By Lori Kerr, CEO, FinDev Canada. Originally published on devex on 09 November 2021
As COP26 moves into its second week, there is a clear consensus that we are running out of time to tackle what’s been described as the greatest challenge of our time. Yet there is optimism in Glasgow. We know it will take major change — and major investment — to truly address climate change. Consensus abounds that resources from both public and private sectors must be brought to bear in a meaningful way.
Whilst significant attention has — and should — be placed on large-scale mobilisation of private capital for transformation to low-carbon, climate-resilient growth pathways, it is important to remember that climate investments of every scale matter. Small and medium-sized investments also contribute to our collective efforts on this matter. We need all types of capital, public and private, foreign and domestic, commercial and concessional, to play a role in helping address climate change at all levels.
As Canada’s development finance institution (DFI), FinDev Canada provides financial solutions to mobilise private investment in emerging markets and developing economies, and we believe that we need all hands on deck to combat climate change. We believe that efforts on private capital mobilization for climate change should not overlook the many small and medium climate investments that are transformative at the country and community level, and need to be part of the global response.
Whether it’s investing directly in SMEs such as M-KOPA, Africa’s leading ‘pay-as-you-go’ energy provider offering off-grid, solar energy kits to local communities, or supporting local financial institutions, such as Produbanco, a pioneer in green lending in Ecuador, or investing in larger platforms, such as Climate Investor One, a US$850 million blended finance facility for renewable energy projects across emerging markets FinDev Canada is putting its capital to work to support private investment at all scales in the markets we serve, so that climate impact can be achieved similarly, at all levels.
We are particularly mindful of the unique challenges vis-à-vis climate change and mobilising private investment that are faced by small island developing states and the off-grid sector in Sub-Saharan Africa, for example, which may not offer the largest investment opportunities, but certainly offer very transformative ones at the national and community levels.
While well-structured climate investments deliver positive impact individually, they also create paths to investment opportunities at the portfolio level with the potential to mobilise even greater levels of private climate finance and scale-up positive impacts collectively.
So, how do we get there? Like many of our multilateral development banks and DFI peers, FinDev Canada leverages our own capital, in addition to offering blended finance solutions to the private sector. Much discussion at COP26 centres around scaling blended climate finance. Moreover we agree — blended climate finance is an important part of the solution set to structure appropriate risk-return in emerging markets, and evolve millions of investment dollars into billions, and billions into the trillions of investment dollars needed to address climate change.
Judicious use of blended finance at project and portfolio levels can bring in more private capital to contribute to climate goals and the Sustainable Development Goals more broadly.
Finally, as a gender-lens investor, FinDev Canada also believes that gender equality is an important part of development finance and the climate change agenda. Sustainable development, by definition, needs to be inclusive development.
As COP26 moves into its second week, I share the optimism and excitement of those gathered in Glasgow; FinDev Canada will do our part to play a meaningful role — at different levels of investment — as part of the collective response to the immense challenges posed by climate change.
About the Author
Lori Kerr joined FinDev Canada as Chief Executive Officer in June 2021. She is a widely experienced international development finance professional with more than two decades of leadership in private investment in emerging markets with a focus on sustainable infrastructure, climate finance, and blended finance.
You can follow her on LinkedIn and Twitter.