The portfolio of investments is primarily in the form of loans to local banks that now include banks in ten countries on 4 continents. Combined with the help of the fund’s technical assistance facility, this investment increases the capacity of these financial institutions to provide their own loans to local projects which reduce carbon emissions. On average, funded projects created a 42% carbon emission savings, well above the fund’s minimum target of a 20% carbon savings.
Examples of the local projects that were supported included:
- Ukraine’s Ukrexim Bank providing loans to 10 projects including a solar PV power plant in the Vinnytsya region
- Ecuador’s Banco Pichincha providing more than US$4 million in consumer loans to allow hundreds of families to have more energy efficient fridges and appliances
- Brazil’s Banco Pine providing a US$5 million loan to the ceramic tile manufacturer Portobello for replacing the firm’s old roller kilns with more efficient European technology, achieving a 25% emission reduction and lower energy use
- Turkey’s Sekerbank providing 239 loans to apartment buildings and households to upgrade their insulation
Senior loans were also made to Nicaragua’s Banco de la Producción, Mongolia’s XacBank, Vietnam’s Vietinbank, Sri Lanka’s PanAsia Bank and India’s Ratnakar Bank. The fund also made two direct investments in South Africa. A subordinated loan was provided to Hidoplex, a company installing energy efficient technologies in the telecommunication sector and debt financing was provided for a solar PV plant at the Cronimet chrome mine.
The fund does not intend to provide resources in areas where the private sector can already satisfy the financing needs of sustainable energy investments, nor does it seek to compete with subsidized investments. Instead, it strives to provide financial resources in areas which do not require subsidies in order to unleash their potential but are currently insufficiently served by private financiers.
The fund is structured as a public-private partnership which allow public financing to catalyze private investment. The first private investor (a German doctor’s pension fund) made a $30million investment into the fund in 2012. Germany’s Federal Environment and Building Ministry increased its investment by US$13.6 million to reach US$55.5 million and the United Kingdom’s Department of Energy and Climate Change became a new investor with US$50 million. This public investment provides a risk cushion that will allow the fund to continue to grow. In total, the fund has US$326 million of commitments and an intermediate fund volume target of US$500 million but does not have a limit on the fund’s ultimate size. The fund is a strong example of international climate finance and the international goal of providing $100 billion of support to developing countries.
GCPF seeks to maintain the highest recognized standards for the management of social and environmental risks in its operations. The last year also saw an audit which concluded that the fund’s Social and Environmental Management System is being properly implemented with no material gaps.