By Faridat Salifu
As the world intensifies its fight against climate change, innovators in climate finance are shaping the future of sustainable investments.
At the 2024 New York Climate Week, alumni of the Global Innovation Lab for Climate Finance (the Lab) shared transformative strategies and solutions during a high-profile panel discussion at the Lab Summit.
The panel, moderated by Ben Broché, Associate Director at Climate Policy Initiative (CPI), brought together three visionaries from past Lab cohorts:
Martha de Sá (2023 Lab alumna): Founder of Violet, a Brazilian company advancing sustainable agriculture finance and bioeconomy initiatives like the Amazônia Viva Financing Mechanism.
Las Perera (2022 Lab alumnus): Creator of the Green Guarantee Company, a pioneer in de-risking climate investments in emerging markets.
Sanjay Wagle (2017 Lab alumnus): Co-creator of the Climate Resilience and Adaptation Finance & Technology Transfer Facility (CRAFT), the first growth equity fund targeting climate adaptation.
Building Foundations for Growth
Martha de Sá emphasized the importance of scalable and replicable models in climate finance. Reflecting on the two-year process to launch the Amazônia Viva Financing Mechanism, she highlighted the need for practical, adaptable solutions.
“Perfection is impossible. The focus should be on creating ‘good enough’ frameworks to start addressing challenges while building solid foundations with technology and tailored products,” said de Sá.
She pointed to fintech as a model for scaling simplicity and replicability in climate finance. By addressing local needs and using clear documentation, she said, nature-focused initiatives can become more accessible and impactful.
De Sá also advocated for treating nature as an asset class, similar to stocks or bonds, to attract investment. The Low-Carbon Agriculture Transition Mechanism she developed aims to align diverse stakeholders, from institutional investors to local communities, by speaking a common financial language.
“Nature-based solutions offer immense economic potential while addressing social and environmental goals,” she said, emphasizing, “We must view these investments as opportunities, not just challenges.”
Las Perera underscored the role of guarantees in unlocking capital for climate projects in emerging markets. The Green Guarantee Company, developed under the Lab, mitigates investment risks by offering flexible guarantees, which can be scaled up or phased out as markets mature.
“Our guarantee model builds trust among stakeholders and allows projects to move forward independently once relationships are established,” said Perera.
Research by CPI shows that guarantees are crucial in attracting institutional investors to regions with sub-investment-grade credit ratings, further demonstrating their scalability across different markets.
Sanjay Wagle recounted the challenges of launching CRAFT, a groundbreaking growth equity fund for climate adaptation, in 2017. At that time, private sector interest in adaptation was limited.
“Convincing institutional investors of the value of climate adaptation required proving its potential returns and real-world impact,” he said.
Seven years later, adaptation has gained traction, with investors recognizing its profitability. Wagle emphasized that scaling adaptation finance requires diverse capital sources, from venture capital for new technologies to project finance for resilient infrastructure.
“One fund isn’t enough. Climate adaptation demands every type of capital to scale effectively,” he concluded.
The panel reinforced the Lab’s role as a catalyst for climate finance innovation.
By focusing on standardization, risk mitigation, and aligning diverse stakeholder goals, alumni like de Sá, Perera, and Wagle are driving transformative change in the global climate finance landscape.
Their success stories underscore the urgency of scaling investments to address climate challenges and seize opportunities for sustainable growth. END
Source : Climate Policy Initiatives