Zero: The Climate Race Why investors avoid developing countries, and how to change that: Moving Money
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Apr 24, 2025 Avinash Persaud, Special Advisor on Climate Risks to the President of the Inter-American Development Bank, dives into the hurdles that keep private investors away from developing countries. He shares insights on de-risking investments to attract capital for clean energy projects. The discussion highlights innovative financing options, including initiatives for foreign exchange liquidity and sustainability-linked bonds. Persaud also addresses the evolving landscape of carbon markets and the challenges surrounding ESG investments in a shifting political climate.
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Currency Exchange Guarantees Unlock Investment
- Use currency exchange guarantees to mitigate currency risk in developing countries' investments.
- This makes investing in volatile currencies like rupee or rand more attractive for foreign investors.
Risk Blocks Developing Investments
- Private sector funds 81% of mitigation projects in rich countries but shies away from developing countries due to perceived risks.
- Currency and country risks are large, and private investors lack tools to absorb them effectively.
Buy Performing Assets via Banks
- Encourage foreign investors to buy performing assets from local banks, reducing permitting and construction risks.
- This lets banks reinvest sold loan proceeds into new renewable projects, doubling investments quickly.