8 November 2021

Collaborating to accelerate investment in climate adaptation and resilience

New multimillion dollar commitments and strategic collaborative actions to overcome key hurdles to private investment in climate adaptation and resilience in developing and emerging countries.

The group of development finance institutions signatories and partners members to the Adaptation & Resilience Investors Collaborative (the “Collaborative”) today committed to substantially increase investments in climate adaptation and resilience to support vulnerable developing and emerging countries.

Last May the G7 development finance institutions members of the group put forward a set of ambitious actions to the G7. Work is already underway among these organisations and other members of the Collaborative for the adoption of a common approach to identifying eligible investments and reporting on impact and progress. Activities are also ongoing for improving physical climate risk assessment capabilities, shaping markets, and building pipelines of bankable investments.

Further to these joint efforts, members of the Collaborative commit to:

  • Adopt common principles for tracking finance for climate adaptation and resilience in line with best practice for a stepwise process-based approach, granularity, and conservativeness.[1]
  • Disclose the volume of finance committed for climate adaptation and resilience on an annual basis, following different implementation timelines for each institution, and continue progressing towards harmonization through peer learning and engagement.
  • Continue collaboration towards the adoption of standardised approaches for measuring the contribution of their investments towards adaptation and resilience impact goals.
  • Develop common good practice approaches for identifying, assessing, and managing physical climate risks, including common tools for engaging with counterparties.

The Collaborative will report on progress by the Germany’s G7 Summit in 2022 and continue working towards joint outcomes to be announced at COP27 hosted by Africa.

The Collaborative has also announced new members. The DFIs Finnfund and Swedfund have joined as signatory members, while the European Investment Bank, the Global Innovation Fund, the Islamic Development Bank, KFW Development Bank, the Nordic Development Fund, and USAID joined as partner members.

Members have invited other development finance organisations to join and contribute towards its action plan. The Public Development Bank Coalition gathered at Finance in Common 2021 welcomed the work of the Collaborative and encouraged the endorsement of its recommendations. Joint work is also underway under existing fora on Paris alignment of new financial flows, which includes focus on climate adaptation, and implementation of the TCFD’s recommendations.[2]

Finally, at COP26 some members of the Collaborative are announcing new commitments for increasing adaptation finance and accelerating private investment, demonstrating strong collective ambition:

  • AFD Group is strongly mobilised to support the fulfilment of the ambitious French adaptation finance target of 2 billion euros per year from 2021. AFD is also launching the second phase of the AdaptAction Programme with 15 million euros to be financed in up to 18 African countries.
  • Cassa Depositi e Prestiti (CDP) stands ready to provide support in the context of Italy’s renewed pledge towards climate finance, which amounts to US$4 billion per year over the next 5 years. In its role as Financial Institution for International Development Cooperation, CDP is developing a climate investment strategy aimed at reinforcing its action towards both mitigation and adaptation.
  • CDC Group will commit over £3 billion in climate finance in Africa and Asia in the next five-years. Thiswill be bolstered by the £200 million Climate Innovation Facility announced by the UK Government during COP26 Finance Day. The new facility will seed pioneering climate solutions, including for adaptation and resilience. The first investee of the facility, Kenya-based agritech business Pula, provides an example. It will enable Pula to offer untested “pay-at-harvest” parametric insurance to smallholders in several African countries to accelerate uptake.
  • FinDev Canada launched its Climate Change Strategy with adaptation and resilience as a key pillar, and committed to increase climate finance to 35% of its total investments by 2025.
  • Finnfund has committed to make 1 billion euros worth of new climate investments by 2030, including investments both in adaptation and mitigation.
  • FMO, manager of the Dutch Fund for Climate and Development (DFCD, euro 160 million available), highlights the DFCD anchor investment of euro 75 million in its water facility, Climate Investor Two. The DFCD expects to mobilize over euro 600 million before year-end from commercial and impact investors for this facility. In addition, the Land Use Facility within the DFCD has already committed euro 21 million to projects in Least-Developed-Countries. DFCD, launched in 2019, has about 50 projects in its origination pipeline.
  • The European Investment Bank launches its first-time Adaptation Plan aiming to increase the volume and the impact of its adaptation finance.
  • The Global Center on Adaptation has announced increased funding for its Africa Adaptation Acceleration Program from the UK government.
  • The Global Innovation Fund is pleased to launch a call for innovators and a new, dedicated fund: Innovating for Climate Resilience that will invest in early-stage innovations with the potential to scale and build resilience and adaptation to inevitable changes in climate. With support from the UK’s Foreign Commonwealth and Development Office, and in partnership with the Global Resilience Partnership and the Adaptation Research Alliance the fund will use grant, equity, and debt instruments, and will build on GIF’s evidence-based approach, and metrics for measuring impact on resilience and adaptation.
  • The Nordic Development Fund has set a target of directing at least 50% of our financing towards adaptation projects.
  • The US International Development Finance Corporation (DFC) has launched a Climate Action Facility, which will deploy at least US$50 million in technical assistance funds to build a robust pipeline of climate finance investment transactions, including for adaptation and resilience. DFC has also announced an intent to invest US$1 billion in Food Security and Agriculture over the next five years.

