International launch at UN climate change conference (COP25) in Madrid
“Increasing private investment opportunities in climate projects is crucial. Because public and philanthropic resources alone will never be enough to tackle the climate challenge. Via DFCD, locally identified NGO’s and communities will build bridges with the world of finance. SDG17 is extremely important. The fund will endeavor an optimistic approach, from good to great.” – Sigrid Kaag, Minister for Foreign Trade and Development Co-operation
Madrid, December 9, 2019 – Today, the COP25 provided the opportunity for the international launch of the Dutch Fund for Climate and Development (DFCD), in the presence of Sigrid Kaag, the Dutch Minister for Foreign Trade and Development Cooperation. In May of this year, the DFCD was awarded to the consortium of Dutch entrepreneurial development bank FMO, SNV Netherlands Development Organisation (SNV), World Wide Fund for Nature (WWF-NL) and Climate Fund Managers (CFM). “Today’s international launch means that the DFCD is officially open for business,” said Linda Broekhuizen, Chief Investment Officer at FMO. “The consortium is keen to connect with innovative entrepreneurs with climate-related businesses and with private investors to mobilize much-needed funding from the private sector to join us in our mission to create a more climate-resilient world.”
Climate change is one of the biggest challenges we face today. It is already affecting people and nature across the globe, with developing countries being most impacted. “The poorest communities are the most vulnerable to climate change. Poor farmers and others at the bottom of the pyramid suffer and lose their livelihoods even with small changes in rainfall patterns or temperature”, as Meike van Ginneken, Chief Executive Officer at SNV explained.
There is an urgent need for investment to enable vulnerable communities and ecosystems to adapt to climate change. The challenge we face to help communities adapt to and mitigate the effects of climate change is enormous, and the case for action is incredibly clear. We cannot do this with governments alone. We need all stakeholders to be strong enough to confront this challenge. The set-up of this consortium in which finance and NGOs come together, is unique and uniquely positioned to do this. The government of The Netherlands has committed to addressing this need through the DFCD, making EUR 160 million available in the period 2019-2022 for climate adaptation and mitigation, of which 65% is targeted for climate adaptation projects.
DFCD is a direct response to the increasing demand for climate adaptation projects that have to date suffered from a lack of funding compared with mitigation efforts. Linda Broekhuizen adds: “In 2018, USD 612 billion was invested in climate mitigation which is important and much needed. In contrast however, only 5%, USD 30 billion, was invested in adaptation. Adaptation may have to be USD 180 billion a year if the 2030 goal is to reach the USD 1.7 trillion as required according to the most recent report of the Global Commission on Adaptation.”
To help bridge this funding gap the DFCD aims to mobilize upwards of EUR 500 million from private sector investors. Andrew Johnstone, Chief Executive Officer of Climate Fund Managers adds: “The opportunities are there. Take water for example: 80% of the world’s wastewater enters rivers and oceans untreated and by 2025, half of the world’s population will be living in water stressed areas. Neither the private nor the public sector is doing enough, but together the investment potential is enormous, as is the impact to be delivered.
This partnership of NGOs and financiers seeks to develop and finance sustainable private sector solutions to enhance resilience to the effects of climate change. These projects will boost the health of freshwater, forest, agricultural and ocean ecosystems, and improve water management.
“The consortium takes a landscape approach through investing in projects which are planned in an inclusive manner, and build on a solid understanding of the landscape, ecosystems and communities. In this way these projects will contribute to healthier ecosystems,” said Margaret Kuhlow, Finance Practice Leader of WWF. “New and incredibly exciting in this consortium is that there is early-stage funding available to convert adaptation opportunities into bankable projects.”
WWF and SNV take on the key role of developing climate-relevant projects from an early-stage idea to a bankable business case. Climate Fund Managers and FMO provide investment capital, delivering projects to full operations. This combination of early-stage involvement with full life-cycle funding will ensure lasting, long-term impact that contributes to the Paris Agreement and the United Nation’s Sustainable Development Goals (SDGs).