Green Finance
GOPA AFC FINANCIAL SECTOR DEVELOPMENT DEPARTMENT
Your partner in facilitating green investments around the world
The importance of green finance
Impacts related to climate change have no borders. People need financial security as well as resilient working and living environments. That is why climate change mitigation and environmental protection are among the most pressing tasks when it comes to development cooperation. There is an opportunity to deliver improved social, environmental and economic outcomes for people, including support to job creation and more resilient communities, as well as a cleaner and healthier environment. Investments in climate change mitigation and adaptation measures are essential; factors such as strong domestic financial markets and access to green finance play a key role and contribute to the “greening” of economic activities and living conditions worldwide.
Another important factor is the ability of financial intermediaries to fully and duly assess and address climate risks of investments and to provide a transparent disclosure of financing green assets, including their emissions and taxonomy alignment, as well as overall reporting on Environmental, Social and Governance (ESG) according to standards agreed upon. In our view, a proper and transparent disclosure of financing green projects is fundamental. By disclosing and validating financing of green projects, more finance will flow into those investments, and green washing can be avoided.
How we shape green finance
The Financial Sector Development department of GOPA AFC (AFC-FSD) provides an array of advisory services to financial intermediaries, in the field of green and energy nexus finance.
AFC-FSD advises financial institutions on how to establish and successfully develop their own “greening” strategy. That strategy influences all financial products and services and ensures that they are not only commercially viable, but also engage in climate-friendly activities, stimulate economically healthy businesses and responsible practices as well as improve living conditions.
We help financial institutions across the globe with the development, implementation, and promotion of innovative financial products, which support a smooth transition from a conventional to a sustainable, climate resilient economy. AFC-FSD has the capacity and programmes to train and coach staff on day-today operations, design and support awareness raising on climate risks, and demonstrate opportunities and benefits of green and environmentally sound investments to financial institutions and their clients.
We support financial institutions to identify, evaluate and manage environmental and social risks that are generated by the activities and projects they finance. In addition, AFC-FSD assists in performing Environmental and Social Due Diligence and in establishing an Environmental and Social Management System at the financial institution.
Our experience in climate finance further expands to developing green and energy-nexus loan products, including energy and resource efficiency, as well as small-scale renewable energy financing for micro, small and medium-sized enterprises (MSMEs) and households.
In addition, we support companies and SMEs– potential and current clients of financial intermediaries– to recognize opportunities, evaluate benefits of green investments, and prepare bankable loan applications for further negotiations with banks.
Snapshot of selected projects
ENERGY EFFICIENT HOUSING FINANCE
Armenia, Kyrgyzstan and India
FINANCE FOR THE PROTECTION OF NATURAL RESOURCES
Columbia Uganda Pakistan
BIODIVERSITY PROMOTING FINANCE
RENEWABLE ENERGY INVESTMENTS
GREEN CREDIT LINE
Philippines
INCLUSIVE GREEN FINANCE POLICY
Papua New Guinea
In Uganda, we facilitated biodiversity-friendly financing investments in the private sector and developed a climate proof appraisal tool, which helps banks to assess potential borrowers on their businesses’ needs and procedures regarding greening, conservation, and biodiversity.
In Colombia, we contributed to the development of financing mechanisms for the sustainable management of natural resources (energy – nexus).
We support the Pakistan Microfinance Investment Company to facilitate small-scale renewable energy investments in Solar Home Systems through partner microfinance institutions, develop respective local facilities,
enhance capabilities of service providers and staff of financial intermediaries, and improve access to energy for households in poor grid and off-grid locations in the rural areas of Pakistan.
We developed the framework foundations for an inclusive green finance policy (IGFP) for the financial sector of Papua New Guinea, in partnership with the Bank of Papua New Guinea and the Centre for Excellence in Financial Inclusion (CEFI). The 1st edition of PNG’s Inclusive and Green Taxonomy will be further developed, and should be used as catalyst and policy guide in transitioning from a conventional to a sustainable financial system, by establishing new structures and adapting existing ones, to drive the future growth and green inclusion, such as renewable energy and energy efficiency, climate-smart agriculture, green cities, and greenpreneurs.
We support financial institutions on a global scale to manage their environmental and social risks of lending activities and provide trainings in climate risk management and green lending opportunities, highlighting the importance of climate-related financial disclosure.
We assisted the Land Bank of the Philippines in establishing a credit line for energy efficiency and climate protection. As a result, the bank benefited from enhanced staff and operational capacity. It is now able to effectively manage its green lending activities, identify energy saving potential amongst clients, and attract potential clients for energy efficiency and renewable energy loans.
For various energy-efficient housing finance programmes in Armenia, Kyrgyzstan and India, our experts designed tailored loan products for financial institutions, enhanced the capacity of their loan officers, facilitated lending operations, and promoted energy efficiency credits among the public.
We developed a Climate Risk Finance e-learning course (accessible via the QR code) for everyone who is interested.
