The success of blended finance rests critically on the ability to maximise additionality, both in terms of the financial resources mobilised and the developmental impact created, while minimising concessionality, i.e. providing public capital at as close to market conditions as possible.

Why might blended finance be needed to help meet climate and development goals?

Progress on achieving the 17 Sustainable Development Goals, including SDG 13 on climate action remains insufficient. In 2015 the annual shortfall in the finance required was US$2.5 trillion and by 2022 this had increased to US$4 trillion For comparison, in 2021 US$178.9 billion of foreign aid was provided by members of the OECD Development Assistance Committee.
Raising the finance to meet climate goals is particularly difficult for low- and middle-income countries. Developed countries committed to channelling US$100 billion per year to developing countries in 2009 but have so far failed to deliver on this promise. This gap in funding climate action is growing: a report published ahead of COP27 suggested that the investment needs for climate action alone in emerging markets and developing countries (other than China) total US$1 trillion per year.

The political nature of development assistance and the budgetary implications for donor countries mean that these financing gaps cannot be closed through increased aid alone. In international fora such as the G20 UN institutions the Organisation for Economic Co-operation and Development and the International Energy Agency, as well as in development finance institutions (DFIs), ‘blended finance’ is viewed as a promising tool to bridge the SDG and climate financing gaps by mobilising private sector investment.

Figure 1. Common instruments used in blended finance transactions

There are several ‘instruments’ used in blended finance transactions, as shown in Figure 1 and described below.

Debt mechanisms: In 2020, concessional senior debt (e.g. loans at conditions more attractive than market terms but prioritised for repayment compared with junior debt) was the most commonly used instrument in blended finance transactions by members of the DFI working group Debt instruments typically include loans, direct lines of credit and bonds. The Women’s Livelihood Bond which pools loans made to social enterprises focused on empowering women in Southeast Asia, is an interesting example of a debt-based blended finance investment.

Equity mechanisms: When equity mechanisms are employed, investors take a share in the ownership of a corporation or a certain project and derive a claim on the residual value of cash flow streams after creditors’ claims are met. As in debt structures, there are typically senior and junior (subordinated) tranches. Senior investors’ claims are met first while junior investors’ claims are secondary. An example is the AfricaGrow Fund of the German development bank KfW and insurance company Allianz. This represents a ‘fund-of-funds’ structure, whereby the AfricaGrow Fund channels financial resources to African private equity and venture capital funds which then select small- and medium-sized enterprises and entrepreneurs in Africa to invest in.

Senior vs. junior (‘subordinated’) positions: Blended finance mobilises private capital by altering the risk–reward relationship of private investors. When development finance providers such as DFIs take junior or subordinated positions they absorb higher risks, for instance by taking first losses compared to those (private) investors holding senior debt and equity positions. Under these altered risk–reward conditions, private investors view the blended finance projects more favourably and are incentivised to deploy their capital when they otherwise would not have.

Grant funding: This represents the provision of financial resources free of interest or provision of repayment. Grants help decrease the total funding costs of a given investment project and as such are sometimes used to make projects ‘investment ready’. A recent example is the Digital Invest Blended Finance programme by the United States Agency for International Development (USAID), which promotes investment in digital infrastructure in developing countries.

Guarantees: These can be defined as a type of insurance policy meant to protect financial institutions and investors from the risks of non-payment. They can be tailored to cover specific types of risk, which might be linked to the instruments for which they are used. Guarantees offer the benefit of not requiring immediate monetary outflows by donors, and preliminary evidence suggests that guarantees tend to be more effective than debt or equity instruments in mobilising private capital. An interesting example of the use of guarantees is NASIRA a programme by Dutch development bank FMO which provides a guarantee for a portfolio of loans from local financial institutions to stimulate lending to underserved groups (e.g. women, refugees or young people).

Technical assistance typically represents grant-like resources used for project preparation as well as feasibility studies to ensure the quality, efficiency and sustainability of projects. According to data from early 2019 one-third of blended finance transactions to date have included technical assistance. The AfricaGrow fund mentioned above includes a technical assistance facility which is used to support funds and portfolio companies.

This Explainer was written by Timothy Randall with review by Hans-Peter Lankes.

Inequity in Climate Finance Distribution

Notably, the distribution of climate finance that Africa does receive is highly uneven. About 60% of all climate financing is concentrated in just 10 countries, and Uganda is not among them. This disparity is in stark contrast to the region’s level of commitment; up to 98% of African countries have ratified their NDCs, and over 80% have submitted updated NDCs, making Africa among the most compliant regions to the NDCs process.

In Uganda, the financing gap is glaringly apparent. Despite ratifying its NDCs and submitting updated commitments, the country receives only about 3.9% of the estimated $28.1 billion it needs to implement its NDCs.

The Imperative for Blended Finance

Addressing the urgency to bridge the financing gap requires a comprehensive understanding of the current financing profile. International public finance dominates, contributing 80 cents for every $1 invested in climate finance across Africa. The private sector contributes 14 cents, with only about 4 cents coming from the national government. This distribution is mirrored in Uganda, where global climate finance flows are significant compared to domestic sources.