Amal-Lee Amin, Director, Climate Change, CDC Group, said: “The climate crisis is a reality today. As DFIs, we need to act now and work together to overcome barriers for accelerating private sector investment in climate adaptation. Through our investments we must equip and empower businesses across all sectors, communities, and natural systems to adapt and become more resilient to the adverse effects of climate change.”

Rémy Rioux, Chief Executive Officer, AFD Group and President of the International Development Finance Club (IDFC), said: “Assessing and managing physical climate risks in financial institutions contributes to raising awareness on the importance of identifying vulnerabilities and investing in adaptation. From this standpoint, development banks bear a special responsibility: they should not penalize their most exposed borrowers by remaining solely focused on a risk-based approach, but instead should get to know their borrowers better and support them in progressing along adaptation pathways in the long-term to reduce the risks together. We are happy to be part of this important exchange platform and contribute by sharing our experience on the integration of physical climate risks at project and counterparty levels to move forward together in fulfilling our role as development banks.”

Jaakko Kangasniemi, Managing Director, CEO, Finnfund, said: “As development financiers, fostering climate adaptation and building resilience must be at the core of our work. We need to work together to mobilise funding for companies that enhance resilience in all levels of society. Therefore, Finnfund is committed to make 1 billion euros worth of new investments in adaptation and mitigation by 2030.”

Michael Jongeneel, CEO, FMO, said: “Building on our track record of blended finance and mobilization for climate and environment investments, we are committed to working with financial and non-financial partners to significantly improve local project development and accelerate the mobilization of additional private sector capital for climate adaptation. We also commit to new partnerships – like we do with the Dutch Fund for Climate and Development and The Rallying Cry – providing the basis for a ‘landscape approach’ and ensuring that we empower local leaders to maximize the positive impact of our work. We look forward to working further with the Collaborative to achieve our common goal of mainstreaming and accelerating adaptation and resilience finance, especially in the least-developed countries.”

Karin Isaksson, Managing Director, Nordic Development Fund said: “The NDF’s Strategy 2025 communicates a strong focus and adaptation and resilience action in lower income countries. To operationalise this, NDF will commit at least 60 million euros on a yearly basis to support both public and private sector investment targeted at advancing the climate and development agendas with a focus on early-stage and catalytic financing together with strategic partners.”

Alix Peterson Zwane, CEO, Global Innovation Fund, said: “The climate crisis has the potential to wipe out decades of progress in improving the lives and livelihoods of the world’s poorest people. Its effects are already being felt, and the need for investment in climate adaptation and resilience solutions is critical. Building on more than six years of investing in evidence-based innovations that respond to big development challenges, GIF is delighted to join the Adaptation & Resilience Investors Collaborative, working closely with mission-aligned organisations to accelerate progress on this urgent agenda and support those who are vulnerable to the most serious effects of climate change.”

Maria Håkansson, CEO, Swedfund, said: “Swedfund has committed to align with the goals of the Paris Agreement. This means not only focusing on the mitigation of emissions, but given our countries of investment, that we have a key role to play in facilitating finance flows to climate-resilient development and increasing the ability to adapt to climate change. Joining the Adaptation & Resilience Investors Collaborative will enable us to collaborate with other international development actors with the same goals, such as strengthening our assessments of physical risks and accelerating investments that make communities more resilient to climate change”.

Patrick Verkooijen, Chief Executive of the Global Center on Adaptation, said: “More funding is critical for the most vulnerable to survive climate change. It is also essential to help countries in Africa reach the ambitious goals they have set in the African-led and African managed Africa Adaptation Acceleration Program. Through this program Africa and with the collective efforts of the members of ARIC we will be able to integrate climate adaptation investments at the national level, mobilize private sector financing and ensure best practice and knowledge is shared across the continent.”

About the Collaborative

Launched at the Finance in Common Summit 2020, the Adaptation & Resilience Investors Collaborative is an international partnership of development finance organisations working together to accelerate and scale up private investment in climate adaptation and resilience in developing and emerging countries. To this end, we build know-how and tools, and we join forces to develop pipelines of bankable investments and support early-stage ventures with innovative climate adaptation and resilience solutions to become investment-ready.

Signatory members include, in addition to the new members announced above, CDC Group, the French AFD and Proparco, Italy’s Cassa Depositi e Prestiti (CDP) in its role as Financial Institution for International Development Cooperation, FinDev Canada, the Foreign, Commonwealth & Development Office (FCDO), FMO of Netherlands, the Global Center for Adaptation the U.S. International Development Finance Corporation (DFC).

[1] Those that have not already done so.

[2] See e.g., the EDFI Statement on Climate and Energy Finance and Multinational development banks present their Paris Alignment approach.

CDC is becoming British International Investment