benchmarking model to be shared with the broader farming sector. The model will enable emissions intensity targets to be established that are consistent with Science Based Targets, a global industry program initiated after the COP21 Paris Agreement.

Macquarie also announced that it will become a member of RE100, a global corporate leadership initiative bringing together businesses committed to 100% renewable electricity and will source all of the energy supplying its premises and data centres from renewable sources by 2025. Consistent with the dedicated power purchase agreements it has created for clients, Macquarie will seek to develop projects to supply the green energy for its new Sydney headquarters and Melbourne office. Macquarie has been carbon neutral in sourcing its energy supply since 2010 through the purchase of carbon credits.

Macquarie has a long track record of investing in renewable energy projects. Since 2010, Macquarie and the Green Investment Group, which was acquired in 2017, has helped finance more than 22 GW of generation capacity in onshore wind, offshore wind, solar, thermal, hydro, waste-to-energy, storage and energy management projects, investing or arranging over $A8 billion in FY19 in projects around the world. In 2019, Macquarie was accredited by the Green Climate Fund. GIG continues to support the UK Government in a joint venture to invest in transformational projects across India and Africa. In 2018 Macquarie launched a £500 million Green Loan, the first of its kind in the world.