Scale up climate finance through the financial sector – “30 by 30 Zero”

The implementation of NDCs in emerging markets requires vast funding amounts, for which the financial sector plays a critical role. However, numerous aspects, such as limited under-standing of climate financing opportunities and a lack of consistent policies, have so far pre-vented sufficient mobilisation of funds. To increase climate lending, the project supports the creation of domestic markets for climate financing in the partner countries. It follows a holistic approach, working at the political, market and financial institutions levels. This includes the alignment of financial sector strategies to support NDC implementation. In addition, by 2030, the share of climate lending in the participating banks' total credit portfolio shall be significantly increased, while climate and carbon-related risks are reduced. Finally, the project fosters climate investments through the development of domestic green bond markets.

Project data

Countries: Egypt, Mexico, Philippines, South Africa
IKI funding: 50,000,000.00 €
Duration: 01/2021 till 12/2028
Status: open
Implementing organisation: International Finance Cooperation (IFC)
Political Partner: Department of Finance - Philippines

Ministry of Finance and Public Credit - Mexico

National Treasury

The Central Bank of Egypt
Implementing Partner: The World Bank Group

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State of implementation/results

Egypt:
- The investor survey finalized during previous reporting periods was disseminated to support the assessment of the current state of climate-related risks and opportunities by Egyptian investors in preparation for a market-level roundtable with domestic investors and related stakeholders.
- In partnership with the Climate Bonds Initiative, the IFC project delivered a Green, Social, and Sustainability Bonds issuance process training to the real sector companies in Egypt. Participants were trained on the overall process of issuance of green, social, and sustainability bonds and understanding each of the steps of distribution, including the preparation, the requirements and content of a labeled bond framework, use of proceeds for GSS issuance, the process for project evaluation and selection, independent review, management of proceeds and reporting, and finally got some Knowledge of the key stakeholders involved in the process, their roles and responsibilities. 21 participants attended the training.
- Climate Finance Advisory to leading public and private sector banks in Egypt to support in developing their climate finance strategies and climate risk management to ensure its financial stability and regulatory compliance while continuing to support the financing needs of its client base. The program further supported developing green products such as Energy Efficiency in industrial facilities and Desalination and water treatment.
- Delivery of various on-line workshops covering (i) Impact of Climate Change on the Financial Sector, (ii) Overview of Sustainable Finance, (iii) Integrating Climate Change in Regulatory and Supervisory Frameworks, (iv) sharing EU financial sector regulatory framework for climate change, and (v) Toolkits for Policy Makers on Greening the Financial System.
Mexico:
- IFC continues engaging with professional associations of institutional investors to promote the development of a sustainable capital market in Mexico with a focus on climate
- Scholarships: The program financed a total of 81 scholarships to Mexican staff of the financial sector. 22 scholarships were dedicated to the 3rd cohort of the Chief Sustainability Officer Program over 13 days of in-person training. 45 scholarships were offered to finance professionals to obtain the CFA ESG certification. Finally, 14 scholarships were offered to staff from the financial sector to enroll in the Impact Investing Course at Universidad Autonoma de Madrid.
- 5 trainings were conducted during the 2nd half of 2023. 2 trainings in partnership with GBAC on Biodiversity Finance and Green Buildings, 2 trainings with CMFS on the Principles of sustainability-linked bonds and the Decarbonization Pathways, and one additional training on the structuring of sustainable finance projects.
- The 30 by 30 Mexico team participated in the launch of the Sustainable Taxonomy of Mexico at the Banking Convention on 18 March 2023.
- As the trusted advisor of the Mexican Banking Association's sustainability committee, IFC presented in March 2023 a proposal to develop tailor-made roadmaps for each of the segments identified among the 35 members of the ABM’s Sustainability Protocol.
- An advisory mission was conducted for a financial institution to launch a new green finance product. The mission’s objective is also to provide technical support and expertise in Green Building and Edge certification for the institution’s clients.
