Brookfield nets $7bn initial close for Global Transition Fund

The vehicle, co-led by former Bank of England governor Mark Carney and Brookfield renewables chief Connor Teskey, has a $12.5bn hard-cap.

Brookfield Asset Management announced yesterday it had reached an initial close of $7 billion for its Global Transition Fund, which it called “the largest fund focused on the global transition to a net-zero economy”.

The new vehicle comes at a time of record fundraising for energy-transition focused strategies, as outlined in our just-released H1 2021 fundraising report.

Launched in February, the Global Transition Fund has a $12.5 billion hard-cap and counts a $2 billion commitment from Brookfield itself. It aims to build on the firm’s renewables expertise to “scale clean energy” and deploy capital into assets that “catalyse the transformation of carbon-intensive businesses”, the firm said.

Commitments to the fund have so far come from “founding investment partners” including Canada’s Ontario Teachers’ Pension Plan and Singapore’s state-backed investor Temasek, which Brookfield said “are committing significant capital in, as well as strategically investing alongside, the fund”. Other LPs include Canadian pensions PSP Investments and the Investment Management Corporation of Ontario, listed as “meaningful initial investors”. The firm anticipates a traditional first and second close to be held before the end of 2021.

The investment strategy – which Brookfield calls its “inaugural impact fund” – is co-led by Mark Carney, Brookfield’s head of transition investing, and Connor Teskey, chief executive of Brookfield’s renewables strategy, which has already deployed billions of dollars into solar, wind and other forms of clean energy and efficiency technologies.

“Brookfield is committed to achieving net-zero by 2050 or sooner, and to accelerating the global net-zero transition,” Carney said in a statement.

Net-zero controversy

Earlier this year, Brookfield and Carney found themselves embroiled in some controversy when the manager claimed its entire $600 billion portfolio had a zero-carbon footprint. At the time, Carney said “the reason we’re net-zero is that we have this enormous renewables business [which means] all the avoided emissions that come with that” offset the less climate-friendly parts of the Canadian manager’s portfolio, which still includes fossil fuel investments.

Ben Caldecott, director of the University of Oxford’s Sustainable Finance Programme, was one of the critics of that announcement, telling Bloomberg: “Such commitments are not credible and represent greenwashing.”

A spokeswoman for Brookfield told the news agency at the time that the firm believes “emissions avoided through renewable power generation are critical to the transition to net zero”, but recognised “that avoided emissions are only one element of the transition to a net zero global economy”. Carney, in a tweet, appeared to walk back on his initial claim, admitting that “avoided emissions do not count towards… net zero science-based targets”.

Toby Mitchenall and Jordan Stutts contributed to this story