Building private investment opportunities in climate adaptation and resilience
Development and launch of the first private sector investment strategy for climate adaptation and resilience.
NDF has approved financing of EUR 500,000 to partly finance the preparation activities and establishment of the Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT). The Lightsmith Group, a US-based investment firm, has developed the concept and will be in charge of executing and managing CRAFT.
CRAFT is the first global commercial investment vehicle dedicated to expanding the availability of technologies and solutions for climate adaptation and resilience in developing and developed countries. The targeted investment portfolio will include companies with resilience intelligence and resilience products and services that help private and public sector agents in assessing and managing the physical risks and impacts of climate change.
A blended structure will enable the participation of a diverse set of investors, including concessional and commercial investors. CRAFT includes two separate investment windows: one for developing countries and another for developed countries. A separate Technical Assistance Facility strengthens the support to investee companies in expanding technological capacity and solutions in developing countries.
The project is fully in line with the NDF Climate Change Mandate and Strategy. By supporting and leveraging financing for an innovative initiative, focusing on the active engagement of the private sector and mainstreaming the business case of adaptation and resilience intelligence and products, NDF contributes directly to closing the so-called adaptation gap in developing countries.
In addition to providing growth capital and strategic support to private sector companies, CRAFT’s investment activities are expected to impact positively on the supply and availability of adaptation solutions and services in developing countries. The expected impacts are not limited to adaptation; significant impacts in mitigation are also expected, given the high complementarity between adaptation and mitigation action.
NDF will support the Lightsmith Group in bringing the CRAFT concept into execution, by leveraging the extensive experience that NDF has built over the years in the field. “By supporting CRAFT in the early-stage phase, NDF has the opportunity to consolidate its leading role in the context of building the business case of climate adaption and resilience and private sector engagement in developing countries,” said Isabel Leroux, Country Program Manager at NDF.