The UN Permanent missions of Fiji, Jamaica and Rwanda co-hosted a virtual briefing to over 100 representatives of governments and other partners, highlighting the SubNational Climate Fund (SnCF) funded by the Green Climate Fund (GCF).

The SnCF is an innovative climate finance partnership between GCF, Pegasus Capital Partners, IUCN, R20, BNP Paribas and the Gold Standard aimed at making USD 5 million – USD 75 million equity investments into low-emission, climate resilient solutions in the under-served municipal and sub-national markets across 42 developing countries. GCF approved a USD 150 million first loss equity investment into the SnCF that will substantially de-risk and crowd-in investments from private and institutional sources.   

Ambassador Rugwabiza, Permanent Representative of Rwanda opened the meeting highlighting the importance of climate finance to support developing countries in raising and realising climate ambitions. “Every meeting on climate I have attended over the last number of years has emphasized climate finance for developing countries”, she said. She highlighted the opportunity to discuss public-private finance to support developing countries who are playing an active role in trying to limit global warming to 1.5 degrees Celsius. She also noted the partnerships critical in the initiative – GCF, Pegasus, IUCN, BNP Paribas, R20 and fold Standard – emphasizing the power of partnership to achieve the breakthroughs on climate investments. 

Ambassador Prasad, Permanent Representative of Fiji noted the importance of the USD 100 billion commitment to support climate action in developing countries which could be further catalyzed and leveraged to generate more resources. “The GCF is doing fantastically in leveraging and catalyzing finances that are on the table to open up other resources,” he said. While additional financing is important, [the SnCF Fund] is a helpful and important start to promote transformative climate action.

Ambassador Rattray, Permanent Representative of Jamaica welcomed the sub-national focus for the SnCF, highlighting the importance of blended finance models that work for all countries. He emphasized the importance of GCF as the largest global climate fund to support public and private partnerships to close the financing gap. “The financing gap just cannot be closed or bridged solely by reliance on public funds, so the private sector has an indispensable role to play in closing this gap through exploring new and innovative mechanisms for finance to reach developing countries especially the poor and vulnerable communities,” he said.

Noting the climate crisis, Selwin Hart, Special Adviser and Assistant Secretary-General for Climate Action reiterated the UN Secretary General’s call for COP26 to deliver breakthroughs on adaptation and resilience - traditionally seen as the neglected half of the climate equation. He outlined the actions called by the Secretary General including a significant increase public finance – as it plays a catalytic role – as well as calling on both public and private finance to direct at least 50% of climate finance towards adaptation and resilience (at the moment less than 20% is directed to this). He also noted the Secretary General’s call for donors, MDBs and funds like GCF to ease access for SIDS, LDCs and other vulnerable countries and countries to integrate climate risk across budgetary and decision-making landscape. “These commitments are realistic and can be achieved by COP26”, concluded Hart. 

Babita Bisht, GCF Deputy Director for External Affairs provided an update on the GCF, noting the rapid growth in its portfolio and strong track record since becoming operational just over five years ago. “The SnCF is a partnership that highlights the unique features of GCF and our ability to work with different partners to drive transformative climate action”, she said. Tony Clamp, the acting Director of GCF’s Private Sector Facility (PSF) announced the signing of the Fiduciary Agreement with Pegasus that morning and IUCN last week – a critical milestone in moving toward implementation of the initiative. “The hard work begins now, said Clamp. 

Craig Cogut, Founder and Chairman of Pegasus outlined the catalytic potential and unique attributes of the SnCF fund, noting that sub-national climate projects are critical as they are where the action is, and the money has not yetflowed. “Municipal level investments are the biggest missing piece of scaling up climate resilient development”, he said. Although the fund will allow for investments into distributed energy and small scale-renewable energy projects, it will be very focused on ‘less glamourous’ municipal level investments typically overlooked by large-scale climate investors, including municipal waste, agriculture waste, wastewater management, regenerative agriculture, and nature-based solutions (NBS). 

The scale and multi-country scope of the fund will also allow the consortium of partners to deploy novel business models and leverage innovative foreign and local climate technologies across the SnCF portfolio. Cogut remarked that he was “thrilled to announce our partnership with GCF to anchor and provide the concessional capital tranche for the SnCF. We believe SnCF's blended finance approach, together with the strength of our consortium partners, will allow us to attract and deploy private capital to finance climate resilient solutions and scale innovation in key sectors."

Patrick Scheurle, Managing Partner SNCF said, “The SnCF is a game changing initiative with a game changing institution like GCF which will have an important contribution.” Addressing the issue of impact, he noted that the collaboration with the Gold Standard would be critical for the impact certification at the project and portfolio level. For investors, this is important because they get the verification and assurance of their investment.

Stewart Maginnis, Global Director of the Nature-based Solutions Group at IUCN said, “Not only do we have a moral obligation to nature, but nature is a functioning ecosystem which can deliver real benefits to society”. The IUCN support to the SnCF project covers 3 areas of intervention - project development; capacity building and monitoring and reporting to generate measurable impact. 

It was noted by many of the speakers that the SnCF is the first of its kind initiative. Its approach to mobilizing climate finance at scale through dozens of small-scale investments at the sub-national level is unique. By demonstrating the potential of combining a blended finance structure with a municipal scale approach, the backers of the initiative have ambitions of replicating its model with the launch of similar sectoral or regionally focused sub-national funds in the future.

Comments and questions from the floor from representatives of El Salvador, Indonesia, Guatemala, UNCDF among others noted the importance of climate finance and the role of the GCF in supporting developing countries access climate finance including developing and financing bankable projects. Participants also highlighted the challenge of COVID-19 and the implications to address climate change. The importance of innovative blended finance models that could be scaled up and regional approaches that could be replicated was also highlighted.