Sanlam invests for climate change, bolsters vulnerable communities
The Hague: The Dutch government has announced that the consortium of Dutch development bank FMO, SNV Netherlands Development Organisation (SNV), World Wide Fund for Nature (WWF-NL) and Climate Fund Managers has won the tender to manage the €160 million Dutch Fund for Climate and Development (DFCD). This pioneering partnership of NGOs and financiers aims to help developing countries build climate resilient economies.
Climate Fund Managers (CFM) is a joint venture between Sanlam InfraWorks and the Dutch Development Bank and invests in climate-related projects in emerging markets. CFM operates with the purpose to mitigate climate change, to establish greater gender equality, and to create jobs. ‘Sustainable development and climate change are core issues that need to be addressed on a global scale through innovative investment,’ commented Nersan Naidoo, CEO of Sanlam Investments. ‘Through Sanlam InfraWorks we are able to deliver long-term returns to investors and, concomitantly, promote positive environmental change.’
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 river basins to 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-resilient economic growth
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. Therefore, the FMO-led consortium will use 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.
Unique partnership and fund structure
It is revolutionary that a development finance institution, a private sector investment manager, a conservation NGO, and a 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.
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. 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.
Peter van Mierlo, CEO of FMO: ‘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. It allows us to improve climate resilience of landscapes and their vulnerable inhabitants in developing countries. We welcome the collaboration between NGOs and (development) finance institutions and look forward to making progress in adapting to the consequences of climate change.’
Meike van Ginneken, CEO of SNV: ‘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.’
Kirsten Schuijt, CEO of WWF-NL: ‘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. Together we will make investing in healthy ecosystems as a key strategy to enhance the climate resilience of people an attractive proposition to the 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.’
Andrew Robert Johnstone, CEO of CFM: ‘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.’
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.
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).
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.
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.
WWF is one of the world’s largest and most respected independent conservation organizations, with over 5 million supporters and a global network active in over 100 countries. WWF’s mission is to stop the degradation of the earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption.
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, wind and run-of-river hydropower projects across global emerging markets.