EU and European DFIs launch a major new Global Gateway climate mitigation programme aiming at mobilising €4 billion of forestry sector and other nature-based climate investments in developing and emerging countries
The programme will remove more than eight million tons of CO2 and other greenhouse gases from the planet’s atmosphere as well as restore natural habitats.
Brussels, 2 October 2024 – The European Union and EDFI Management Company, together with European Development Finance Institutions (EDFI) – key implementing partners of the EU Global Gateway’ European Fund for Sustainable Development Plus, or EFSD+ – have joined forces to launch a groundbreaking initiative aimed at providing critical support for ecosystems known as ‘Carbon Sinks’, which absorb carbon dioxide from the atmosphere and are essential in global efforts to curb global warming and mitigate climate change, as agreed upon internationally at CoP15 in Paris.
The EDFI Carbon Sinks Guarantee Programme received an injection of €366 million of EFSD+ support to be managed by the EDFI Management Company (EDFI MC). The support will be used to significantly boost the capacity of EDFIs to support higher investments levels into countries in Sub-Saharan Africa, Americas and Caribbean, Asia, the Middle East, the Pacific, and Western Balkans.
European Commissioner for International Partnerships Jutta Urpilainen said: “
The launch of the EDFI Carbon Sinks is a bold step forward in our commitment to sustainable development and climate action through Global Gateway. This initiative will mobilise critical investments to combat climate change and promote sustainable land management, creating jobs and unlocking economic opportunities in regions that need it most, including EU Forest Partnership countries and the Amazon Basin, while promoting bioeconomy and trade.”
European Commissioner for Neighbourhood and Enlargement Olivér Várhelyi said: “As part of our tailored-made Economic and Investment Plans, today’s signature is another excellent example of our firm commitment to supporting economic inclusion in the Western Balkans and the Eastern Neighbourhood. Through the EFSD+ Guarantee Programme, we will mobilize EUR 4 billion for the forestry sector to mitigate the heavy effect of climate change and another EUR 2 billion for the job creation of micro-, small- and midsize enterprises, particularly in the manufacturing, supply chain, and agriculture sectors. We are dedicated to promoting growth and jobs in our partner countries with all our available tools and instruments, ensuring a long-term commitment to economic inclusion.”
Rodrigo Madrazo Garcia de Lomana, CEO of EDFI MC, lauded the launch: “EDFI Carbon Sinks Programme represents a significant step forward in our mission to support European DFIs, along with private and public co-investors to accelerate sustainable development finance in climate mitigation projects. Global Gateway and its financial arm, the European Fund for Sustainable Development Plus, is a game changer, making its mark on the forestry sector.
“EDFI MC is proud to play a key role in providing EU risk support to the European DFIs and their co-investors who will in turn make capital investments into critical Carbon Sink projects. While EDFI Carbon Sinks is open to all EDFIs, I must commend the vision and leadership of the German, Finnish and Dutch EDFIs – DEG, Finnfund, and FMO – and the support of the European Union to develop such a groundbreaking Global Gateway programme.”
Tobias Dorenkamp, DEG Vice President within the Global Climate Investments team, commented: “EDFIs are among the most active investors in the forestry sector in developing and emerging markets. We have experienced first-hand how the scarcity of equity investments in the sector has prohibited it to reach its growth potential and thus its opportunities to contribute to reaching the SDGs.”
Annette Berendsen, Principal Investment Officer Private Equity at FMO, added: “The EU EFSD+ support for equity and equity-like instruments will enable all participating EDFIs to strengthen the emerging natural capital sector through the significant increase of investments – not only in terms of scale, but also risk profile. That’s why we warmly invite co-investors to engage together with us on this climate journey.”
EDFI Carbon Sinks
The programme aims to prevent and/or reduce environmental degradation, increase protection, sustainable use and restoration of biodiversity, while fostering green and inclusive employment and enhance economic growth to farmers / forest small holders. Special attention will be given to the different countries most in need, in particular least developed countries, low-income countries, countries in a situation of crisis, post-crisis, or fragility, and vulnerability. The EFSD+ supported programme will be complemented by EU Technical Assistance to address environmental, social and governance aspects of supported investees, managed by DEG Impulse – a DEG subsidiary.
Ilkka Norjamäki, Head of Agriculture and Forestry portfolio at Finnfund, concluded: “This programme will mobilise €4 billion of investments into projects in Carbon Sink sub-sectors that include: natural forests and natural marine ecosystems; outgrower schemes & smallholder forestry and algaculture; regenerative agriculture and blue carbon ecosystems; sustainable plantation forestry as well as forest and ocean-related product processing for prolonged carbon storage.
”EDFIs have a strong track record on the climate finance support front. Clients of EDFIs that received support in 2023 alone avoided 15 million tons of GHG emissions, equivalent of 75% of the annual CO2 emissions of Bolivia.”
Commitment to Sustainable Development
EDFI Carbon Sinks will focus on contributing to the following UN Sustainable Development Goals (SDGs):
- SDG 13.2.2 reducing total greenhouse gas emissions per year
- SDG 15.1.1 increasing the share of forests in proportion of total land area
- SDG 14.5.1: enhancing coverage of protected areas in relation to marine areas
- SDG 15.1.2 enhancing the proportion of important sites for terrestrial and freshwater biodiversity that are covered by protected areas, by ecosystem type
The programme will also contribute to increased green and inclusive employment (SDG 8.5.2) and income (SDG 2.3.2) as well as economic and social development and growth (SDG 8.1.1).
Notes to editor:
About EDFI Management Company: EDFI Management Company (EDFI MC) is a multilaterally owned impact asset manager which delivers innovative development finance solutions that enable European DFIs, development banks and private sector investors to increase the scale and impact of their work. The company focuses on business models, technologies and geographies where other investors have not been able to operate at the desired scale given their resources and investment criteria. Learn more at www.edfimc.eu
About EDFI: The Association of European Development Finance Institutions, or EDFI, was established in 1992 to support and promote the work of bilateral Development Finance Institutions (DFIs). With a combined portfolio of €53 billion, including over €15 billion of climate finance, EDFI’s 15 member institutions share a vision of a world where the private sector offers people in low- and middle-income countries opportunities for decent work and improved lives, and where private investment flows are aligned with the Sustainable Development Goals and the Paris Climate Agreement. EDFI’s mission is to promote the joint interests of its members, inform policy, and drive innovation in industry standards. Discover more at www.edfi.eu
EDFI membership: BII (UK), BIO (Belgium), Cofides (Spain), DEG (Germany), Finnfund (Finland), FMO (The Netherlands), IFU (Denmark), Norfund (Norway), OeEB (Austria), Proparco (France), SIFEM (Switzerland), Simest and CDP Development Finance (Italy), SOFID (Portugal), and Swedfund.
