Dale Petrie is the Chief Financial Officer for the Development Guarantee Group, the proponent for the Green Guarantee Company (GGC), an instrument from the Lab’s 2022 cycle. GGC is the first specialist guarantor for emerging market climate adaptation and mitigation projects, unlocking access to global investors by de-risking green bonds and loans.
Tell us about your organization’s climate finance goals and achievements.
The Green Guarantee Company’s mission is to use guarantees to drive the transition towards a net zero carbon economy and promote environmental and social sustainability. The company will have an investment grade rating and provide guarantees to emerging market borrowers, improving their credit rating and ability to access more capital for climate adaptation and mitigation projects.
With an ambitious 10-year plan, we aim to leverage approximately USD 400 million of capital by a factor of 10, which together with recycling of capital will result in the mobilisation of between USD 4 billion and USD 6 billion in loans and bonds from global capital markets. These guarantees will credit enhance bonds, enabling global investors to confidently invest.
In your view, what should climate finance actors be paying more attention to?
Climate finance actors should acknowledge the challenge of aligning with the various taxonomies. These are essential for determining whether investments in climate activities are aligned with climate goals. However, due to regional and sectoral nuances, pathways to transition will be different across jurisdictions and industries. Although a single global taxonomy is unlikely to be viable, there are currently too many. A recommendation from the Global Financial Market Association is for global policymakers and market participants to agree on a minimum set of global, guiding principles to underpin taxonomies across regions. This could form the basis for developing sector-specific and, where necessary, region-specific taxonomies that are consistent, comparable, and reliable.
With an ambitious 10-year plan, we aim to leverage approximately USD 400 million of capital by a factor of 10, which together with recycling of capital will result in the mobilisation of between USD 4 billion and USD 6 billion in loans and bonds from global capital markets.
What are the most significant barriers to climate finance in the private sector?
IFC and Amundi Asset Management identified the below as being key barriers to greater investment being mobilised from the global capital and credit markets, into emerging markets and developing economies:
- Transparency – lack of reporting to identify, measure, and track climate impact using market standards
- Supply constraints – limited climate debt issuance and a pipeline of scale
- Capacity – global investors’ lack of knowledge on emerging market borrowers in climate mitigation and adaptation projects
- Stability – global investors’ negative perception of macroeconomic and policy instability of emerging markets
- Liquidity – information asymmetry between emerging market borrowers and global investors, reducing market appetite and thus liquidity
What does your organization gain from the Lab Network and what does your organization bring to the Lab Network?
We are dedicated to supporting the journey towards a Net Zero future, and we believe that guarantees can play a critical role in mobilising private sector investment. Joining the Lab Network provides us with a valuable opportunity to connect with a global network of like-minded individuals and organizations, opening the door for potential collaboration and partnerships.
We bring a wealth of expertise in the development and implementation of guarantee products and are keen to share our knowledge with others in this network, creating an opportunity for us to learn from one another, identifying areas of synergy, and working together to drive progress towards our common mission of a sustainable and low-carbon future.
Other than the Lab, what are other climate finance initiatives your organization is engaged in?
The Green Guarantee Company was a finalist in the Mobilising Institutional Capital Through Listed Product Structures (MOBILIST) competition. MOBILIST is the UK government’s flagship programme which aims to mobilise large scale investment through publicly listed markets.