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Global financial institutions have a significant role as a ‘clearing house’ for infrastructure and climate change investment opportunities in both developed and emerging markets, says New Zealand Superannuation Fund Chief Executive Adrian Orr.

Mr Orr, who is also Chair of the International Forum of Sovereign Wealth Funds, was speaking during the World Bank and International Monetary Fund annual meetings in Washington on 13 and 14 October.

The meeting’s flagship event ‘Maximising Finance for Development’, hosted by World Bank President, Dr Jim Yong Kim, looked at how the private sector could fill gaps in financing and solutions for global development initiatives.

Mr Orr said there was strong investor appetite for sound long-term infrastructure investments, including climate-related initiatives, and there was no shortage in the supply of capital. Likewise, there was demand for long-term capital for relevant development and climate-change projects globally.

“The challenge is in matching the supply of, and demand for, long-term capital,” he said.

There were some clear steps to improve the demand side of the equation. Among them were clearly identifying investment needs; developing transparent decision-making frameworks for agreeing on projects and deciding on partners and risk-sharing; creating a long-term pipeline of projects; and ensuring clarity around the characteristics of a successful investor.

Institutional investors differed in their purposes, so a wide spectrum of investment options was needed.

For many investors, certain 'hygiene' factors were necessary before capital would freely flow, including minimal regulatory risk, standardised procurement frameworks and trusted partners to do business with – preferably global financial institutions and local sovereign wealth funds.

Mr Orr said global investment had been held up by lack of certainty around property rights and regulation, lack of information on opportunities, high costs of entry into investments and limited partnership opportunities.

To overcome these roadblocks, global financial institutions must push hard on these hygiene issues, long-term investment practices, and develop ‘clearing-house’ roles.

A copy of Adrian Orr’s full address is available to view here.

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