Today, the Global Innovation Lab for Climate Finance (the Lab) endorsed six innovative financial solutions to scale up mitigation and adaptation financing in emerging economies. The 2023 Lab class includes the India-based Impact Financing Facility for Climate-Focused Social Enterprises, a credit guarantee mechanism that helps climate-smart social enterprises build a credit history and unlock commercial debt. The proponent Villgro has paired the credit guarantee with technical assistance to help the enterprises absorb and repay credit.
“Social enterprises that do not have an established credit history face an enormous disadvantage in the marketplace,” says Srinivas Ramanujam, Villgro’s Chief Executive Officer. “Our instrument seeks to level the playing field for micro, medium, and small enterprises working in key sectors considered riskier borrowers.”
The Lab is an incubator program that develops innovative financial mechanisms to drive private investments into climate change mitigation and adaptation in developing economies. Climate Policy Initiative serves as the Secretariat. Backed by Bloomberg Philanthropies, the Lab in India is a public-private initiative that identifies, develops, and accelerates innovative solutions to finance renewable energy infrastructure and other green growth channels.
“Meeting India’s renewable energy targets will require an all-hands-on-deck strategy from the public and private sectors. The Global Innovation Lab and the projects it supports are helping India and other economies not only meet their climate goals but also create jobs and improve lives”, said Antha Williams, who leads Bloomberg Philanthropies’ environment program.
The Lab’s member institutions endorsed all six instruments from the 2023 class of ideas, having met at the McDermott, Will, and Emery law firm’s New York office, completing the third phase of the six-month acceleration program. The Lab will host a virtual Demo Day on October 19 to present this year’s instruments to potential investors, funders, and implementation partners. Registration here.
“We are excited to endorse the Impact Financing Facility for Climate-Focused Enterprises,” said Arun Krishnan, who manages the Lab program in India. “The instrument can bring in new actors to work together and build a low-carbon and climate-resilient future for India – the fastest growing large economy in the world and one with ambitious climate targets.”
Instruments launched by the Lab utilize a wide array of financial mechanisms, from concessional debt facilities to private equity impact funds and accelerators. Following endorsement, these instruments will continue fundraising to build on the USD 3.5 billion previous Lab’s solutions have already mobilized.
The other five instruments:
Catalyst Climate Resilience Fund is an impact fund and accelerator to support pre-seed climate adaptation startups that improve the resilience of vulnerable African communities. Catalyst Fund is an investment management firm focused on equitable and inclusive finance.
Climate Resilient Landscape Finance (CRLF) is an innovative and concessional debt facility that addresses underlying challenges to climate-resilient land management in and around African conservation areas. Platcorp Group, an impact-focused African asset manager, is developing this instrument with Conservation Capital, a conservation finance boutique advisory firm, and Dascot Limited, a technical conservation consultancy.
Lendable Decarbonization Fund finances small and medium-sized enterprises’ efforts to decarbonize activities within their supply chain through sustainability-linked loans. Lendable will also set up a Carbon Project Preparation Facility that supports a subset of borrowers that have the potential to generate carbon offsets.
Social Infra Ventures (SIV) aims to develop green, affordable housing in secondary cities in Morocco using a gender-inclusive approach throughout the community planning, design, and financing processes. SIV is a housing company set up by incubator and sponsor Cardano Development.
The Low-Carbon Agriculture Transition Mechanism (LATM) accelerates climate transition in agriculture by offering long-term loans to small and medium-sized farmers in the Brazilian Amazon, Cerrado, and Atlantic Forest regions while guaranteeing a minimum income and technical assistance. The proponents are Vert, a securitization company, and Vox Capital, an impact investment manager.
About the Lab
The Global Innovation Lab for Climate Finance identifies, develops, and launches innovative finance instruments that can drive billions in private investment to action on climate change and sustainable development. Bloomberg Philanthropies and the governments of Canada, Germany, the United Kingdom, and the United States have funded the Lab’s 2023 programs. Climate Policy Initiative serves as the Secretariat and analytical provider.