Letter from the ExCo of the Fund Manager
In May 2019 a consortium led by FMO with consortium partners SNV, WWF and CFM was awarded the management of the Dutch Fund for Climate and Development – the DFCD. With the national launch in The Hague and the international launch in Madrid the fund is open for business.
The fund has come to life in a year in which the strain on global multilateral climate action increased. The 2019 Madrid climate conference ended in an agreement to disagree and to postpone a future consensus. Despite scientific reports that the window of opportunity for effective climate action is closing, nations have not been able to muster the strength to act as one community in charge of saving the global commons.
At the time of publication of this report, these concerns are compounded by the COVID-19 pandemic in the first months of 2020. The expectation is that the world will face the worst recession since the Great Depression, due to the abrupt halt in economic activity in the last months. More than ever, there is a need for channels such as the FMO-managed state funds to play a counter-cyclical role and help address the global challenges of inequality and climate change.
Against this background the DFCD aims to help local communities seize opportunities, by financing meaningful climate action that increases the resilience of households and businesses. The DFCD responds to the urgent need to increase investment in climate adaptation. Between now and 2030, a massive USD 140 to USD 300 billion per annum is needed in developing countries to address the costs of adaptation. A figure that will steadily increase, especially if coordinated global climate action falls short of the international commitment to keep global warming well below 2 degrees.
With a pipeline of projects aligned with the ambitions of the fund, business activities have started in the second half of 2019. Four pilot landscapes – in Paraguay, Kenya, Zambia and Vietnam - for the DFCD Origination Facility were identified by the consortium partners. Technical Assistance (TA) by WWF and SNV via first stage project identification and guidance within these landscapes, has begun. The Land-Use and Water Facilities within the DFCD advanced the first scalable projects close to the initial approval stage. The Green Fund was the most advanced transaction under the Land-Use Facility. This fund targets creating a sustainable supply chain of agribusiness commodities and protecting large areas of forest. The Water Facility delivered several projects near the first approval stage, including a wastewater to bio-energy project in Thailand. The intensity of contacts with prospective clients in these first six months of the Fund’s existence reaffirms the attractiveness of the DFCD’s unique combination of bankable project development along with the catalyzation of private finance for climate adaptation.
We thank all our stakeholders for their continuous support, including our clients and investors, the Dutch Ministry of Foreign Affairs, the NGOs that help us to improve and our colleagues for giving their best every day.
The Hague, 8 May 2020
On behalf of the Executive Committee
Fatoumata Bouaré, Chief Risk & Finance Officer
Linda Broekhuizen, Chief Investment Officer
Peter van Mierlo, Chief Executive Officer