With the goals set by the international community, within the UN 2030 Agenda and the Paris Agreement, the necessity to finance low-carbon, resource efficient and climate resilient investments is gaining in relevance. To meet these targets, major private and public resources are required. Financial systems serve as a key to unlock the mobilization of the capital required to fulfil this financing gap as they own the potential for re-directing investments towards more sustainable technologies and businesses.
Developing countries are especially vulnerable to climate change and therefore they increasingly acknowledge the importance of investments in climate change mitigation and adaptation - e.g. renewable energy (RE), energy efficiency (EE), resource efficiency (ResE) - as well as other overlapping environmental investments in forestry, fisheries, land-use, water resource management and water-saving technologies. Experience reveals that sustainable investments on broader scales are more advantageous for saving energy resources and costs. Such investments usually have short payback periods, attractive return rates, and debt service can often be covered by cost savings.
Even though the importance of such investments is widely acknowledged, many commercial financial institutions remain hesitant to fund these projects. This is mainly because financial institutions (FIs) are unfamiliar with sustainable financing, and perceive lending to these sectors as risky rather than a means of diversifying their portfolio.
GFA concept and services
GFA’s Financial Systems Development department supports local partner financial institutions in developing, launching and managing sustainable financing activities with a focus on climate change mitigation (e.g. RE, EE and ResE finance), and adaptation (e.g. forestry and water & climate smart agriculture). Our consultants offer concepts proven in the field that ensure the application of best practices.
Our services include:
Identification of green lending opportunities
- Feasibility studies for green credit lines
- Portfolio and market screenings
- Pipeline/Portfolio development
Introduction/Roll-out/Management of green financing and green credit lines within financial institutions
- Development of a green financing strategy (adapted to local market needs)
- Development of green financing products and of market launch / marketing concept
- Project identification and portfolio development
- Capacity building and training for FI staff to identify and finance green investment projects
- Monitoring, reporting and verification of green loans
- Process assessment
- Development of ESMP, ESMS and implementation support
- Drafting policies, guidelines and integration of ESMS in existing procedures
- Training of FI staff
- Development of energy and emissions savings calculation tools
- Automation of green lending into the financial institution’s internal processes
- Digitizing credit monitoring and Environmental and Social (E&S) risk management