The implications are clear. First, Africa, and Uganda in particular, need to increase the share of private sector financing, including from local private sources. Second, attracting these private sources necessitates prioritizing credit support or credit guarantee schemes to de-risk the climate finance landscape. Lastly, there is a need to clearly define the investment opportunity inherent in the NDCs, with only 28% of African countries currently having a well-developed NDC with an associated investment plan.

The Role of Innovative Blended Finance

Blended finance, which combines public and private capital, presents a critical solution to bridge the finance gap. It can help de-risk investments, attract additional private sources, and operationalize costed NDCs with the help of innovative investment plans.

An innovative blended finance tool for operationalizing the NDCs investment plan is being developed. It draws its “innovativeness” from the diverse components that work in complementarity towards de-risking and operationalizing NDCs investments. This includes training for various stakeholders, insurance to cover market risk, enhanced market access for products developed from the NDCs, cash guarantees, and effective traceability and accountability for timely progress monitoring.

Key Takeaways

1. De-risking involves more than just fiscal resources; it includes training, targeted policies like fiscal incentives, and other elements that lower the risk of investment failure.
2. The innovative blended finance tool being developed goes beyond a traditional blended finance facility, incorporating multiple components that work together to de-risk and operationalize NDCs investments.
3. Different stakeholders need to be engaged based on their expertise and comparative advantage to operationalize the tool.
4. Financing NDCs implementation must target vulnerable groups like youth and the informal sector to be effective.
5. The innovative blended finance tool is a public good, intended to be implemented by all stakeholders, not the government alone.
6. The tool is a subset of the entire NDCs investment plan and is applicable to a variety of NDC priority areas as they ascend the hierarchy of national priorities.
7. Capitalization of cash guarantees and financing different aspects of implementation can draw from both the exchequer, bilateral/multilateral sources, and the private sector.
8. High interest rates make the majority of cooperatives inaccessible. Addressing these rates calls for actions on two levels: application of cash guarantees to cover repayment defaults and central bank intervention through policy and regulation to bring interest rates down.
9. The tool being developed is a compendium of recommendations and guidelines, designed to be implemented by the different players needed to achieve de-risked financing for the implementation of the investment plan.
10. The climate finance unit is developing a strategy to integrate this innovative tool, which is seen as a subset of the entire NDCs investment plan.
11. The blended finance tool is poised to address not only the initial focus areas – agroforestry, solar dryers, solar irrigation – but also other NDCs priorities as they ascend the hierarchy of national priorities.

In conclusion, bridging Africa’s climate finance gap is an urgent task that demands a multifaceted approach. The innovative use of blended finance provides a promising solution, offering a way to leverage both public and private capital, de-risk investments, and operationalize NDCs.

As we continue to refine and implement this tool, there’s hope that we can catalyze a shift towards a more equitable and sustainable climate finance landscape in Africa.

By Dr. Richard Munang, Head of Global Environment Monitoring Systems and Early Warning for the Environment Unit, UNEP

From October 17 to 20, 2023, developed countries led by the United States of America held their ground, insisting that they must have total control over this fund, which they say is being established for developing countries.

Many experts including Harjeet Singh, the Head of Global and Political Strategy of the Climate Action Network (CAN), saw this resolution as a complete disappointment. This insistence by the U.S and her allies is nothing short of an attempt to exert control over developing countries.

By trying so hard to force developing countries to accept that the Loss and Damage Fund must be domiciled within the World Bank – an institution long seen by developing countries as serving the interests of developed countries – developed countries led by the United States and Switzerland have once again showed that, for them, climate action is not about justice and corrections of the mistakes of the past, but more about them exercising powers over anything and everything in the world.

Historically, emissions by developed countries created the climate crisis. Furthermore, those emissions were used by developed countries to boost their technological progress giving them an advantage when it comes to control and access to finance and technologies needed to cut down emissions. Having exploited the common resources of the entire world to get to this point, it is only a fair that they should support poor countries who are bearing the impact of the climate crisis to grow in a more sustainable way.

Nonetheless, these countries have continuously refused to make the basic compromises required to build trust in the international process and encourage developing countries to pursue low-carbon development. First, they failed to meet the $100 billion annual support agreed to in 2009 to assist developing countries by 2020, next they tried to pass of high interest loans as part of the effort to meet the $100 billion pledge. And now, this bull-headed decision to have control of the Loss and Damage Fund with the usual conditions to make sure that access becomes extremely difficult for those who need adds salt into the wounds of developing countries.

Let us be clear, the funding expected from rich countries either as part of the Green Climate Fund, Adaptation Fund, or the Loss and Damage Fund, should not be viewed as charity.  Instead, they are essentially tokens from massive profits made by developing countries from destroying the earth. It is as simple as that. While the language of compensation is not explicitly used in the UNFCCC texts, that is essentially what it is, and the fact that poor countries agreed to expunge compensation language from the text is already enough demonstration of compromise and good will by the Global South.

