An asset-management business just made a major investment in clean infrastructure and the energy transition for developing countries.

Ninety One just launched a $400 million Emerging Markets Transition Debt (EMTD) fund. The money will go towards building out resources for the energy transition in developing countries.

During a recent event in Rio de Janeiro, US Treasury Secretary Janet Yellen lauded the initiative, emphasizing its alignment with key Treasury priorities like promoting economic stability and growth, writes the Financial Times. However, critics from Center for Global Development quickly pointed out that the fund’s impact might be overstated.

Experts argue that the $400 million commitment falls drastically short of the financial needs of developing nations to meet climate goals. According to the International Energy Agency, achieving net-zero emissions by 2050 will require about $2 trillion in annual investment.

Moreover, critics caution that past initiatives from wealthier nations have often failed to mobilize sufficient private capital for meaningful change. The fund, which focuses on attracting investments in middle-income countries, aims to make financing for energy transition projects more accessible. However, foreign direct investment in developing economies remains extremely low, the challenge of mobilizing large-scale climate finance persists.

The EMTD fund’s structure is designed to be attractive to investors by focusing on commercially viable projects. Yet, there is skepticism about whether this approach will be enough to bridge the vast financing gap.

Experts argue that the fund could serve as a model for future investments, on one condition. It needs substantial effort to address the global climate finance challenge.