Introduction

This report, developed under the UK’s 2021 G7 presidency, explores how to mobilise institutional capital at scale to support the Sustainable Development Goals (SDGs) through a Just Transition. Workstream B focuses on designing investment vehicles that address both climate and social imperatives, particularly in emerging markets. The report identifies practical solutions and case studies across asset classes, aimed at accelerating the flow of private capital into impactful, scalable investment opportunities.

Why does more capital need to move faster towards the SDGs?

The global SDG financing gap remains substantial, estimated at $2.5 trillion annually in developing countries. Emerging markets face growing climate and socio-economic challenges, yet receive only 15% of global sustainable investment assets. Investors are becoming more aware of environmental and social risks, which can directly affect long-term returns. ESG and impact investing practices are advancing, but broader capital markets must align investment decisions with sustainable outcomes. Regulatory and fiduciary frameworks need to support this shift.

An immediate opportunity to advance a Just Transition

A Just Transition seeks to combine climate action with social inclusion and community voice. This approach ensures environmental solutions do not exacerbate inequality. The report identifies three integrated Just Transition Elements:

• Climate and environmental action

• Socio-economic distribution and equity

• Community voice

These elements should be embedded across investment design, operations, and outcomes. Global initiatives, such as Just Energy Transition Partnerships (e.g. South Africa), illustrate policy momentum. Funding needs remain large and under-specified. The IEA estimates $4 trillion annually is required for clean energy investment by 2030. Sectors such as housing, agriculture, and transport offer aligned investment opportunities. A future-fit Just Transition must be place-based, inclusive, and responsive to local contexts.

What are the units of action for moving markets towards the SDGs?

Institutional investors are positioned to play a critical role due to their scale and long-term capital. However, they face barriers in emerging markets, including currency risk, political instability, and limited data. Blended finance offers tools to overcome these issues. Recommended instruments include:

• Subordinated capital

• Guarantees

• Insurance

• Securitisation

• Local currency financing

Other enablers include improved performance data, strategic partnerships, and clearer policy frameworks. DFIs and philanthropic actors can de-risk early-stage capital and help build local investment ecosystems. Public-private coordination and structured investment platforms can increase flows into impactful sectors.

How do we mobilise capital at scale towards the SDGs now?

The report presents investment vehicles that are already operational across major private asset classes:

• Private equity: LeapFrog and DPI funds address inclusion and climate risk

• Private debt: responsAbility and Ninety One funds support clean energy and access to finance

• Infrastructure: Actis and Africa Finance Corporation target resilient energy and transport

• Real estate: IHS and Divercity promote affordable and green housing

• Bonds: Amundi and BlueOrchard offer climate-focused emerging market exposure

Each vehicle is evaluated based on its alignment with Just Transition Elements. Practical design features and roles of key actors (asset managers, DFIs, investors) are outlined. The report includes a blueprint for incorporating Just Transition outcomes into governance, operations, and measurement.

Recommendations

The report calls for urgent, coordinated action across the financial system. It recommends:

• Integrating social and environmental goals

• Scaling existing investment tools

• Enhancing transparency and outcome reporting

• Mobilising capital now using proven vehicles and partnerships

These actions are intended to align institutional capital with inclusive, climate-resilient growth.