Confronted with the stark reality of climate change, and constantly reminded by developed countries that they must take action to address climate change, developing countries have since committed to follow the low-carbon development path hoping that those who destroyed the earth would at least live up to their own words and provide the agreed financial support necessary to encourage mitigation and adaptation efforts, and also support for Loss and Damage.

Yet, all poor countries continue to get is warm words and empty promises.  It is instructive that as soon as the Ukraine-Russian war hit, and energy became a problem in Europe, developing countries that had been told by rich countries to divest from fossil fuel and make net zero transition plans watched as Europe made a dash for gas in Africa and had coal-powered energy industries were reactivated in Germany!

The Loss and Damage Fund therefore presented a clear opportunity for developed countries to, for once, build trust and defer to what works for those whom the fund is being set up for. But as usual, they have re-emphasized that for them, it is only about what benefits them, and not what is best for the long-term good of the world.

By Chukwumerije Okereke and Nnaemeka Oruh

Prof Chukwumerije Okereke is Professor of Global Governance and Public Policy at the University of Bristol

Nnaemeka Oruh is Senior Policy Analysts with the Society for Planet and Prosperity, Nigeria

Original from: https://www.environewsnigeria.com/deadlocked-loss-and-damage-funding-rich-countries-trample-on-equity-and-trust-in-global-climate-agreement/

Established in 2009, AgDevCo’s vision is a thriving commercial African agriculture sector that benefits people, economies, and the environment. The organisation contributes to this goal by providing investment capital and technical assistance to grow sustainable and impactful businesses across the agricultural value chain. In doing so, it aims to promote resilience, gender equality and the production of better-quality, more nutritious food.

This new funding builds on the original endowment funding provided by the UK government which helped establish AgDevCo over the past decade. This endowment has provided capital to agribusinesses that have directly created or sustained more than 15,000 jobs and to work with 750,000 smallholder farmers to help increase their income and improve their resilience to climate change. It has also allowed AgDevCo to build a capability and track record to the point where it can secure external investment capital.

In welcoming the investment, Keith Palmer, AgDevCo’s founder and Chairman, said: “Securing investment from CDC, Norfund and DFC is a major milestone in AgDevCo’s history. It is a strong endorsement of AgDevCo’s team and our strategy. We are excited that our vision is shared by our new funders, who recognise the important contribution that AgDevCo investments can make to productivity, sustainability, and inclusivity in Africa. Their funding marks the beginning of a partnership in which AgDevCo will use its sector specialism, drawing on our new funders’ networks and resources, to increase the number of impactful investments in African agriculture.”

UK Minister for Africa, Vicky Ford, said: “I am proud to see how AgDevCo’s investing has boosted sustainable agriculture across Sub-Saharan Africa over the past 10 years, including deepening impact on smallholder farmers and SMEs. This new investment will bring continued growth, by enabling agribusiness SMEs to expand, improve farmer incomes, create new jobs and strengthen climate resilience across Africa.”

Tenbite Ermias, CDC’s Managing Director for Africa, said: “This investment reinforces our long-term commitment to investing in key sectors in Africa including agriculture, which is critical for creating jobs, promoting gender equality and supporting people to build a better life for themselves and their families. Furthermore, it reflects our continued focus on climate finance which is central to our new strategy over the next five-year period, to support emerging economies that are most vulnerable to the impacts of the climate emergency.”

Ellen Cathrine Rasmussen, Executive Vice President of Scalable Enterprises in Norfund, said: “Norfund is very pleased to partner with AgDevCo to deliver on our joint mission: to create jobs and improve lives by investing in businesses that drive sustainable development. A thriving commercial African agriculture sector is vital for economic growth and job creation. More than half of Sub-Saharan Africa’s population work in agriculture, yet Africa does not produce enough food to feed the continent. The investment in AgDevCo will create jobs, increase food production, improve climate change resilience, and promote gender equality. The AgDevCo team’s skills, networks and achievements are impressive – and we look forward to working with them.”

Algene Sajery, DFC’s Vice President of External Affairs and Head of Global Gender Equity Initiatives, said: “DFC is thrilled to support AgDevCo with a $20 million loan to bring additional capital to smallholder farmers and agricultural businesses in Africa, promoting food security for lower-income communities across the continent. DFC’s loan, alongside financing from our partner DFIs, will enable AgDevCo to link more farmers to markets and create jobs for underserved populations, with a focus on women farmers.”

Time is running out to fulfil the United Nations Sustainable Development Goals (SDGs) and ensure an equitable world for the next generation. Success will require an eye-watering amount of money – between US$5-US$7 trillion a year, according to a World Bank report.

In more positive news, there has been an increasing shift in mindset as investors adopt SDG-aligned impact investing strategies, which means more private capital is being allocated towards these 17 global targets. Encouragingly, 85% of 440 impact investors assessed by the Global Impact Investing Network (GIIN) in 2021 said their impact investment strategies focus on SDG-alignment.

