The diversification of company supply chains outside China is one of many factors feeding an increasingly favourable business case for clean energy blended finance in emerging markets and developing economies, Amundi has said.
The ‘China plus one’ model, whereby businesses avoid investing only in China and diversify into other countries, is increasingly creating opportunities for other emerging or developing economies, such as India, Vietnam, Mexico and Turkey, including in the clean energy sector, Amundi says in Responsible investment views 2025.
Along with ‘friendshoring’ and ‘nearshoring’ by companies moving supply chain operations to neighbouring countries or those that share similar values, emerging markets regulators and policymakers are trying to create a more favourable policy environment for private investment to address chronic underfunding of clean energy.
Vietnam and the Philippines had announced policy incentives and Indonesia announced a commitment under the Just Energy Transition Partnership (JETP) to mobilize $20 billion over the next three to five years to accelerate its energy transition.
“This combined with the declining cost of renewable technologies, and the fact that EMDEs (emerging markets and developing economies) typically have abundant renewable energy resources are likely to create commercial opportunities and drive the growth of the industry,” Amundi says.
Yerlan Syzdykov, global head of emerging markets & co-head of emerging markets fixed income at Amundi, said: “We are at a juncture where we must recognise that the future trajectory of greenhouse gas emissions at a global scale will hinge on the growth and inevitable development in emerging markets, particularly in regions like India, Middle East and Africa.
“As these economies grow and standards of living improve their implied impact on global emissions will be progressively more and more significant than the policies implemented in developed markets, highlighting the need to prioritize our focus on these critical areas.”
“The outlook for blended finance appears to be strong” despite challenges including the election of Donald Trump as US president, and current regulatory frameworks governing the stability and risk taking of the global financial system, Amundi says.
Reforms by multilateral development banks and development finance institutions were beginning to translate into positive change, with initiatives such as the Multilateral Development Bank Reform Tracker, “launched in 2023 and greatly improved in 2024, a sign that the industry is globally realizing the necessary steps to support blended finance,” it continues.
“We see in a positive light the development of best practice networks, such as the Network for Greening the Financial System’s Blended Finance Taskforce,” while Amundi also cites the Establish Energy Transition Acceleration Finance Partnership by the Monetary Authority of Singapore, the Asian Development Bank and the Global Energy Alliance for People and Planet. The partnership aims to raise up to $2 billion in concessional and commercial capital.
A blended finance conference will be hosted in Paris next month by the Organization for Economic Cooperation and Development, in partnership with Environmental Finance. Click here for more information. To register email events@fieldgibsonmedia.com