Zurich August 16, 2023 - A flagship climate fund managed by responsAbility is propelling India's climate transformation through strategic investments in four prominent financial institutions (FIs), amounting to USD 80 million in new loan agreements signed in June 2023. The Fund’s robust engagement in India is intended to boost the country’s climate change mitigation capabilities, given India's dual role as one of the world's most rapidly advancing economies and a major contributor to global CO2 emissions. The pursuit of climate-positive investments within this context carries far-reaching implications for the global community.
Central to this endeavour is India's vibrant Micro, Small, and Medium Enterprises (MSMEs) sector, a cornerstone of economic growth and employment generation. This sector not only fuels economic vitality but also holds the potential for substantial reductions in CO2 emissions. Unlocking this potential hinges on the role of Non-Banking Financial Institutions (NBFIs), which serve as catalysts by empowering underserved segments of society, including rural households.
The Fund’s versatile approach accommodates FIs at varying points on their climate journey. This inclusiveness is evident in the onboarding of new partner FIs like Clix Capital, as well as existing investees from other responsAbility managed funds like Kinara Capital and Annapurna Finance, which have a strong history in Financial Inclusion but limited to no experience in Climate Finance. Additionally, and supportive of its long-term investment horizon, the Fund was proud to have renewed its partnership with Electronica Finance, a partner of the Fund since 2019. "The diversity of the Indian market is addressed through the Fund’s customized approach, which aligns technical expertise with each FI’s unique market focus and nurtures a sustainable climate transition on a significant scale”, says Vani Mehta, Investment Officer, Climate Finance at responsAbility who led the four transactions.
Kinara Capital, supported by a USD 20 million facility, aims to spur the adoption of climate-positive technologies within the MSME realm, with a focus on retailers and distributors of renewable energy and energy efficiency equipment.
Annapurna Finance, somewhat unique in the climate fund’s portfolio with its focus on micro-borrowers, seeks to facilitate the adoption of renewable energy and energy-efficient solutions among small-scale entrepreneurs and households with the USD 25 million facility.
The USD 20 million facility signed with Clix Capital will unlock tailored climate-positive investment across various sectors, with a focus on radiology equipment for peri-urban clinics and solar rooftop for K-12 schools, two segments where Clix is among the market leaders.
Electronica Finance, a long-standing partner of the climate fund, will use the new USD 15m facility to continue scaling its financing of climate-positive technologies across various manufacturing-related sectors focusing on MSME customers, supporting India’s emergence as an industrial powerhouse.
The intricacies of launching climate-focused initiatives often pose unique challenges for traditional lenders, especially in the MSME segment. A critical component of responsAbility’s offering is the bespoke support provided to its partner FIs via a combination of in-house and external advisory and support teams. Regardless of the FI’s client or market segment, responsAbility’s in-house team of Climate Advisory Specialists can support with tailored programs encompassing the entire spectrum of climate financing. Sathish Dhanapal, Global Head of Climate Advisory Specialists at responsAbility notes: “The substantial deployment reflects the profound trust in responsAbility’s ability to accompany our FIs through all stages of their climate journey. We look forward to taking on the challenge and great opportunity in onboarding our new partners onto their Climate Finance journeys.”
Notably, complementing its support in developing climate-positive business activities, the Fund also helps its partners manage environmental and social (E&S) risks in line with international best practices. Its commitment to this was seen most recently in March 2023 in Mumbai, where responsAbility hosted 28 participants from 16 partner institutions for an interactive workshop dedicated to improving management of E&S risks, sponsored by the Fund’s technical assistance facility.
David Diaz Formidoni, Head of Financial Institution Investments, Climate Finance at responsAbility says ”The close collaboration across our investment, advisory and technical assistance teams – the bedrock of what we call our “Partnership Model” – is what sets our climate offering apart. By deploying tailored, unwavering support to these partner FIs, we are happy to play a role in propelling India toward its climate objectives.”
About responsAbility Investments AG responsAbility Investments AG is a leading impact asset manager specializing in private market investments across three investment themes to directly contribute to the United Nations Sustainable Development Goals (SDGs): Financial Inclusion, to finance the growth of Micro & SMEs; Climate Finance, to contribute to a net zero pathway; and Sustainable Food, to sustainably feed an ever-growing population. All responsAbility investment solutions target specific measurable impact alongside market returns. Since its inception in 2003, responsAbility has deployed over USD 14 billion in impact investments. With over 270 employees collaborating across eight offices, as of 1 October 2023 the company manages USD 4.7 billion in assets across approximately 270 portfolio companies in 72 countries. Since 2022 responsAbility is part of M&G plc, the international savings, and investments business, and contributes to enhancing M&G’s capabilities in impact investing.
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