But the next step is more difficult. How do investors measure the extent to which their capital is making a real-world difference?

Impact investing is when investors funnel capital into companies that are having a positive effect on the environment or society around them. To qualify as an impact investor, investments must have a measurement system in place, the International Finance Corporation (IFC) noted in a recent report. Worringly, the IFC highlighted that just a quarter of the US$2.3 trillion impact market in 2020 operated under a clear impact management system.

This is because understanding of how to quantify real-world outcomes of financial contributions to SDGs is still in its infancy.

“Investors want to stop guessing on impact,” says Lissa Glasgo, Senior Manager of impact measurement platform IRIS+ and Impact Measurement and Management at GIIN. “They want to be making impact-based decisions with the same rigour and quality of evidence as they do for risk and return-based decisions.”

Pressure is mounting for those tracking climate-related SDGs, as 2030 is also a significant milestone for investors, companies and governments that have set ambitious decarbonisation targets on the way to net zero greenhouse gas (GHG) emissions by 2050.

To accelerate action, policymakers are beginning to ask companies and investors to disclose their impact on society and the environment, adopting a double materiality lens.

Standardised, high-quality impact reporting is still a long way down the road, experts say. Getting there will require further collaboration between investors, standards-setters, data providers and policymakers to navigate the complexities surrounding impact measurement.

As reporting requirements yield the required data, investor demand will increase for comprehensive impact measurement methodologies, tools and frameworks. This is where organisations and initiatives such as GIIN, the Impact Taskforce (ITF) and Impact Management Platform (IMP) come into play.

Metrics and models

There are a number of barriers preventing impact investors from accurately measuring and modelling their contributions to the SDGs. Most obviously, these goals were not designed primarily with investors in mind and so aren’t easily quantifiable.

For example, SDG 13 (climate action) can be measured according to the number of investee companies that have made net zero commitments, but how do investors track their impact against SDG 16 (peace, justice and strong institutions)?

Even when metrics are straightforward, impact still isn’t so cut and dry. After all, how does the investor know an investee company set a net zero target as a direct result of its influence? If the company was under pressure from multiple investors, the public and its domestic government (as is most likely the case), who’s to say who had the biggest impact?

“Investors are currently trying to understand what kind of information they need, what relevant information is already being reported, and how impact-related information should inform decision-making,” says Peter Paul van der Wijs, Chief External Affairs Officer at the Global Reporting Initiative (GRI). “It’s definitely challenging.”

An unsurprising hurdle is the inconsistencies in third-party sustainability data, says Nick Parsons, Head of Research and ESG at specialist infrastructure investment firm ThomasLloyd. “A lot of asset owners and managers are trying to measure their impact at an arm’s length by relying on third-party vendors, which simply doesn’t work with this kind of strategy,” he says.

“Being a direct investor means we owns a stake in companies, so we can more easily get hold of proprietary data. As we have tracked SDG-related data since 2015, we know our impact over time.”

A number of asset owners and managers measure contributions to SDGs through investee companies’ revenues, according to a GIIN report. However, interviewees admitted that “the SDG revenue-alignment approach is […] insufficient in speaking to the outcomes or impact associated with the investments”. Instead, there is a demand to shift to more “standardised metrics”.

But a number of the impact measurement tools introducing standardised metrics are still in the “early stages of development” and therefore not yet useful to investors, according to a report by the World Wide Fund for Nature (WWF). In theory, investors can already compare their own portfolio impacts to benchmarks and other portfolios, WWF noted, adding that company laggards can be identified by comparing their SDG commitments and progress to competitors, i.e., identifying how many of the company’s direct competitors have publicly committed to the SDGs and outlined which goals are their priority.

Of course, this is assuming companies are providing investors with decision-useful information in the first place.

Standards-setter GRI recently published its findings following analysis of 200 companies’ approaches to SDGs. While four in five committed to the SDGs within their sustainability reports, less than half set measurable targets outlining how their actions are contributing to the goals, the report said.

In response, the GRI has outlined a series of recommendations for companies making commitments to the SDGs, including meeting stakeholder demands for transparency on negative impacts, making SDG performance data accessible by using recognised frameworks, and disclosing targets outlining how they plan to support the SDGs.

Asset managers are continuing to struggle to analyse data from investee companies using different disclosure frameworks, meaning they cannot accurately work out the overall impact of the fund, Cliff Prior, CEO of the Global Steering Group for Impact Investment (GSG), tells ESG Investor.

“Likewise, an asset owner using multiple asset managers across its impact investments – who are likely all providing differing data – has the same problem,” he adds.

Too many options?

Nonetheless, there are a number of platforms and initiatives offering guidance to help investors get started on their journey towards aligning their impact strategies with the SDGs.

“Investors are coming to us every day, saying that they want to drive impact and they need XYZ data to be able to understand what their impact even looks like and what targets they need to set moving forward,” says GIIN’s Glasgo.

