New report reveals $330B/year opportunity in emerging market green investments
- Research released today shows dozens of green technologies are now cheaper than incumbent fossil-fuel products in emerging markets, sparking a wave of climate investing
COP28, Dubai: Dozens of green technologies are now lower cost than incumbent technologies across the emerging world, sparking a wave of new green investments that could potentially reach $330B per year over the next decade and spur green development.
The Investor Roadmap for Inclusive Green Growth report, released today by LeapFrog Investments, CGAP (a global partnership housed at the World Bank), and Temasek, analysed a range of sectors across emerging markets to determine their commercial viability. It found technologies like electric scooters in India, rooftop solar in Kenya, and smart farming in Vietnam are already 14%- 75% cheaper than incumbent products, offering low-income consumers huge savings of as much as $500 a year.
These ‘green discounts’ have triggered a wave of sustainable investing across mobility, energy, built environment and the agriculture sectors in emerging markets, as investors place big bets on companies like Indian solar company Ola Electric and African renewable financier Sun King, hoping to scale the green champions of the future as 5 billion people in these markets rise into prosperity.
Among the key findings of the report:
- The green discount: Analysis across mobility, energy, agriculture, and built environment sectors in emerging markets reveals dozens of investible opportunities where the price of green goods and services is out-competing incumbent dirty technologies by up to 75%. The top four investible opportunities include:
- The opportunity is immense: Around $330B a year, or $3.3 trillion by 2030, is needed to deliver a green transition across these four sectors in South Asia, Southeast Asia and Africa. Current investments account for about 5% of this annual total, leaving a significant funding gap and investment opportunity. Across the last 10 years, sustainable deal funding across these four segments has grown on average 22%-47% per annum, and continues to rise.
- Urgent investment is needed: without a green transition in emerging markets, rising incomes across Southeast Asia, South Asia and Africa will translate into dramatic rises in emissions. If developed markets meet <2 degree scenarios, but new investment doesn’t flow to emerging markets, then Africa, South Asia and Southeast Asia could account for 73% of global emissions by 2050, up from 25% today.
- Green Technologies can improve lives: To ensure a just green transition for those who have contributed the least to the climate crisis, green technologies and practices need to be both affordable and readily available for low-income consumers. These investable opportunities show emerging markets can leapfrog a generation of polluting, expensive technology and infrastructure with clean alternatives. This can improve incomes, health, and food security.
About LeapFrog Investments
LeapFrog invests in healthcare, financial services and climate solutions businesses in high-growth global markets. Its companies deliver distinctive impact and robust returns, growing on average 24 per cent a year. LeapFrog companies now reach 492 million people in 30 countries. The firm has raised billions of dollars from global institutional investors, including a recent $500m commitment by Temasek to LeapFrog and its growth equity funds. LeapFrog has twice been ranked by Fortune as one of the top Companies to Change the World and was named inaugural Pioneer in Impact by the FT and IFC at the Transformational Business Awards.
Montfort Communications: LeapFrog@Montfort.London
CGAP is a global partnership of more than 30 leading development organizations dedicated to advancing the lives of people living in poverty, especially women, through financial inclusion. CGAP is housed at the World Bank and operates like a thinktank and innovation lab. It works at the frontier of inclusive finance to test solutions, spark innovation, generate evidence, and share insights. CGAP’s knowledge enables public and private stakeholders to scale solutions that make financial ecosystems meet the needs of poor, vulnerable, and underserved people and of micro and small enterprises (MSEs), including through advancing women’s economic empowerment. As a global public good, CGAP’s independent research and analysis is available to all.
Temasek is a global investment company with a net portfolio value US$287B as at 31 March 2023. Its Purpose “So Every Generation Prospers” guides it to make a difference for today’s and future generations. As an active investor, forward looking institution and trusted steward, it is committed to deliver sustainable value over the long term. Temasek has overall corporate credit ratings of Aaa/AAA by rating agencies Moody’s Investors Service and S&P Global Ratings respectively. Headquartered in Singapore, it has 13 offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and London, Brussels, Paris, New York, San Francisco, Washington DC, and Mexico City outside Asia.