A portfolio of nearly USD 600 m is a clear sign of success
As we celebrate the Global Climate Partnership Fund’s 10th anniversary, we are featuring personalities who brought this Fund into being and have shaped it over the past decade. Here is Claudia Loy, long-time Chair of GCPF’s Investment Committee, on how the Fund’s portfolio has evolved over the past decade and what caused this successful development.
Claudia Loy has been a member of the GCPF Investment Committee since April 2010. Until her retirement in October 2019 she worked for German development bank KfW in various functions, particularly with a sectoral focus on energy, and headed the KfW Development Bank’s Center for Environmental and Social Sustainability.
How has the GCPF portfolio evolved since the Fund’s inception?
In the beginning, the major objective was to demonstrate that GCPF would be able to successfully deploy the available funds in a relatively short time, which is why the Fund opted to work with relatively large banks. A few years down the line and looking to achieve stronger additionality, the Fund’s investment strategy shifted towards assisting small and mid-size partner institutions to build up their green lending portfolios, not only through funding, but also by using Technical Assistance to build up expertise. More recently still, GCPF has substantially increased its exposure to direct investments in climate-positive projects. A portfolio of nearly USD 600 m, 37 partner institutions and extended commitments by public and private investors clearly demonstrate GCPF’s successful development over these past ten years.
What skills have been acquired in the process?
Compliance of the portfolio with high sustainability standards is of prime importance for all of the Fund’s stakeholders, prompting GCPF to systematically improve its CO2 accounting and monitoring as well as its Environmental and Social (E&S) Management System to comply with international standards.
Has awareness of climate finance changed over the years?
Absolutely. Financial commitments by the international donor community have substantially increased and also privately financed institutions across the world are increasingly focusing on sustainable finance. Changes in the regulatory environment in many countries now also provide the financial and legal incentives to invest in renewable energy and energy efficiency projects.
How has Technical Assistance helped to create opportunities?
The number of partner institutions which are willing and able to engage in climate finance has dramatically increased over the past years. To a great extent this is due to GCPF’s providing Technical Assistance to help identify the market potential for climate finance in a number of countries and assist interested partner institutions to tap this potential. In addition, partner institutions value being part of GCPF’s Green Lending community which fosters peer-to-peer knowledge sharing across the network.
Where do you see potential for GCPF’s further development?
In light of the looming international debt crisis caused by the increasing over-indebtedness of many countries in foreign currencies, I think it would be worthwhile to closely evaluate the potential to provide local currency lending in cases where hedging is not available.