The International Finance Corp. (IFC), a member of the World Bank group, is launching a $60 million equity financing mechanism to "promote homegrown green innovation in developing countries while encouraging the transfer of clean technologies from developed countries to developing countries."
The Cleantech Innovation Facility will help small, highly innovative start-up companies that offer products or services that mitigate carbon emissions.
It will not only give them the capital they need, but will also provide technical assistance on governance, management, strategy and business development.
On average, investments will range between $3 million and $4 million, with a maximum of $10 million in any one company.
"This initiative is a practical way to address a market gap within climate finance," says Mohsen Khalil, global head of IFC’s Climate Business Group. "It will support cleantech companies originating from or moving to developing countries – companies that have the potential to be scaled up and make a real impact, but cannot access commercial risk capital."
Once this model is validated, Khalil says, private investors could be invited to expand those investments.
IFC says its invested about $150 million to date on cleantech equity investments.
Green Microfinance
A pilot green microfinance initiative will finance access to clean energy and efficiency technologies for small and medium-sized companies across Latin America and the Caribbean.
The $7 million "Ecomicro Program" will pilot green microfinance products that help companes mitigate and adapt to climate change.
The partners are The Multilateral Investment Fund (MIF) and the Nordic Development Fund.
Over four years, the project will provide training to microfinance institutions to develop green finance instruments; adjust their risk management models to include climate change risk; and incorporate climate impact into their internal policies and operations.
By providing the tools and know-how to these institutions, the program seeks to increase access to clean energy, energy efficiency technology and adaptation products to micro, small and medium-sized companies.
The program is designed to address a dearth of climate change mitigation and adaptation finance directly targeted at smaller private sector actors," says Gregory Watson, MIF. "Microfinance institutions are extremely well-positioned to leverage their networks, clients and reputation to provide financing for clean technologies. They have proven to be successful at adopting new financial products that were initially perceived as complex and unprofitable."
Many Latin American and Caribbean countries are establishing favorable policies toward clean energy installations and CO2 emission reductions and demand for such technologies has began to trickle down to small firms.
MIF is part of the Inter-American Development Bank. It was created in 1993 to develop effective approaches to support economic growth and poverty reduction through private sector-led development in support of micro, small and medium-sized enterprises.
The Nordic Development Fund is a multilateral financing institution established by Denmark, Finland, Iceland, Norway and Sweden. It provides financing for climate change related interventions in low-income countries in cooperation with other financing institutions.
Loading...