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The Lab launches six new climate finance instruments to accelerate climate action in emerging markets

by Paul Morgan

The Global Innovation Lab for Climate Finance, also known as the Lab, has endorsed six financial instruments that have the potential to unlock USD 795 million for climate action in sectors such as climate resilience, conservation, and housing. The Lab, a public-private investor network and accelerator program, aims to drive private investments into climate change mitigation and adaptation in developing economies.

The 2023 Lab class includes diverse solutions to address climate change and promote sustainable development in emerging economies such as Morocco, Kenya, Brazil, and India. The class has already raised over USD 9 million in funding and grants, with the Catalyst Fund announcing its first close of USD 8.6 million during Africa Climate Week and Social Infra Ventures securing a USD 1.24 million grant from the Green Climate Fund.

The six solutions presented by the Lab class include:

1. Catalyst Climate Resilience Fund: An impact fund and accelerator that supports pre-seed climate adaptation startups that improve the resilience of vulnerable African communities.
2. Climate Resilient Landscape Finance: An innovative and concessional debt facility that addresses challenges to climate-resilient land management in and around African conservation areas.
3. Impact Financing Facility for Climate-Focused Social Enterprises: A credit guarantee mechanism that helps climate-smart social enterprises build a credit history and unlock commercial debt.
4. Lendable Decarbonization Fund: A fund that finances small and medium-sized enterprises’ efforts to decarbonize activities within their supply chain through sustainability-linked loans.
5. Social Infra Ventures: A housing company that aims to develop green and affordable housing in secondary cities in Morocco using a gender-inclusive approach throughout the community planning, design, and financing processes.
6. Low-Carbon Agriculture Transition Mechanism: An initiative that accelerates climate transition in agriculture by offering long-term loans to small and medium-sized farmers in the Brazilian Amazon, Cerrado, and Atlantic Forest regions while guaranteeing a minimum income and technical assistance.

Barbara Buchner, Global Managing Director of Climate Policy Initiative and the Lab’s Secretariat, highlighted that each of these solutions addresses critical barriers to climate investment in emerging economies. The Lab’s class of 2023 demonstrates concrete opportunities for public, private, and philanthropic investors to help move these solutions to market and scale quickly.

The Lab’s financial mechanisms range from concessional debt facilities to impact funds and accelerators. Following endorsement, the Lab solutions will continue fundraising, building on the USD 3.5 billion mobilized by previous Lab classes.

The Lab will host a virtual Demo Day on October 19 to showcase this year’s class to potential investors, funders, and implementation partners.

The Lab’s mission to develop innovative financial mechanisms for climate finance in developing economies is supported by Bloomberg Philanthropies and the governments of Canada, Germany, the United Kingdom, and the United States. Climate Policy Initiative serves as the Lab’s Secretariat.

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