The network’s COMPASS methodology gives practical examples of how investors can measure their impact across the SDGs. For instance, investors tracking SDG 6 (clean water and sanitation) can measure the percentage increase (or decrease) in the number of people accessing clean drinking water compared to the previous year. This can then be compared to the rate of increase in access to clean drinking water that is required to achieve SDG 6.1: universal access to clean water.

IRIS+, also run by GIIN, was originally set up as a “dictionary of impact metrics”, explains Glasgo. However, recognising investors’ growing need for a single source of information and guidance on assessing impact, the platform evolved and began aligning with multiple frameworks, generating over 700 metrics covering a variety of standards – including the SDGs.

“If an investor is tracking the SDGs, they can select the specific goals they are focused on and then IRIS+ outlines the recommended metric approach for them,” she says.

For private equity funds, bonds and enterprises, the UN also offers the SDGs Impact Standards framework, which provides best practice guidance and self-assessment tools to align internal processes and practices with contributions to the SDGs.

With funding from the Swedish International Development Cooperation Agency (SIDA), the GRI also updated its disclosure standards, outlining how corporates can align their GRI disclosures with the SDGs.

Building on the work of the Impact Management Project, in 2021 the 2° Investing Initiative (2DII) consulted on and created an impact investment framework. Finalised in November, its Climate Impact Management System provides investors with guidelines on how to devise, refine and communicate about impactful climate strategies.

Further, advisors and consultants are working with impact investors on SDG alignment. Pensions for Purpose, an impact-focused advisor to pension funds uses SDGs as a framework for discussion with clients on their sustainable investment beliefs and priorities.

Despite impact data remaining unstandardised, investors are proving they can partially measure SDG contributions for themselves.

The Sustainable Development Investments (SDI) platform is run by asset owners and supported by index provider Qontigo. Powered by AI-driven technology, SDI has so far analysed over 8,000 companies globally on their existing contributions to the SDGs. It identifies which SDGs companies within an asset owner’s portfolio have committed to, mapping the portfolio’s overall exposure to the 17 goals according to companies’ reported areas of focus. Asset owners involved include PGGM, AustralianSuper and APG.

Bespoke approaches proliferate among asset managers, too. Morgan Stanley Investment Management (MSIM) identifies one or two relevant SDGs it believes are relevant to an investee company’s business model, according to Vikram Raju, Head of Impact Investing for MSIM AIP Private Markets. From there, the firm creates a contractual obligation for this data to be reported by the company in question at a reasonable periodic interval so MSIM can capture any meaningful changes.

“The key is avoiding overcomplicating the reporting ask, bearing in mind that smaller companies with limited resources will struggle to comply with onerous data tracking and reporting requirements,” he notes.

Having financed and developed five utility scale solar plants in Negros, in the Philippines, as well as three biomass energy plants, ThomasLloyd measures the impact of its investments independently, says Parsons. For example, the investment firm measures its contributions to SDG 7 (affordable and clean energy) by annually recording the number of houses in the local area that have access to electricity provided by the plants.

The firm also reports on the indirect contributions its investments are making to other SDGs. “In the Philippines, we contribute to SDG 11 (sustainable cities and communities) when paying local taxes,” says Parsons. “We look at how much tax we pay in the region every year and compare that to how total tax revenue is being generated and spent locally.”

Global standardisation

Of course, the most certain way to ensure companies are all providing the accurate and comparable impact-related data in the future is to mandate standardised reporting requirements and, ideally, a common methodology for impact assessment.

“Investors do have a role to play in asking for SDG impact-related information from corporates, but governments can have a lot of influence here – more are going to be asking for companies and investors to disclose their social and environmental impact,” says GRI’s van der Wijs.

The shift to double materiality-based sustainability reporting in the EU and the UK will increase the need for an alignment in existing impact and SDG standards, he notes.

The ITF – an independent, industry-led body of more than 100 businesses, investors and public policy institutions – recently called for the Group of Seven (G7) nations to mandate impacting accounting. The report outlined the importance of policymakers leading multilateral efforts to improve the transparency and integrity of disclosures around impact investment outcomes.

“The Taskforce has found that companies and investors are really interested in aligning standards around impact reporting,” says GSG’s Prior. “Ultimately, they recognise that there are investment opportunities in impact investing, and standardised reporting will help to unearth them.”

ITF further outlined proposals to stimulate the development of policies that would channel more capital into the SDGs, including increasing the supply of investment vehicles suitable for institutional investors and promoting the use of just transition principles to better integrate social and environmental objectives.

The WWF report also called on regulators and policymakers to mandate sustainability disclosures, and called for impact disclosures for financial products to better encourage financial institutions to adopt “robust and credible impact assessments”.

Other initiatives are working to improve interoperability. Launched in November 2021, the Impact Management Platform was developed to improve cohesion between existing standards as well as support industry impact-related dialogue with policymakers.

