Climate Finance: The Climate Action Fund in Emerging Markets

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The Emerging Markets Climate Action Fund (EMCAF) is a blended finance fund that combines public and private capital to support climate-related projects in emerging markets. Launched in 2021, the fund reached a final size of 450 million euros in January 2025, thanks to an additional contribution of 20 million euros from the Kreditanstalt für Wiederaufbau (KfW) on behalf of the German Federal Foreign Office. The EMCAF is managed by Allianz Global Investors, one of the leading asset managers globally, while the EIB provides expertise in climate finance and support in due diligence on environmental and social aspects.

The EMCAF plays a fundamental role in mobilizing financial resources for climate projects in emerging markets. The fund is expected to mobilize up to 7.5 billion euros to finance initiatives aimed at reducing greenhouse gas emissions and promoting environmental sustainability. EMCAF investments primarily focus on renewable energy and energy efficiency, but also include sectors such as sustainable transport, forestry, water supply, and wastewater treatment. The fund plans to invest in around 15 sub-funds, which will in turn support approximately 150 projects, contributing significantly to global efforts to address climate change.

Emerging markets play a crucial role in the fight against climate change due to their impact on economic growth, energy demand, and global emissions. Economic and demographic expansion in these regions is significantly increasing energy needs, making investments in sustainable solutions essential to limit global temperature rise. These countries also have enormous potential for the development of renewable energy, thanks to the availability of natural resources like sun and wind, which can support the transition to a more sustainable energy model. Furthermore, the rapid urbanization process is increasing the need for sustainable infrastructure, such as eco-friendly public transport systems and high-energy-efficiency buildings, which are essential to reduce the environmental footprint of growing cities.

The collaboration between the public and private sectors is essential to mobilize the resources needed to finance large-scale climate projects. The EMCAF's blended finance model is an example of how public capital can be used to attract private investments, mitigating the risks associated with projects in emerging markets and increasing the attractiveness for private investors. This synergy allows for risk sharing, utilizing public funds to absorb part of the risks, making investments more appealing to the private sector. Furthermore, public institutions can offer technical knowledge, regulatory support, and access to local networks, while the private sector brings operational efficiency and project management capabilities. The combination of public and private resources broadens the scope of projects, increasing the overall impact on climate change mitigation.

Since its establishment, the EMCAF has made significant progress, reaching a size of 450 million euros and investing in numerous projects in emerging markets. Despite the initial successes, it is necessary to continue mobilizing additional resources to meet the growing needs for climate financing. According to the EIB, it is crucial to increase efforts to develop strategic partnerships that can expand the scope of EMCAF, maximizing the impact of each euro invested.

This article was created as part of the "Biodiversity services EU expansion" project (CUP: E43D22000480009) under the Lombardia Region call "PR FESR 2021-2027 – INTERNATIONALIZATION LINE 21-27", aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company developing innovative technologies for the monitoring, protection, and regeneration of biodiversity, supporting companies in defining customized climate strategies based on the analysis of their impacts and dependencies on nature. With a consolidated portfolio in Italy, Germany, and France and notable partnerships, 3Bee continues its expansion in international markets to create concrete impact through technology.