The Sub national Climate Fund
R20 has teamed up with Pegasus Capital Advisors, a leading global impact investment manager, to create the Sub national Climate Fund (SnCF).
At its core, SnCF is a fund structured to invest in a portfolio of projects that will provide water and sanitation; restorative agriculture/aquaculture; urban development solutions; waste optimization; renewable energy generation and energy efficiency retrofits to cities and regions in Developing and Least Developed Countries.
Officially announced and presented, along with R20’s value chain approach, at COP23, in Bonn, SnCF is a first-of-its-kind initiative to address the funding gap for infrastructure projects of between $5-75 million in capital expenditure (CAPEX). Projects of this size, conceived and developed at the sub-national level, have the greatest potential to accelerate the reaching of the Sustainable Development Goals (SDGs) and the objectives under the Paris climate Agreement. However, considered too small for institutional investors, too large for sub-nationals and NGOs to finance or too risky (not bankable) for private investors, they are currently least-served by existing funding and development vehicles.
To bridge this gap, SnCF “blends finance” from philanthropists, foundations, governments, development finance institutions and private investors, and deploys a unique ecosystem that fast-tracks the identification, development and delivery of a portfolio of bankable projects (i.e. the R20 value chain).
SnCF expects to invest in up to 30 projects and mobilize between US$ 750 million and a maximum of US$ 5 billion of climate finance in the form of co-investment in projects. In so doing, the fund expects to significantly contribute to the SDGs by reducing up to 4 million tons of CO2e per year (SDG13), creating up to 20 thousand jobs (SDG8), and bringing better services (SDG7 & 11) to more than 17 million people. To back up the environmental, social and economic claims for each project, R20 and Pegasus are working to make SnCF Fund to be fully certified by Gold Standard for the Global Goals, a next generation standard designed to accelerate progress toward the Paris Climate Agreement and the SDGs.
The SnCF has developed and seeks to implement a dedicated Environmental and Social Management System (ESMS). As to disclosure requirements of the GCF, this ESMS is being published for consultation in advance of a financing decision by the GCF.
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