“IMP is ensuring that everybody – investors, standards-setters, regulators – are using the same language around impact, which is pivotal to driving improvement and growth,” says van der Wijs.

Coordinated by the Impact Management Project, a five-year consensus-building forum that ended in 2021, the platform hosts impact measurement and reporting resources provided by standards-setters and frameworks, such as the SDGs. Currently, the Organisation View for companies is now live, with the Investment View for asset owners and managers expected later this year.

“As the world moves towards greater cohesion on how to deeply and thoughtfully measure impact, we will see an emergence and strengthening in the impact-related data sources we need for investors to be able to make smarter SDG-oriented decisions,” says Glasgo.

By Emmy Hawker

Verdane, the European specialist growth equity investor, has announced that it has held a final close on Verdane Idun I (“Idun” or “the Fund”), an impact focused fund investing in technology-enabled businesses based out of Europe. The Fund is classified as “Article 9” under the European Union’s Finance Disclosure Regulation and closed at its hard cap of €300 million, over its target fund size of €225 million. With Idun, Verdane continues to demonstrate its commitment to driving positive impact through investments in ambitious companies whose impact scales with business growth.

The Fund has already made three investments: in Auntie, a digital provider of workplace wellbeing services; in Spond, a digital enabler of grassroot sports and physical health; and in a third business that contributes to a low-carbon society, to be announced in the next few weeks.

Bjarne Kveim Lie, Co-Founder and Managing Partner at Verdane commented: “We are delighted and humbled by the strong support from existing and new investors for Idun and would like to thank them for putting their trust in us. Today more than ever, there is a growing pool of opportunities to combine technology and sustainability, and we believe that investors like Verdane can take a leading role by supporting founders and management teams who can truly integrate sustainability into their business models and create value through impact. The success of the Idun fundraise reflects the continued development of the firm, and we are excited by the unique opportunities available to us on this journey to drive positive impact with our investments.”

The Fund counts leading institutions among its investors, including Nysnø Climate Investments, Norway’s state climate investment fund, AP3, one of Sweden’s main national pension funds, Adams Street Partners, a private markets investment management firm, and clients advised by Mercer.

Building on Verdane’s proven track record of investing in European tech-enabled sustainable businesses, Idun will make investments focused on driving impact in three clusters: energy transition; sustainable consumption; and resilient communities. The Fund will leverage technology to significantly scale portfolio companies’ impact, and Verdane’s background as a growth investor means the firm is uniquely positioned as a leader in this space.

Every investment that Idun makes will have to meet both financial and elevated impact criteria, with impact defined as addressing at least one of the Sustainable Development Goals (SDGs) and qualifying inside Verdane’s proprietary impact framework, built on the Impact Management Project. At the portfolio level, each Idun portfolio company will regularly report on bespoke sustainability KPIs and both the Fund’s ‘carried interest’ and credit facility are linked to goal attainment. The credit facility is issued by Nordea.

Idun received strong investor support from Verdane’s existing pool of LPs and is made up by a majority of institutional capital, including endowments, family offices and pensions funds.

Idun’s dedicated team combines entrepreneurial and impact investment experience and will be integrated with Verdane’s wider platform of over 90 investment professionals and its team of operational experts, Verdane Elevate, to create value and drive impact in the portfolio. The Fund is headed by partners Christian Jebsen and Erik Osmundsen, who will work alongside directors Reed Snyder and Karin Kans, and Sustainability Lead Axel Elmqvist.

Christian Jebsen, Partner at Verdane commented: “As we enter 2022 and announce the final close of Idun, we are seeing a very strong pipeline of potential investment opportunities across Northwestern Europe, as demonstrated by the Fund’s early deployments into three compelling and ambitious new portfolio companies. We believe that sustainability is an increasingly competitive strategy, especially as the growth and private equity industry is steadily moving towards a more impact-driven mindset. As both a technology and sustainability growth partner, Verdane is strongly positioned to add value and scale its partner businesses, and we look forward to working alongside management teams to drive positive impact.”

Verdane is one of the most active growth equity investors in Northwestern Europe, having completed 17 investments, of which four were portfolio deals, in 2021. Idun will sit alongside Verdane’s existing strategies, Capital and Edda, and represents an important initiative for the firm. The Fund will develop leading-edge, best practice frameworks and toolkits within the impact space that will help Verdane’s teams drive value across all of its strategies.

“These excellent results underscore the Bank’s strong dedication to continuing to support its clients in the wake of the pandemic as well as its commitment to decarbonise economies and enable the transition to a more sustainable future, with a focus on involving the private sector and supporting reforms to tackle climate change,” said EBRD President Odile Renaud-Basso.

The 2021 green results, a significant increase on the 29 per cent share of total financing in 2020, fall under the EBRD’s Green Economy Transition (GET) approach.

They follow the Bank’s recent twin commitments to align all its investments with the goals of the Paris Agreement on limiting climate change by the end of this year, a decision taken by its Board of Governors at last July’s Annual Meeting, and to make a majority of its investments green by 2025.

