Green Climate Fund and Sida in new partnership to mobilise private climate finance

The Green Climate Fund and the Swedish International Development Cooperation Agency (Sida) have signed a Memorandum of Understanding to scale up the use of guarantees to mobilise private finance for climate action in developing countries. 

The partnership brings together GCF’s catalytic capital and climate investment pipeline with Sida’s guarantees, backed by the Government of Sweden. It aims to attract commercial lenders, improve financing terms for climate investments, and make scarce public climate finance go further by reducing investment risks. 

Amer Baig, GCF Chief Investment Officer said:

“Public money alone will never match the scale of climate investment developing countries need. Working with Sweden, GCF aims to combine its catalytic capital with Sida's sovereign-backed guarantees so that it brings in commercial lenders. Sweden has backed GCF for a long time; this is a new way of working together.”

Line Vikström Rosvall, Head of Sida’s Climate & Environment Unit said:

“Risk is a barrier that stops private climate investments from flowing to developing countries, where it is most needed. Guarantees are a key tool to address that barrier and help bridge the climate finance gap in a context of pressing climate needs and limited public resources.”

Mobilising private capital is central to GCF’s work. The Fund uses flexible, concessional finance to reduce risks and unlock investment in markets that commercial investors may otherwise overlook. Its USD 7.18 billion private sector portfolio has mobilised USD 32.15 billion in additional co-financing, equivalent to USD 4.5 for every USD 1 invested. About 29 per cent of the private sector portfolio, worth USD 2.1 billion, is directed towards Least Developed Countries and Small Island Developing States, helping channel investment to some of the most underserved markets.