In focus – selected green finance projects
Housing finance in Armenia
In Armenia’s urban economy, buildings are one of the major sources of greenhouse gas emissions. Thanks to the “Im Taniq” housing finance programme activities, the construction of energy-efficient districts has increased, which also contributes to the demand for financing of energy-efficient mortgage. AFC-FSD implemented the programme in cooperation with the National Mortgage Company and the German-Armenian Fund (2021-2022).
The EUR 20 million financing was provided within the framework of the German-Armenian intergovernmental cooperation through the KfW Development Bank.
14 commercial banks and credit organizations participated in the programme. Loans at affordable interest rates were provided to 643 borrowers for the purchase and renovation
of apartments and construction of family houses. Nearly 40% of the loan amount was allocated to energy efficient housing investments (purchase or renovation), which was one of the most important components of the programme.
During the programme an energy efficiency standard for newly constructed buildings was established and an innovative web-based tool was developed (accessible via the QR code) allowing for the assessment of energy efficient projects and measuring of the climate impact of the investments. Apart from that, 351 bank employees and National Mortgage Company staff were trained in 39 various capacity building events, including assessment of energy efficient housing projects.
Within the frames of the program, we have established an energy efficiency standard for newly constructed buildings. In cooperation with several partners, including UNDP, we managed to persuade realestate developers to obtain energy passports for new construction projects. I am glad that the construction of energy-efficient districts and the demand for energy-efficient apartments and houses have increased in our country.
Inclusive green finance policy for Papua New Guinea
During 2021 until 2022, on behalf of the Global Green Growth Institute (GGGI), GOPA AFC has developed the framework foundations for an inclusive green finance policy (IGFP) for the financial sector of Papua New Guinea, in partnership with the Bank of Papua New Guinea and the Centre for Excellence in Financial Inclusion (CEFI).
The IGFP was designed for investors, lenders, and other financial sector participants to identify, track, monitor, and demonstrate the scope and volume of their green and inclusive financial flows, whether it is in the form of a loan, equity, guarantee, or other financial instrument. The IGFP is supported by a roadmap, which sets out practical
action steps necessary to implement an IGFP and taxonomy in Papua New Guinea.
In the process of developing the IGFP, IGFP committee members discussed the key findings of a pilot application of the green finance taxonomy— with strong emphasis on financial inclusion— and provided strategic guidance on its further development. Additionally, various technical working groups were established, with representatives from financial intermediaries, authorities, industrial associations and donors, to steer the further IGFP development at operational level.
Edmond Vardumyan, CEO, National Mortgage Company, Armenia, November 2022
Environmental & social risk capacity building in East Africa
From 2014 until 2020, we successfully implemented the EUR 10 million “Technical Assistance Programme to various EIB Financial Sector Operations in East and Central Africa”.
An essential part of the project was the promotion of the European Investment Bank’s (EIB) environmental and social risk management (ESRM) principles by screening allocation requests for compliance and eligibility, promoting client protection principles, and providing specialized trainings and capacity building interventions. 22 trainings and six capacity building activities were organized on the topic of ESRM, for 557 bank staff of 13 financial institutions.
The trainings on ESRM included in-depth reviews of incorporating specific standards, such as the EIB’s and
International Finance Corporation’s Environmental and Social Sustainability Performance Standards, to help mitigate environmental and social risks. In the workshops we focused on building awareness about the strategic and commercial relevance of environmental and social issues and risks for the banks and their clients. Interactive exercises, drawing on experience from the banks’ business operations, focused on simulating how to practically implement ESRM policies and procedures, from both a client relationship and project investment perspective. The objectives were among others to enable the bank staff to engage proactively with clients, with regard to environmental and social risks and opportunities, and to reflect on ethical and responsible finance considerations.
Since 2014, we received technical assistance in the form of trainings, capacity building and MSME client trainings. We acquired expert knowledge and technical skills aimed at the development of our staff and clients, which also enhanced the bank’s performance in 2019/2020 and helped reduce considerably our NonPerforming Loan Portfolio over time.
Climate finance, resilience & financing for biodiversity –our e-learning course
We developed an e-learning course on Climate Finance, Resilience & Financing for Biodiversity (accessible via the QR code). The course can be flexibly structured and studied at own pace; in total it takes about 8-12 hours.
Since 2021, GOPA AFC has been supporting the East African Development Bank and KfW in onlending climate smart biodiversity finance to the private sector in Uganda. As part of the technical assistance, we trained bank staff using our newly developed e-learning course.
“The E-learning, course enhanced not only our understanding, but also our appreciation of the aspects related to the challenges emanating from climatic change and continued biodiversity degradation. The course further stimulated our and my awareness, of financial players’ critical role in regard to actively participating in interventions geared towards environmental (biodiversity) conservation, so as not only to guarantee sustainability of communities, but also their (Financial players) future survival.”
