NDF - Financing for climate change and development projects

Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT) [C114]

Photo: Mon Zamora
Photo: Plan Denmark
Photo: Aage Jørgensen
10.12.2018
The Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT) is the first commercial investment vehicle dedicated to expanding globally the availability of technologies and solutions for climate change adaptation and climate resilience.

Multiple regions
Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT)
Ref. C114

Implementing Agency: The Lightsmith Group LLC
NDF financing: EUR 10 million
Project period: 2019 - 2031

Currently, governments, businesses and consumers are spending substantial amounts to manage different types of risks and impacts due to climate and weather events. Weather volatility, physical damage and disruption, and resource scarcity are affecting economies and societies at an increasing pace. Due to climate change, these risks and impacts are being amplified and becoming more critical.

The founding premise of the CRAFT concept, developed by The Lightsmith Group, is that globally there are many companies offering technologies, products and services to assess and manage these risks and impacts, so-called “climate resilience solutions”. Lightsmith has identified 20 market segments with companies offering climate resilience solutions, including risk and weather analytics, agricultural analytics, catastrophe risk modelling, and distributed water solutions, to name a few. These market segments are already fast-growing with annual growth rates of 20-30%, and global spending in these areas is expected to double from current levels to over USD 275 billion per year by 2022.

CRAFT will make growth equity investments in selected private companies with climate resilience solutions to address the impacts and risks being increased by climate change. While CRAFT’s investment strategy is global, at least two-thirds of investments will be directed to developing countries, where much of the need - and the growth - is found. CRAFT’s strategy emphasises rigorous impact measurement and monitoring, best practice management of environmental, social and governance issues, and gender mainstreaming in all activities.

CRAFT is structured as a private equity fund with a blended structure, which includes a layer of concessional equity, a layer of commercial equity, and a complementary Technical Assistance (TA) Facility. The TA Facility will provide grant financing to support the application of technologies and solutions of CRAFT’s portfolio companies in lower income countries.

Expected outcomes

  • A diversified investment portfolio in climate resilience solutions and demonstration effect of profitable private investments in climate resilience.
  • Outcomes will be tracked in the context of Adaptation and Climate Resilience, Climate Mitigation Co-benefits, Gender Equality, Biodiversity and Economic Development.
  • CRAFT is expected to contribute to the following SDGs: Zero Hunger (SDG 2), Clean Water and Sanitation (SDG 6), Industry, Innovation and Infrastructure (SDG 9), Sustainable Cities and Communities (SDG 11) and Climate Action (SDG 13).

 

Financing
The NDF contribution includes a EUR 8.5 million concessional equity commitment to investment activities in developing countries and a EUR 1.5 million grant commitment to the TA Facility. NDF has financed, in partnership with the Global Environment Facility, the preparation activities of CRAFT [NDF C106].

NDF Contact
Program Manager Isabel Leroux
isabel.leroux@ndf.fi