Brookfield Asset Management Inc. plans to launch a global impact investment fund that will dwarf competitors and focus exclusively on helping companies transition to net-zero greenhouse gas emissions, said Mark Carney, Brookfield's head of environmental, social and governance and impact fund investing.
Carney, the former governor of the Bank of England and the United Nations special envoy on climate action and finance, joined Brookfield in 2020 with a charge to develop funds that combine "positive social and environmental outcomes with strong risk-adjusted returns for investors," the company said at the time.
"If we are going to address this issue, it requires the mainstreaming of climate change and, obviously, the leadership of the private sector," Carney said Feb. 10 during an episode of Bloomberg Invest Talks, a virtual conference series. "And now it's very clear this is what society wants, it's beginning to mainstream and ... there's an opportunity with this fund to help define what good is, what real transition is ... taking assets that are brown or beige or even olive and shifting them to green over the life of the fund."
Carney did not disclose the size of the proposed fund. As of late 2020, Brookfield had approximately $575 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit, according to S&P Global Market Intelligence data.
With more than 1,500 companies and some 130 countries having committed to net-zero emissions, according to a September 2020 report from Data-Driven EnviroLab and the NewClimate Institute, observers now are watching to see how they deliver.
"Now's the time to begin that kind of strategic and operational focus ... on embedding climate change into investment decisions," said Ilesh Patel, head of global strategy and markets for energy and resources at Baringa Partners, a consultancy.
Brookfield subsidiary Brookfield Renewable Partners LP, which has a sizable pipeline of renewable energy projects, could see new investment opportunities from its sponsor's impact fund, CEO Connor Teskey said Feb. 4 on an earnings conference call. Brookfield Renewable Partners is focusing on what market observers say are two of the most in-demand areas in the renewable energy sector right now: building large-scale megaprojects and helping corporations cut their carbon emissions.
In addition to renewable energy investments, Brookfield CEO Bruce Flatt said on an earnings call last year that the company's inaugural impact fund could be open to other infrastructure and industrial assets. "[We] think that universe is very, very large," Flatt said.
In the race to limit the rise in global temperatures, decarbonizing heavy industry is one of the toughest challenges. Companies are pouring money into hydrogen products that they hope will be a key to cutting industrial emissions. And investors are turning to transition bonds, an offshoot of the green bond market, to provide industrial companies with the financing they need to move from brown to green, as Carney put it.
"Climate change is the biggest risk to the world," Carney said. "But when you turn it around, if you're part of the solution, it makes it the biggest commercial opportunity in the world. In effect, we're going to rewire, so to speak, the entire global economy consistent with net zero."