At the November 2021 COP26 climate summit in Glasgow, the EBRD also set out how it plans to support the transition to a low-carbon economy in its regions by doubling the mobilisation of private-sector climate financing by 2025.

The EBRD, a leading climate finance investor, works in some of the world’s most fossil-fuel dependent countries and aims to support them in planning and executing their transition to a low-carbon economy.

Among its many successes is EBRD Green Cities, a €5 billion urban environmental programme, which has grown to include 53 cities in its five years of existence and helps them identify, prioritise and connect their environmental challenges with sustainable infrastructure investments and policy measures.

The EBRD announced in November that the programme was doubling in size, allocating a further €2 billion to invest in green urban infrastructure over the next two years.

The 2021 green finance record was a key element in the EBRD’s second highest overall annual business volume ever. The record of €11 billion was set in 2020 when its investments were buoyed by emergency lending at the start of the Covid-19 pandemic.

The total number of its projects in 2021 was 413, compared to 411 in 2020. The share of private sector investment rose four percentage points to 76 per cent.

Annual Mobilised Investment - the amount made available to clients from entities other than the EBRD due to the Bank’s direct involvement – climbed sharply to €1.8 billion from €1.2 billion in 2020. Disbursements totalled €7.3 billion for the year.

The EBRD raised approximately €1.2 billion in donor funds to support its operations in 2021 and is an important partner for the European Union, the Bank’s largest multilateral donor.

Under its EU budget and NextGenerationEU funding programmes, the EU provided €291 million in 2021 and through the EU’s pandemic-related Recovery Resilience Facility €500 million in concessional finance were provided by Greece.

Bilateral donors contributed some €123 million to the High-Impact Partnership on Climate Action (HIPCA), the EBRD’s first green-focused multi-donor facility, launched at COP26.

Inclusion and digital, the EBRD’s two strategic priorities other than green, also made a major contribution to the Bank’s success in 2021.

Projects with a strong gender component accounted for 35 per cent of projects signed during the year, nearly double a target floor of 18 per cent.

With two new interlinked EBRD strategies for the promotion of gender equality and equality of opportunity released in November, the Bank now aims to integrate gender equality components into at least 40 per cent of its operations by the end of 2025, and a quarter of EBRD annual investments will fund inclusion projects.

The Bank published its first Digital Approach, also in November, addressing the urgent need for economies to embrace rapid technological change to overcome the challenges exposed by the Covid-19 pandemic through investment, policy engagement and advisory services.

The 2021 ABI results showed the quality of the EBRD’s investments and impacts rose, as measured by the Bank’s performance indicators.

The EBRD’s impressive operational performance in 2021 was matched by strong profitability. More details on the latter will be announced in the weeks ahead.

By Vanora Bennett

Hoa Nang Organic’s strong fit with the Beacon Fund’s mission to promote the growth of women-led and owned companies, as well as the support of Hoa Nang Organic’s existing investor Louis Nguyen, led to both parties concluding the due diligence and disbursement process quickly.

While there were multiple reasons for why Beacon decided to back Hoa Nang Organic, the main factors that stood out were: first, the passion and knowledge the founders have for organic farming in Vietnam; second, the company’s ability to secure a major contract with one of the largest dairy companies in Vietnam, a testament to the company’s professionalism and strong execution; and ‘and finally, a rare female CEO in the agriculture sector with a demonstrated commitment to gender diversity at the team and farmer level’.

“We are excited to make an investment in Hoa Nang Organic. They have demonstrated a deep level of knowledge and passion for organic farming in Vietnam and making a difference to the lives of ordinary farmers. In addition to supporting Hoa Nang Organic’s capital needs, we are equally excited about working with them via providing technical support to help improve their management capacity and bring about their next phase of growth”, said Shuyin Tang, CEO of the Beacon Fund.

Even though the COVID-19 pandemic affected the overall economy negatively, Hoa Nang Organic quickly took steps to adjust to the new reality, including modifying its supply chain structure, and developing and implementing an online sales and product delivery strategy. This allowed the company to capture new sales and increase revenues by 30% in 2021.

With this investment from Beacon Fund, Hoa Nang Organic will have additional resources to reach its goal of expanding operations to growing areas in the Mekong Delta region. This will help position the company in the long term, to develop additional organic product lines of even higher value and to serve more customers.

On the collaboration with the Beacon Fund, Ms. Dang Thi Truong An – CEO of Hoa Nang Organic said: “The Beacon Fund is the first institutional foreign investor to invest in Hoa Nang. This recognition from an independent institutional investor is a testament to Hoa Nang Organic’s track record and their faith in our future direction. This is an important milestone in our continuous efforts to bring more value to the community and positively impact society”.

Hoa Nang Organic became widely known after appearing on Shark Tank Vietnam Season 2, 2018, and receiving a seed investment of US$500k from Shark Louis Nguyen, a prominent investor in Vietnam and the Chairman & CEO of Saigon Asset Management (SAM).

