Nersan Naidoo, CEO of Sanlam Investments
The Hague: The Dutch government has announced that the consortium of Dutch development bank FMO, SNV Netherlands Development Organisation (SNV), World Wide Fund for Nature (WWF-NL) and Climate Fund Managers has won the tender to manage the €160 million Dutch Fund for Climate and Development (DFCD). This pioneering partnership of NGOs and financiers aims to help developing countries build climate resilient economies.
Climate Fund Managers (CFM) is a joint venture between Sanlam InfraWorks and the Dutch Development Bank and invests in climate-related projects in emerging markets. CFM operates with the purpose to mitigate climate change, to establish greater gender equality, and to create jobs. ‘Sustainable development and climate change are core issues that need to be addressed on a global scale through innovative investment,’ commented Nersan Naidoo, CEO of Sanlam Investments. ‘Through Sanlam InfraWorks we are able to deliver long-term returns to investors and, concomitantly, promote positive environmental change.’
Investments made by the consortium parties will seek to improve the wellbeing, economic prospects, and livelihoods of vulnerable groups – particularly women and youth – and, enhance the health of critical ecosystems, from river basins to tropical rainforests, marshland, and mangroves. The consortium’s activities will also help protect communities and cities from the increasing frequency of extreme weather events and benefit weakening biodiversity in areas that provide people with water, food, medicine, and economic opportunity.
Climate-resilient economic growth
In the period up to 2030, an estimated $3.5 trillion is required for developing countries to implement the Paris climate pledges to prevent potentially catastrophic and irreversible effects of climate change. Therefore, the FMO-led consortium will use the full €160 million of DFCD funding to accelerate the flow of institutional and commercial capital into climate-resilient investments. The consortium provides the Dutch government with a vehicle for climate impact and promotes broad-based actions to the global challenge of climate change.
Unique partnership and fund structure
It is revolutionary that a development finance institution, a private sector investment manager, a conservation NGO, and a development NGO work together on a fund of such scale, within the scope of climate finance. The partners aim to establish a fund that can serve as a global example for attracting and deploying public and private capital in well-designed and impactful climate-relevant projects, in particular for climate adaptation. The fund will be focusing on several high impact investment themes, including climate-resilient water systems and freshwater ecosystems, forestry, climate-smart agriculture, and restoration of ecosystems to protect the environment.
The DFCD will be structured with three separate but operationally linked facilities, each with a unique role across the project lifecycle; each with a unique thematic sub-sector focus. The consortium will connect the long-standing project development expertise of SNV and WWF to the mobilizing and investment power of FMO and CFM. This will allow projects to graduate from idea to full implementation using lifecycle financing for every stage of a project. Furthermore, the consortium will adopt a ‘landscape’ strategy for deal origination and execution. This strategy allows consortium parties to actively source and develop investment opportunities for other consortium parties in-and-around, as well as downstream, the vicinity of their own investment activities.
Peter van Mierlo, CEO of FMO: ‘Climate change is real and requires urgent action. It will affect us all and developing countries even more. We are very proud to have been entrusted with this initiative by the Dutch government. It allows us to improve climate resilience of landscapes and their vulnerable inhabitants in developing countries. We welcome the collaboration between NGOs and (development) finance institutions and look forward to making progress in adapting to the consequences of climate change.’
Meike van Ginneken, CEO of SNV: ‘Poor communities are the most vulnerable to the devastating effects of climate change. Improving their climate resilience requires financing and expertise, as well as market-based approaches to ensure sustainability in development impact. We are delighted to team up with the Netherlands Government, FMO, CFM and WWF on the DFCD.’
Kirsten Schuijt, CEO of WWF-NL: ‘To effectively combat climate change we need to fundamentally change our attitude to the matter. This partnership consisting of financial institutions and NGOs is a case in point. Together we will make investing in healthy ecosystems as a key strategy to enhance the climate resilience of people an attractive proposition to the private and public sector. We will reach out to stakeholders and projects worldwide to join on this exciting innovative path made possible by the Dutch government.’
Andrew Robert Johnstone, CEO of CFM: ‘We are delighted to be awarded the DFCD and together with our consortium partners are excited to take up the challenge of developing and financing climate adaptation projects across developing countries. With the DFCD funding, CFM will target water and sanitation sectors within a world of increasing water scarcity and water pollution which is a bold step forward for the application of blended finance in the fight against climate change. This initiative is a continuation of CFM and the Climate Investor community of investors’ commitment to the fight against climate change and the use of blended finance to magnify the impact of investment capital.’
|
Kafue Flats landscape The Kafue Flats in Zambia provides a good example of the landscape approach in action. An area of major ecological, industrial, and socio-economic significance for Zambia, the Kafue is the largest tributary of the Zambezi River. It is instrumental in providing electricity to half of the Zambian population and drinking water to half of the capital Lusaka. This has led the region to face a range of pressures creating trade-offs between expanded economic activity, resource management, climate adaptation and conservation. The Kafue Flats showcase synergies between bankable opportunities and grant-funded projects that can be captured by the consortium. Notably, by taking steps to improve water availability through eco-system restoration (grant-funded), the development of a water treatment facility (bankable), and introduction of water efficiency measures (bankable), investment cases have also been made possible for expanded agricultural activity and aquaculture. |
Next steps
Establishing this consortium has been at the heart of our collective strategic ambitions to tackle one of the most pressing issues of this era, that of fighting the effects of climate change on social, economic and human development. The DFCD provides a pivotal opportunity for a partnership approach to project origination and graduation. The consortium will use its knowledge, networks and pipeline of projects to hit the ground running and invest in the first climate adaptation projects this year already.
About DFCD
The Dutch Fund for Climate and Development (DFCD) allows for investments in projects aimed at climate adaptation and prevention in developing countries. Herewith, the DFCD presents an important additional instrument for the Dutch government’s efforts in contributing to the Paris Agreement and the Sustainable Development Goals (SDGs).
Get the latest issue of FAnews