Delivering on B3W and private sector climate finance at COP26

By Aparna Shrivastava, Deputy Chief Climate Officer of the U.S. International Development Finance Corporation

As we return from the climate talks in Glasgow where DFC set out to advance discussions with our G7 counterparts on the implementation of a Build Back Better for the World (B3W) agenda, we are excited to spotlight the significant ramp up of resilient and climate-smart infrastructure DFC has worked to commit in the last year.

In this post, I’ll share highlights of how DFC is advancing President Biden’s Build Back Better World Initiative through climate-resilient infrastructure investments and driving high-level initiatives.

Nearly $900 million in climate-smart commitments for developing economies

Building a sizeable and impactful portfolio of climate-smart investments is key to demonstrating and furthering DFC’s commitment to development, and to provide a values-driven, high-standard, and transparent infrastructure partnership led by major democracies around the world. In just the past two weeks during COP26, the UN Climate Change Conference, DFC has announced nearly $900 million in such climate-friendly and sustainable commitments for four projects across three continents focused on mitigating and adapting to climate change and building more resilient infrastructure. Over the past year, DFC has announced more than $1 billion of climate investment, all of it focused on emerging economies.

The transactions DFC announced during COP26 helping to build climate-smart infrastructure include:

  • $610 million in political risk insurance to cover loan principal and interest in support of the Belize Blue Bond for Ocean Conservation, a collaboration between DFC, The Nature Conservancy, and Credit Suisse. The $364 million bond, which closed November 5, 2021, will provide sovereign debt relief and simultaneously fund projects in support of Belize’s commitment to place 30 percent of its ocean within biodiversity protection zones. This natural infrastructure is critical to supporting jobs in fisheries and tourism, and food supply for local communities.
  • A $267 million loan guaranty for Smart Rio to support one of the largest urban lighting efficiency and smart city initiatives in the world. In Rio de Janeiro, Smart Rio will modernize public lighting and install smart city infrastructure by replacing or adding 450,000 public lights with LED, adding 5,000 public Wi-Fi access points, connecting 6,000 smart traffic lights, and more.
  • A $9 million loan facility for Ampersand, Africa’s first electric motorcycle company, to expand its operations in Rwanda and Kenya and improve e-mobility and transportation services throughout the continent.

Driving government and international initiatives

Climate change is not only an urgent crisis, but also represents a once-in-a-generation chance to build anew — and to build better. The United States’ vision for climate-smart infrastructure is fundamentally driven by the extraordinary opportunity it presents for economic revitalization and equity — for job creation, healthier communities, and for dismantling racial inequities. We are proud to have joined U.S. government and international initiatives, including:

  • The President’s Emergency Plan for Adaptation and Resilience (PREPARE), which supports developing countries and communities in vulnerable situations around the world in their efforts to adapt to and manage the impacts of climate change.
  • The Global Energy Alliance for People and Planet (GEAPP), which has received $1.5 billion in seed funding from the Rockefeller Foundation, the Ikea Foundation, and the Bezos Earth Fund, and builds on DFC’s innovative work to catalyze finance for distributed renewable energy projects in partnership with the philanthropic finance community.
  • The Forest Investors Club, announced by the Department of State on November 2, 2021, and designed to convene major investors in nature-based solutions for climate change.
  • The Net Zero World Initiative, launched by the U.S. Department of Energy on November 3, 2021: a new partnership between countries working to implement their climate ambition pledges and accelerate transitions to net zero, resilient, and inclusive energy systems. DFC will provide investment and business partnership assistance.
  • A Gender-Lens Climate Investment Toolkit, launched by DFC and our 2X Challenge partners CDC group, EIB, and EBRD on November 9, 2021.

Introducing DFC to the global community

On COP26 Finance Day, we hosted an event introducing DFC to the global community. The event was designed to spotlight the agency’s commitments and approach to mobilizing climate finance in developing economies and included perspectives from leaders in entrepreneurship, development, business, and government. In addition to senior U.S. government officials, the event included perspectives from Damilola Ogunbiyi, CEO of Sustainable Energy for All and Special Representative to the UN Secretary General; Jeanine Cooper, Liberian Minister of Agriculture; Barbara Buchner of the Global Innovation Lab for Climate Finance; Jacqueline Novogratz, CEO of Acumen; Josh Whale, CEO of Ampersand; and Marie-Claire Paiz, Country Director of The Nature Conservancy in Gabon. A recording of the event is available here.

DFC convened numerous meetings with a diverse array of leaders in the private sector, ranging from institutional investors and emerging markets finance leaders to corporate sustainability leaders and entrepreneurs to identify concrete opportunities for partnerships in climate-smart transactional work. The encouraging participation of the private sector at COP26 demonstrated that the private sector is working alongside governments and that capital markets are aligning at scale to preserve a pathway for 1.5 degrees during this decisive decade of climate action. As part of the 2015 Paris climate agreement, almost all the world’s countries pledged to limit global warming to 1.5 degrees above pre-industrial levels to avoid the worst impacts of climate change. It’s promising to see the private sector working to ensure this ambition is met.

While in Glasgow, we also hosted bilateral meetings with our development finance organization counterparts from the UK, Germany, Canada, and the European Union specifically focused on advancing B3W among our key G7 partners. Parties in the bilateral meetings discussed the importance of standardizing approaches to finance, including in the elimination of forced labor from the solar supply chain, greater capital mobilization, as well as platform-building for the purpose of project origination.

Reflecting on our participation as an agency at COP26, it is remarkable how emblematic our work is to demonstrate that climate-smart investing is a critical tool for development — for protecting the hard-fought gains the development community has made over decades and ensuring that communities hardest hit by climate change will have the infrastructure and resources needed to cope with its impacts. Historically marginalized populations are disproportionately bearing the impacts of climate change around the world. Wherever possible, we will aim for our work in mobilizing climate finance to be an engine to drive global justice and advance equity.

By identifying the right opportunities for financing and enabling private sector investment in values-driven and sustainable infrastructure solutions, we aim to take advantage of a rapidly closing window of opportunity to tackle climate change globally and continue supporting sustainable economic growth in developing countries.

U.S. International Development Finance Corporation. Investing in development and advancing U.S. foreign policy. Twitter: @DFCgov