By Simon Jessop

LONDON, (Reuters) – Climate change represents “the greatest business opportunity” in the global marketplace, however, more must be done to increase private sector investments in emerging markets, according to an executive at International Finance Corporation (IFC).

Speaking in an interview at the Reuters Impact conference, Managing Director Makhtar Diop said the current level of investment in emerging markets was just a fraction of the capital that could be being deployed from the world’s markets.

The World Bank’s investment arm, which is part of the World Bank, was providing support to countries in developing their climate change transition plans.

Even so, multilateral development banks (MDB), such as the World Bank, needed to be able to create new financial structures that would derisk private sector investments.

This “blended finance”, which can include an MDB providing the first loss-absorbing capital, to encourage risk-averse financiers and funds to get involved. It increases the money’s amount and enhances the environment.

Diop expressed confidence that “all activity related to Climate Change will be considered less risky in the future” and that the blended finance we bring with us will enable us to access more resources that we’ve been able in the past.

You are obligated to do more

Diop made these comments several months ago after Larry Fink, chief executive at BlackRock (NYSE):, called for an overhaul of IFC and other peer institutions to increase private sector capital.

Diop replied that MDBs are “pushing as hard and as they can” to fulfill their purpose but that they needed more. He cited several projects in progress that might help.

These include helping investment officers prepare projects that are “bankable”, and moving the Climate Change department into the IFC’s core operations. In addition, the IFC worked with peers MDBs in order to develop a common methodology for assessing projects. This should encourage more co-financing.

Diop stated that the World Bank Group invested nearly $83Billion in climate-related activities so far. In 2020, however, the record amount of $21B in climate projects was set by the IFC.

One third of our internal resources go to climate-related investments. “We are trying to reach Paris-aligned 100% by 2025” he stated, refering to the Paris Agreement of 2015.

Diop noted that the most difficult challenge in scaling up funding for climate adaptation projects is looking ahead to the Oct. 31 global climate talks in Glasgow.

Diop described the problem as “the hardest question that I face today,” given that many of the nations that must adapt to the changing world, such as desertification or coastal erosion, are found in emerging markets.

“If there’s one thing I want us to work on in COP26 it is this: How to pool more resources together for adaptation.