Emerging solutions to drive private investment in climate resilience

This working paper provides emerging insights from the experience of seven Development Finance Institutions (DFIs) in driving private sector investment in climate resilience, and from a workshop on strategies and business models that could help to scale up current efforts.

It examines a subset of projects developed by five multilateral, one bilateral and one national development bank over 2011-2014, in both developed and developing countries. In particular, it looks at the tools and approaches designed by these DFIs to address pre-investment and investment stage barriers holding back private investment in measures that would enhance the resilience of infrastructure, water-intensive industries and agriculture. These are the sectors where DFIs have focused their private sector-oriented interventions.

This paper aims to provide governments, their agencies and DFIs with an overview of the strategies employed so far and to identify opportunities to further scale up private investment in climate resilience.

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• A combination of policies, regulations, and longer-term debt from DFIs can trigger private investments in climate resilience.
• Technical assistance measures helped to stimulate demand for private investment by addressing knowledge gaps. They supported water-dependent businesses to identify opportunities for climate-resilient investments, and engaged local banks in the financing of water-efficient technologies.
• Technical assistance, provision of finance for on-lending, and credit enhancement measures are encouraging local financial institutions and non-bank entities to address the debt funding gaps preventing micro-, SMEs’ from investing in climate-resilience. 

Trabacchi, C. and Mazza, F. (2015). Emerging solutions to drive private investment in climate resilience. A CPI Working Paper. Climate Policy Initiative. June, 2015.