- At the sectoral level with the Mexican Banks Association, IFC finalized the Paris Agreement Capital Transition Assessment (PACTA) diagnostic exercise, and delivered a 2-day Climate Risk Training for the 50 members of the Association.
- The team launched the IFC Mexico Green Bonds Guide at the occasion of its participation to the Mexican Sustainable Finance Council (CMFS) 's annual Sustainable Finance Forum.
- The team realized two milestones global trainings of the Program: the first generation of the Sustainability-Linked-Bonds and Transition Bonds with Carbon Trust, to more than 40 participants, and launch of the first 19-participant in-take of the executive training on Financing Distributed Generation Projects in Mexico with RENAC.
- The program supported the 4th cohort of the “Chief Sustainability Officer” training, a course in alliance with the Mexican Institutional Stock Exchange (BIVA), providing close to 200 participants with the tools and knowledge to issue a sustainable bond.
- The team led interviews with key stakeholders to update and finalize an issue paper that outlines the barriers and potential solutions for investment and development in distributed generation in Mexico. A roundtable dialogue on this issue also took place with 43 stakeholders participating.
Philippines:
- A multi-stakeholder roundtable dialogue was held in Manila in May 2023 and in Cebu in June 2023, where 60 (Manila) and 30 (Cebu) participants from the public, private, and financial sectors attended to review, validate, and build on the findings of the issues paper and to develop recommendations to encourage the development and private sector investment into green building projects. Moving forward, targeted discussion groups will be held to dive deeper into the recommendations and feed into the final deliverable, a green building sector roadmap of targeted recommendations to enable green building project pipeline development and scale private sector financing for green buildings at the local level.
- The first Sustainability-linked and climate transition bonds training took place on August 2 and 3 and was attended by 42 participants. IFC worked with Carbon Trust, which has been selected as the SLB and TB Executive training provider. The training was organized in partnership with the Securities and Exchange Commission and aims to help the participants gain a thorough and practical introduction to pre– and post–issuance.
- The project team has worked with two financial institutions on Climate Smart Agriculture and Climate Transition Stress Test, respectively.Scholarships with RENAC’s Green EnergyFinance Specialist program: The Green Energy Finance Specialist program was completed with the 10+ virtual sessions during this reporting period.
South Africa:
- The project team developed an issues paper that summarized key barriers to development and investment in climate-smart agriculture (CSA) projects in South Africa. The paper also identified potential actionable solutions to increase private sector investment into CSA projects in South Africa and outlined thematic areas for further discussion.
- On April 26, 2023, the project team held an in-person multi-stakeholder roundtable dialogue with 40 participants from the public, private, and financial sectors in South Africa to discuss and elaborate on the barriers and solutions identified in the issues paper.
- IFC supported the Johannesburg Stock Exchange’s (JSE) coordination on sustainability matters with the Financial Sector Conduct Authority (FSCA), the JSE’s regulator and supervisor. This work is performed alongside the World Bank Group's support to FSCA to develop an FSCA “Statement on Sustainable Finance and Program of Work” (published on 31 March 2023). The FSCA work program includes a pillar on “Disclosure, reporting, and assurance.”
- The project is working on CSA studies for a financial institution and provides support in defining their CSA lending strategy and climate risk management of their agriculture portfolio. The project team finalized the first report and presented it to the institution.
- The project team is drafting a sector roadmap for Climate Smart Agriculture in South Africa, which is in line with the country’s NDC, following engagement and feedback from the wider sector.
- Completed training with 15 staff of another financial institution on Buildings and Energy and Resource Efficiency through RENAC. In addition, the program supported 4 staff to become EDGE-certified.
All four countries:
- Since the program’s inception, IFC has invested $800 million in Financial Institutions across Egypt, South Africa, and the Philippines to support green projects.
- IFC’s Blended Finance team has held discussions with industry and investment teams in the country to raise awareness of the BMWK Blended Concessional Finance Facility and how it can support climate lending.