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Fund Solutions

Invesco Launches Climate Adaptation Fund

US asset manager Invesco is seeking to raise US$500 million from institutional investors to fund climate adaptation projects in developing countries. The Invesco Climate Adaption Action Fund (ICAAF) will invest in public and private placement bonds issued with the purpose of funding projects aiming to counter the effects of climate change. The UN Environment Programme (UNEP) has cited climate adaptation as a key pillar in the global response to climate change alongside mitigation, with an estimated cost of as much as US$387 billion a year. But it lacks funding, with UNEP estimating the finance gap between US$194 billion and US$366 billion per year – with the need greatest in developing countries. The ICAAF will invest in bonds funding areas such as food security and agriculture, coastal zones, urban infrastructure, water collection and management, energy and nature-based solutions. The fund’s term is 12 years, comprising a seven-year investment period. It is made of two parts: the junior share – around 25% – which  is aimed at the public sector with a targeted return of 11.75% per annum; and the remainder, which will target private sector investments with annual returns of 8.1%. Invesco said it would work with the Global Centre on Adaptation (GCA) to find “compelling and effective investment opportunities”. “We believe there is an enormous opportunity to transform how climate adaptation is funded and have created [the] ICAAF to enable institutions to invest to accelerate the scale-up of solutions – an approach we believe will create the most impact,” said Hamid Asseffar, Head of EMEA Sustainable and Impact Investing at Invesco.

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