Mankind’s footprint is exhausting the world’s natural resources and we cannot close our eyes to the effects of climate change. NpM and its members promote responsible investments that take the environmental footprint as a central focus, alongside the positive social and economic impact in emerging economies. The Green Impact Finance (GIF) expert group focuses on ‘greening’ the inclusive finance sector. The partners stimulate environmentally sustainable investments and aim to increase the development of financial products and services that focus on climate mitigation, climate adaptation and increased biodiversity.
In 2015, NpM and its members presented a signed Letter of Intent to the Dutch Ministry of Foreign Affairs. With this letter, our members commit to greening the inclusive finance sector and amending their policies and practices to achieve this goal.
Since then, the GIF group focused on:
- Defining Green Inclusive Finance;
- Gathering business cases to share good practices and GIF investments;
- Developing and harmonizing indicators to improve environmental Performance Management and Impact Measurement.
ACCESS TO ENERGY
Since 2019, the GIF group started focusing on the access-to-energy (A2E) space, due to a greater interest in understanding the processes and requirements of these relatively new and complex companies.
The A2E sector’s growth has been immense, with investments increasing from $107.34 million in 2014 to $511.55 million in 20181. The sector focuses on improving access to energy through the provision of clean and sustainable energy services to rural and difficult to reach areas. The most prominent form of energy provided is solar2. The investments of the private sector in this space have been instrumental in contributing to achieving the targets of SDG 7: Access to Affordable and Clean energy.
Greater focus is put into the A2E sector due to the several advantages it brings:
- Clean alternatives: The obsolescence of kerosene-based energies, and the switch to renewables, brings greater safety to households as it reduces fire hazards and emission of toxic gasses3.
- Affordable energy: Households can save up to $60 per year in energy costs through pay-as-you-go pricing models4.
- Flexibility: The pay-as-you-go pricing model that many of the A2E actors adopt allow households to forego payments in periods of lower-income while also permitting advanced payments.
GREEN IMPACT FINANCE PARTNERS
To bring energy to underserved regions, improve the capacities of A2E actors and make the A2E sector more accessible for investors, NpM and the GIF partners provide:
- ESG & impact standards: alignment of standards to ensure that projects provide positive effects for its recipients.
- An Engagement Platform: to present opportunities for co-investment and joint technical assistance provision.
- Knowledge Building: conduct research and organize knowledge sharing sessions to allow for better investment allocation, improve deal efficiency, increase the volume of investments and increase its impact.
Photo credits of header photo to: Axel Fassio CIFOR
- 1. Attia, B. & Maze-Rothstein, I. (2019). Strategic investment in off-grid energy access: Scaling the utility of the future for the last mile[PowerPoint Slides]. Retrieved from https://www.energy4impact.org/strategic- investments-grid-energy-access-scaling-utility-future-last-mile-0
- 2. International Renewable Energy Agency. (2018). Off-grid renewable energy solutions: Global and regional status and trends. Retrieved from https://www.irena.org/publications/2018/Jul/Off-grid-Renewable- Energy-Solutions
- 3. M-Kopa Solar. (2019). Impact Report Upgrading Lives 2019. Retrieved from http://www.m-kopa.com/wp-content/uploads/2019/09/M-KOPA-IMPACT-REPORT-2019.pdf
- 4. Giordano, P., Pelizan, L., & Alavi, A.R. (2018). Pay-As-You-Go: Unlocking Access to Energy Services in Sub-Saharan Africa1 A Disruptive Business Model Leveraging Mobile Technology to Finance Energy Services for the Bottom of the Pyramid. Fuel Freedom Chair for Energy and Social Development in press. Retrieved from https://media.iese.edu/research/pdfs/OP-0303-E.pdf
GREEN IMPACT FINANCE REPORTS
Green Impact Finance: Five Case Studies
The Green Impact Finance (GIF) Expert Group of NpM has issued 5 case studies in different countries as examples of GIF investment. These examples are about investments in PAYGO Solar companies, Agri-services, as well as in vehicle loans and services by NpM members.
Download the report to read a brief but informative description of the type of investments and companies.
Green Inclusive Finance: Status, Trends and Opportunities!
At the NpM annual conference organised with FMO and Hivos, Green Inclusive Finance was the topic. NpM asked Enclude to carry out a short research on the current status of the green inclusive finance sector. The inclusive finance sector traditionally focuses on creating social impact in developing countries by enabling access to financial services. Besides social impact, the sector increasingly attaches value to creating environmental impact as well. At this stage, the emphasis is put on assessing how also environment-conscious aspects can become a fixed focus or even determinant in investment decisions.
A more elaborated overview is included in the short research realised by Enclude which addresses the current status, trends and opportunities in the green inclusive finance sector.
Greening Financial Inclusion
This assessment of the status of greening inclusive finance across the members of the Dutch Platform for Inclusive Finance (NpM) has been undertaken by Enclude in order to determine which next steps should follow the 2015 signing of the Letter of Intent. The Letter was presented to the Ministry of Foreign Affairs, detailing the shared intentions of the NpM members to make policies and practices more green.
In a final workshop (14 September 2016) in which the draft findings of this survey were presented to the NpM members, it was agreed to ask NpM’s coordination and facilitation of the following next steps:
1. The definition of Green Inclusive Finance.
2. Risk return perspective vs. opportunities.
3. Case development: seen from triple value creation.
4. The role of technology.
5. More aligned indicators.
7. Awareness raising and needs identification.