Kayita Dan Davis Lule, Agriculture Lending Manager, Finance Trust Bank, Uganda, October 2022
Elijah Kariuki, Head of Human Resources, Family Bank Kenya, April 2020
Increasing the energy independence of horticultural companies in Moldova
The Republic of Moldova imports all of its energy resources. This poses a risk to energy security and has a negative impact on the business environment. Due to the COVID-19 pandemic and Russia’s attack on Ukraine, energy prices have soared. In this context, horticultural companies are increasingly interested in investments into renewable electricity generation to reduce their production costs and dependence on external energy sources.
Case story
As a consequence, the EIB offered its Fruit Garden of Moldova project, implemented by AFC-FSD through 2018-2022, to finance such investments. AFC-FSD experts advised horticultural companies on the assessment of possible energy and resource savings, the selection of the most feasible technology, and supported them in applying for bank loans.
Peasant farmer Gheorghe Mereacre, from Costești village, grows table grapes on 6 ha and operates a cold store with a capacity of 350 tons. His electricity bill amounted to MDL 150,000 (~EUR 7,500) for about 100,000 kW. Not only is Gheorghe afraid of price increases, but also of the danger of power cuts which may lead to a complete damage of produce kept in the cold store. Despite the insecurities, following Russia’s war in Ukraine, Gheorghe applied for an EIB-financed investment loan for MDL 1.4 million (~EUR 70,000) through the Fruit Garden of Moldova project, to install a 113 kWp photovoltaic system. The application process was swift and in April 2022 the system was installed on the roof of the cold store – just in time for Gheorghe’s harvest that year.
Benefitting from our consulting group’s synergies
The photovoltaic system allows me to cut costs especially now when many other inputs got so much more expensive. At the end of the season, more money is left for the development of the enterprise and for investments to package grapes according to the requirements of the EU retail market.
As a member of GOPA Consulting Group (GCG), we benefit from being associated to Germany's largest group of consulting firms in development cooperation, which combines various technical specialists under one roof. Within the GCG, AFC-FSD is the competency centre for financial sector development activities.
Since 2007, when GOPA AFC became a member of the GCG, we have benefited from our competitive advantage of having close working relationships with our sister companies such as: GOPA Infra and their expertise in infrastructure development; GOPA Intec, excelling in energy efficiency and renewable energy technologies; or GOPA Worldwide, which actively tackles climate change and depletion of natural resources.
An outstanding example of productive synergies in the GCG is the “Green Climate Fund Readiness Support Programme” which was implemented by several GCG companies. AFC-FSD provided essential technical inputs in climate-resilient agriculture and in preparing project pipelines, by screening and evaluating investment proposals.
Gheorghe Mereacre, Peasant farm owner, Moldova, July 2022
GOPA AFC’s Environmental Management System
In implementing the Environmental Management System, GOPA AFC has achieved certification of its Environmental Management System Certificate according to ISO 14001, in November 2020.
Deriving from GOPA AFC's environmental policy, the following environmental objectives were defined, to further reduce our environmental footprint:
Reduction of CO₂-emissions from flights
of energy consumption
of copy/ printer paper consumption
waste separation
of water consumption
Striving towards purchasing more regional, sustainable and ecofriendly office material
We keep working on further avoiding and reducing emissions whenever and wherever possible to reduce our corporate carbon footprint even more.
Our in-house green finance experts
Elena Yunatska joined AFC-FSD in 2021. She has above 20 years of experience in the management of international TA projects, and over 10 years in green finance. Ms Yunatska is a certified green finance expert and an experienced trainer. She conceptualized and monitored implementation of various TA assignments in green finance with focus on access to finance, capacity building, impact assessments, research, sustainability of financial markets, awareness raising, visibility of impact, etc. In addition to Ukrainian– her mother tongue– she is fluent in English, German and Russian.
Contact: elena.yunatska@gopa-afc.de
Alexis Nyamugira joined AFC-FSD in 2021. He has over 5 years of experience in advisory and implementation of technical assistance, including green and biodiversity finance initiatives. Mr Nyamugira has a strong track record in project management, monitoring and evaluation, and research on various topics related to financial sector development. Prior to joining GOPA AFC, he worked at the European Investment Bank in Luxembourg. He has also worked as a research fellow and independent consultant in international development, focusing on financial inclusion in the Democratic Republic of Congo and Kenya. Mr Nyamugira is fluent in French, English, and Swahili.
Contact: Alexis.Nyamugira@gopa-afc.de
GOPA AFC’s specialised FSD team was established over 28 years ago. Within in the GOPA Consulting Group, AFC-FSD is the competency centre for financial sector development.
Around the globe, AFC-FSD develops tailor-made credit and saving products and establishes appropriate regulation and supervision systems. We advise financial institutions— including commercial and central banks, mortgage companies, microfinance and apex institutions— as well as MSMEs and smallholder farmers.
FSD project countries in 2022
FINANCIAL SECTOR DEVELOPMENT
In the year of 2022, our ten, highly specialised, AFC-FSD project managers have been implementing 37 projects for twelve clients (among others ADB, AFI, EIB, EU, GIZ, IFAD, KfW, WB), in 29 countries, working with 286 consultants. Learn more about our project activities on LinkedIn by following #AFCFinDev. info@gopa-afc.de
Mozambique