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About Hoa Nang Organic

Hoa Nang Organic (HNO) is a company producing organic rice as its main product. The company is proudly certified organic by the Control Union (a Dutch certification company) in line with USDA and European organic standards, including the non-usage of pesticides or herbicides, and the usage of only organic fertilizers that are Organic Materials Review Institute (OMRI)-certified. Hoa Nang Organic also applies integrated pest control practices with natural methods.

With a safe cultivation process, together with indigenous purebred organic rice varieties, Hoa Nang Organic is proud to bring natural nutrition and genuine quality to the table of every Vietnamese family.

About Beacon Fund

Seeded by Patamar Capital, the Beacon Fund is the culmination of many years of engaging with and investing in female entrepreneurs in Southeast Asia through a number of impact investing funds. This led the Beacon team to identify a significant opportunity amongst the “missing middle” of firms which are too small for private equity, too big for micro-finance, do not fit the growth profile of venture capital and are underserved by banks. The Beacon Fund’s initial focus will be on debt and mezzanine products, which tend to be a better fit for the moderate-growth, cash-flow positive businesses that the fund targets. Through its strategy, Beacon hopes to shine a light on alternative models of investing and entrepreneurial success.

About Saigon Asset Management (SAM)

Established in 2007, Saigon Asset Management (SAM) is a fund management and capital advisory firm based in Saigon and Hanoi, Vietnam. The fund has invested over $185 million in 65 Vietnamese companies and projects, and has one of the best investment track records among Vietnam-focused fund managers.

SAM has been managing funds that outperformed their peers as well as the Vietnam Index and the MSCI EM Index, focusing on sustainable and innovative companies with better ESG performance which provide solutions to Food Security, Healthcare, and Inclusion.

Sensoterra today announced it has joined the Inmarsat Application and Solution Provider (ASP) Programme, an ecosystem for providers of software, hardware and solutions, and original equipment manufacturers (OEMs) in commercial land markets. As an ASP member, Sensoterra will gain access to Inmarsat’s global L-band satellite connectivity network, ELERA, and worldwide reach to scale its solutions into new sectors and geographies.

Based in Utrecht and operating in 30 countries, Sensoterra’s mission is to improve water management worldwide by providing detailed insights in soil moisture. Its simple, robust and low-cost wireless soil moisture sensors generate over 60 million global data points. These smart soil moisture measurements empower better decision making for land management resulting in tangible productivity gains and ultimately, more sustainable outcomes.

Sensoterra’s approach is built on combining high-quality, durable, easy-to-install sensors with an open-API platform to allow customers to create the water management insight solutions that meet their requirements. These sensors help users save water, increase yields, prevent drought damage and use land and natural resources more efficiently. Able to adapt to 14 different types of soil moisture conditions customers will encounter across the globe, it has developed its sensors and API platform in such a way that a network of multiple sensors forms a fine-meshed ‘sensor ecosystem’.

Commenting on Sensoterra’s membership in the ASP, Mike Carter, President, Enterprise at Inmarsat, said: “Inmarsat is pleased to welcome Sensoterra to our ASP programme and to be working with them to support their ambitious growth plans. Innovative solution providers like Sensoterra are using leading-edge technology to help industries respond to some of the biggest global challenges. Inmarsat stands ready to support their journey through the provision of reliable connectivity through our industry-leading ELERA narrowband network, as well as go-to-market alignment and support.”

René Voogt, Commercial Director, co-CEO, Sensoterra comments: “As Sensoterra, we want to be the global go-to brand for anyone who wants to measure soil moisture as part of their water management solution. Partnering with Inmarsat’s ASP Programme not only gives us the connectivity solutions to enable that with our API platform, but also a partnership ecosystem we can leverage to power our ambitious growth plans. We’re thrilled to join Inmarsat’s ASP programme because we need reliable, global connectivity and a trusted partner to bring our wireless soil and water optimisation solutions to new markets, so we can aid better decision making for water management through smart soil moisture measurements where it is most needed.”

The Inmarsat ASP Programme is open to new entrants, disruptors, and established brands of any size who have developed an innovative digital product or service but may need additional support to exploit the benefits of satellite-enabled IoT solutions. Inmarsat provides dedicated technical guidance on how to integrate and support its highly-reliable satellite services, go-to-market strategy planning and exposure to the Inmarsat distribution channel to enable access to new markets.

Providers working across a diverse range of industries, including agriculture, aid and NGO, energy, exploration and leisure, media, mining, transport and utilities, as well as agnostic technology providers will be considered for membership.

Companies operating in locations and regions without reliable connectivity, or which have mission-critical connectivity needs, use the Inmarsat ASP programme to access a broad choice of satellite-enabled Internet of Things (IoT) solutions developed by a range of providers that enhance the efficiency, safety and sustainability of their businesses.

Other organisations can register or learn more about Inmarsat’s ASP Programme here.