The Lab launches six new climate finance instruments to accelerate climate action in emerging markets

New York – The Global Innovation Lab for Climate Finance (the Lab) endorsed six innovative financial instruments to unlock USD 795 million for climate action in challenging sectors such as climate resilience, conservation, and housing. 

This strong Lab cohort has already mobilized over USD 9 million. The 2023 Lab class offers diverse solutions to address climate change and promote sustainable development, including:

• Building climate-resilient and gender-inclusive affordable housing units in Moroccan cities 
• Supporting Brazilian agribusinesses‘ transition to sustainable agriculture
• Incentivizing landowners in Kenya to conserve critical ecosystems
• Financing the decarbonization of small and medium-sized enterprises through sustainability-linked loans
• Supporting pre-seed climate adaptation startups in communities across Africa
• Financing early-stage climate social enterprises in India 

Lab Class of 2023 All six teams pitched their ideas to Lab members during the endorsement meeting in New York “Each of these six solutions addresses critical barriers to climate investment in emerging economies across the Global South,” said Barbara Buchner, Global Managing Director of Climate Policy Initiative, the Lab’s Secretariat. “The 2023 Lab class demonstrates that there are concrete opportunities for public, private, and philanthropic investors, who we count on to help them move to market and scale quickly.”

Lab climate finance solutions utilize a wide array of financial mechanisms, from concessional debt facilities to private equity impact funds and accelerators. Following endorsement, they will continue fundraising, building on the USD 3.5 billion previous Lab’s solutions have already mobilized.

The 2023 class has already made significant headlines on the fundraising front. The Catalyst Fund announced its first close of USD 8.6 million during Africa Climate Week, and Social Infra Ventures secured a USD 1.24 million grant from the Green Climate Fund.

“The 2023 Lab class provides promising investment opportunities in some of the most critical sectors for mitigation and adaptation action,” said Ben Broché, head of the Lab program. “The Lab is thrilled to support such promising teams and look forward to seeing the impact they will have.”

After completing the Lab’s six-month acceleration program, all six solutions from the 2023 class were endorsed by the Lab’s member institutions at its annual meeting during NYC Climate Week. The Lab will host a virtual Demo Day on October 19 to present this year’s class to potential investors, funders, and implementation partners. Registration here.

THE SIX SOLUTIONS: 

• Catalyst Climate Resilience Fund is an impact fund and accelerator to support pre-seed climate adaptation startups that improve the resilience of vulnerable African communities. The Catalyst Fund is an investment management firm focused on equitable and inclusive finance.
• Climate Resilient Landscape Finance (CRLF) is an innovative and concessional debt facility that addresses underlying challenges to climate-resilient land management in and around African conservation areas. Platcorp Group, an impact-focused African asset manager, is developing this instrument with Conservation Capital, a conservation finance boutique advisory firm, and Dascot Limited, a technical conservation consultancy.
• Impact Financing Facility for Climate-Focused Social Enterprises is a credit guarantee mechanism that helps climate-smart social enterprises build a credit history and unlock commercial debt. Villgro has paired the credit guarantee with technical assistance to help the enterprises absorb and repay credit.
• Lendable Decarbonization Fund finances small and medium-sized enterprises’ efforts to decarbonize activities within their supply chain through sustainability-linked loans. Lendable will also set up a Carbon Project Preparation Facility that supports a subset of borrowers that have the potential to generate carbon offsets.
• Social Infra Ventures (SIV) aims to develop green, affordable housing in secondary cities in Morocco using a gender-inclusive approach throughout the community planning, design, and financing processes. SIV is a housing company set up by incubator and sponsor Cardano Development.
• The Low-Carbon Agriculture Transition Mechanism (LATM) accelerates climate transition in agriculture by offering long-term loans to small and medium-sized farmers in the Brazilian Amazon, Cerrado, and Atlantic Forest regions while guaranteeing a minimum income and technical assistance. The proponents are VERT, a securitization company, and Vox Capital, an impact investment manager.

Quotes

Vera Rodenhoff, Deputy Director General, German Federal Ministry of Economic Affairs and Climate Action, said:

“Germany is proud to support the Lab since its beginning in 2014. This year’s innovative solutions take on key barriers to climate finance in emerging markets to protect biodiversity hotspots, empower climate-oriented social enterprises as they find their footing, and unlock income-generating opportunities for small and medium-sized businesses looking to decarbonize.”

Lori Kerr, Chief Executive Officer, FinDev Canada, said:

“Understanding the gender-climate nexus, both the disproportionate burden women and girls face from the climate crisis and the improved environmental and social outcomes when gender equality considerations are integrated, is core to our intersectional approach to climate finance. FinDev Canada is thrilled to fund the first-ever Lab stream on gender equality and support an innovative instrument that integrates capital markets, rental and for sale housing units, gender, and climate-sensitive buildings in Morocco and beyond.”

Pallavi Sherikar, U.S. State Department, Senior Advisor, Office of the Special Presidential Envoy for Climate John Kerry, said:

“Through the President’s Emergency Plan for Adaptation and Resilience (PREPARE), the United States is looking to find innovative ways to bolster adaptation and increase resilience to climate impacts and why we decided to support an adaptation window within the Lab at COP27. We are excited to see this class of climate finance solutions that are mobilizing private investment and supporting initiatives that seek to improve the resilience of the most vulnerable communities.”

Antha Williams, who leads Bloomberg Philanthropies’ environment program, said:

“Meeting India’s renewable energy targets will require an all-hands-on-deck strategy from the public and private sectors. The Global Innovation Lab and the projects it supports are helping India and other economies not only meet their climate goals but also create jobs and improve lives.”

Matt Toombs, Director of International Climate Strategy & Finance, United Kingdom Department for Energy Security and Net Zero, said:

“The UK is delighted to be deepening our long-standing support for the Lab with our announcement to fund two new windows beginning in October 2023. This will launch the Latin America and Caribbean mitigation window and a thematic stream to help protect high-integrity forests for one year, complementing the UK’s existing Brazil Lab support. The support and collaboration of Lab members are critical to the success of the proponents, and a model that needs to be adopted and scaled very significantly in the race to mobilise private climate finance.”