Amy Hepburn on Mobilizing Institutional Investors for Climate Impact

Amy Hepburn’s career in sustainable development and social impact began while working on humanitarian policy for refugees in the Balkan region following the Yugoslav Wars. She now leads the Investor Leadership Network (ILN) Secretariat, a CEO-led G7 initiative composed of 14 institutional investors, with over $10 trillion in assets under management, aimed at facilitating the transition to a sustainable global economy through private investment in emerging markets.

The scale of the global climate finance gap led the ILN to convene high-level leaders across the private, public, and philanthropic sectors to identify and co-develop climate financing solutions at the Bellagio Center in 2023. This meeting established a new investor-led consortium which has made a three-year commitment alongside the U.S. Secretary of the Treasury Janet Yellen to accelerate pension fund and institutional investments in emerging markets in climate critical areas such as energy transition and sustainable infrastructure.

Amy was also a delegate on the first G7 Gender Equality Advisory Council and member of the Women’s Forum on Economy and Society. She teaches on social impact, gender equality, and humanitarian action at Duke University and George Washington University.

How is your work helping to address the climate crisis?

We have consistently overlooked the role of institutional investors in driving positive impact in climate change and sustainable development. They’ve also been invited to the table too late: we need to bring them in early to help design solutions, not just come together at the end to critique them.

The ILN provides an opportunity for private capital to collaborate and leverage its leadership in the global marketplace, without having to compromise its fiduciary responsibilities. The aim is to unlock capital for projects that align with the Paris Agreement and UN Sustainable Development Goals in emerging markets.

The ILN is particularly unique for a few reasons. First, its members are aligned on their values and join with an orientation for impact. The second is that we are CEO-driven, and with only 14 members we can easily tap into our leadership expertise to scale our impact. The third is that the ILN is run with a private-sector mindset. We are not a talk-shop and things don’t spin in committee for very long – we want to make things happen. We ask ourselves daily: Is this aligned with our strategy? Are we delivering value for our members and positively influencing the sector? If not, then we pivot.

In 2021, we produced the paper “Investing in Emerging and Frontier Economies: How Blended Finance Can Make the Most of Public Funding” with The Rockefeller Foundation. It articulates a clear institutional investor perspective on why private capital isn’t flowing into emerging markets and what more could be done to unlock it. The paper attracted senior-level actors across the development finance and philanthropic ecosystems, which led to our Bellagio convening.

A key outcome of our convening was a three-year commitment from a catalytic group of ILN CEOs to focus on deepening private-sector financing to better meet our profound global climate challenges. This investor-led consortium is directed by ILN members and investment managers CDPQ, Natixis, and Ninety One, and supported by the U.S. Treasury and Sustainable Markets Initiative. Without this commitment, Bellagio could have been a one-off meeting. But this is serious work; it will take time, effort, and concentrated attention.

Climate change should be a cross-sectoral priority. Investors can’t solve it alone. Philanthropy can’t. Governments can’t. The only way forward is through creative, sustained, and committed partnership.
Amy Hepburn

What breakthroughs need to happen for us to both avoid the worst impacts of climate change and prepare communities to adapt to the new challenges that will arise?

There are a few key barriers that keep private capital on the sidelines. The first is data. Private investors don’t have enough data to accurately price risk in emerging markets. Multilateral development banks (MDBs) use databases like GEMs for this purpose, and private investors would really benefit from access to these types of resources so they can have a more holistic understanding of the projects and communities in which they are looking to invest.

A second is that we need better de-risking tools. Investors need to honor their fiduciary responsibility to minimize risk and maximize returns. If they’re taking on risk in new markets, they need better tools to protect those investments. To better address this, the ILN is advising on the development of risk guarantee capital pools and has proposed a searchable virtual toolbox so investors can more easily find little-known risk-hedging instruments that MDBs and philanthropic organizations offer.

A significant obstacle for progress has been a deficit of trust across both public and private actors. While each sector has an important role to play in meeting our ambitious climate goals and targets, they often lack a common vernacular, leading to confusion on the mandates, roles, and responsibilities of each and an imagination deficit on how we can better collaborate and utilize our resources.

The ILN is resolute that tackling climate change should be a cross-sectoral priority. Investors can’t solve it alone. Philanthropy can’t. Governments can’t. The only way forward is through creative, sustained, and committed partnership.

The sense of urgency on behalf of investors, MDBs, and governments invested in our global financial architecture around sustainable development is unprecedented. For example, we have ILN members who are attending COP28 who now view themselves as integral to the solution – not just as funders, but as co-designers of a healthier, greener and more sustainable future.
Amy Hepburn

What keeps you up at night about achieving these goals? What makes you optimistic?

In short, what keeps me up at night is the sheer magnitude of the challenge. We know what’s ahead of us. We know how urgent it is. I have four children. I know the opportunity cost of not getting this right for ourselves and future generations. That motivates me.

What makes me optimistic, however, is this willingness across sectors to figure it out. It’s unparalleled. In 2020, when I first joined ILN, it just wasn’t there. There was interest, but there was so much frustration from having good intentions that weren’t manifesting impactful results.

But within three years we’ve launched a groundbreaking cross-sectoral investor-led consortium focusing on private capital mobilization and emerging markets. The sense of urgency on behalf of investors, MDBs, and governments invested in our global financial architecture around sustainable development is unprecedented. For example, we have ILN members who are attending COP28 who now view themselves as integral to the solution – not just as funders, but as co-designers of a healthier, greener, and more sustainable future.

Our Bellagio convening has shown there’s a strong appreciation for the different leadership roles and expertise required for progress. The ILN is committed to leveraging all of our best practices, convening power, and expertise to bridge these sectors and continue to be a positive force for good.

Learn more: Find out more about the ILN, read the Investing in Emerging and Frontier Economies: How Blended Finance can make the most of public funding report, or explore the ILN climate change reports and toolkits, including The Net Zero Investor Playbook.

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Bellagio Perspectives: Climate Change

Climate change is the challenge of our lifetimes. The latest Bellagio Perspectives features 11 climate-leader alumni who are driving a range of breakthroughs to tackle the climate emergency, from financing and governance to advocacy and on-the-ground activism.