The Problem

Confronting the sizable challenges of climate change mitigation and adaptation, resource scarcity and energy security will require massive financial investment in a fundamental re-configuration of the core infrastructure that supports modern society. Just to assure that by 2019 CO2 emissions are stabilized will require sustainable infrastructure investments of more than US $300 billion on a global scale.

For many national and sub-national governments, funds of this size will simply not be available for these purposes. At the same time, institutional investors continue to look in the current financial climate for stable, low-risk investment opportunities, and sustainable infrastructure projects could offer just such an option. Yet as it stands today, there are only very limited investment tools available to allow interested institutional investors to direct the funds at their disposal to such projects.

The Idea

Global Energy Basel is a leading global non-profit foundation - funded and supported by the Swiss government, the City of Basel and other partners - dedicated to promoting sustainable infrastructure financing practices in order to foster market based sustainable development around the world. 

To facilitate a solution to the financial gap identified, Global Energy Basel is working towards the creation of a private debt fund for institutional investors to invest in graded sustainable infrastructure (grading is based on a unique high-level grading approach developed by the organization). The project will bring together private investors, development banks and other interested parties to understand and develop such a fund. In doing so, project partners hope to use the greater access to investment capital as a means to not only facilitate, but accelerate, existing moves towards infrastructure modernization.

To date, the organization’s planned Sustainable Infrastructure Fund is still in an embyronic state. It is anticipated by project partners that the funding mechanism will take 1-2 years to establish, with initial consultations already in progress amongst key actors within the targeted investor community.

Potential impact

It is anticipated that Global Energy Basel’s proposed Sustainable Infrastructure Fund will have two key impacts. 

Firstly, by mobilizing large volumes of capital for investment in sustainable infrastructure projects (especially through the involvement of major institutional investors like pension funds), the innovative financing mechanism will pave the way for a significant increase in the number of projects able to proceed at the global level. 

Secondly, by facilitating the entry of pension funds, sovereign funds, private banks and multilateral banks into the arena of public infrastructure funding, the Sustainable Infrastructure Fund would have the effect of encouraging the mainstreaming of sustainable infrastructure investment, with flow-on effects in relation to the mindset and strategies of the wider investment community.

Social value

Investment to provide resilient infrastructure is a fundamental need in order to support a balanced, sustainable development pathway that addresses social, ecological, and economic concerns. Adequate infrastructure combined with a forward-looking mind-set empowers people to make the right choices for addressing the five core challenges that impede sustainable development: population growth and urbanization, economic development and poverty alleviation, climate change mitigation and adaptation, resource scarcity and security, and environmental preservation.

Whether at the societal, community, or individual level, it is the provision of integrated infrastructure that frees people to make sound long-term choices. 

A Sustainable Infrastructure Fund would deliver social value, therefore, by bridging the existing gap between actors with the means to finance such projects and the necessity to undertake these projects in order to increase quality of life and fight climate change. Moreover, the greater the mobilization of investment capital into the fund, the more stable the return on investment will be, resulting in a virtuous cycle allowing for a rapid scaling up of financing for a new asset class (and hence a rising trajectory of economic and social impact).

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