Posted on May, 23 2019

This pioneering partnership of NGOs and financiers aims to help developing countries build climate resilient economies. 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 water basins to rivers, 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 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,” said Peter van Mierlo, CEO of FMO. “It allows us to improve climate resilience of landscapes and their vulnerable inhabitants in developing countries. We welcome the collaboration between NGOs and finance institutions and look forward to making progress in adapting to the consequences of climate change.”
 
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.
 
The FMO-led consortium will utilize 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.
 
It is revolutionary that a development finance institution, a private sector investment manager, a conservation NGO and a social 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.
 
“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,” said Kirsten Schuijt, CEO WWF-Netherlands. “Together we will make investing in healthy ecosystems as a key strategy to enhance the climate resilience of people an attractive proposition to 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.”
 
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.

The design of the Fund was also informed by WWF's Water Risk Filter - a leading, online tool that enables corporates and financial institutions to assess and respond to water risk.

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.

 “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,” said Meike van Ginneken, Chief Executive Officer SNV.

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.

“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,” said Andrew Robert Johnstone, Chief Executive Officer Climate Fund Managers.

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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.
 
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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).
 
About FMO
 
FMO is the Dutch development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development, and has a more than 45-year proven track-record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food and water.
 
About SNV
 
SNV is a not-for-profit international development organisation with a long-term, local presence in over 25 countries in Asia, Africa and Latin America and a team of 1,300 national and international staff. Focusing on Agriculture, Renewable Energy and WASH, SNV provides practical know-how to make a lasting difference in the lives of people living in poverty by helping them raise incomes and access basic services. SNV uses its extensive on-the-ground track record to apply and adapt its expertise to local contexts. As a trusted partner of local and national governments, SNV invests in market-based approaches and works extensively with the private sector.
 
About CFM
 
Climate Fund Managers (CFM) is a leading blended finance fund manager dedicated to securing a sustainable future through investing across global emerging markets. CFM has a long-term vision to structure cutting edge financing facilities around core areas of climate change mitigation and adaptation, including energy, water, sustainable land use, oceans and sustainable cities. CFM is established as a joint venture between the Dutch development bank FMO and Sanlam InfraWorks – part of the Sanlam Group of South Africa. CFM is the fund manager of Climate Investor One, a blended finance facility which invests in solar and wind projects across global emerging markets.