Dutch Fund for Climate and Development (DFCD)
Mobilising private sector investments in climate change adaptation at scale.
SNV has partnered with Climate Fund Managers (CFM), World Wildlife Fund Netherlands (WWF) and FMO, Dutch entrepreneurial development bank (lead organisation) to manage the Dutch Fund for Climate and Development (DFCD), with the objective to mobilise private sector investments in climate change adaptation at scale. The DFCD will run until 2037, is funded by Netherlands Ministry for Foreign Affairs and has a total value of €160 million.
Climate change poses an unprecedented threat to humanity in the twenty-first century. We need to adapt our systems to climate change and increase resilience amongst people living in poverty and vulnerable groups. To date, there is a notable shortfall in funding and a dominant focus on climate mitigation by global financing parties to date. To overcome the funding gap, we need to stimulate private sector investments in climate change adaptation innovations and scale viable business cases.
The Netherlands based consortium will be led by FMO and will have three objectives:
provide finance and Technical Assistance (TA) to projects with a focus on climate change adaptation;
mobilise external private sector funding at scale; and
align directly with DFCD Theory of Change (ToC).
A substantial allocation of investments will be reserved for OECD DAC Least Developed Countries (LDCs) and other Netherlands development cooperation priority countries (collectively, ‘the focus countries’). Investments made by the consortium parties will seek to improve the wellbeing, economic prospects and livelihoods of vulnerable groups – particularly women and children – and, enhance the health of critical ecosystems – from water basins to rivers, tropical rainforests, marshland and mangroves.
The consortium’s activities will also help protect communities and cities from the increasing frequency of extreme weather events and benefit depleting biodiversity in areas that provide people with water, food, medicine and economic opportunity. In addition, the consortium has been established to overcome two prohibitive market barriers for financing climate adaptation, and to a lesser extent, climate mitigation projects in the focus countries: available funding and bankable projects.
Fund governance and facilities
To achieve the DFCD mandate the consortium will be structured with three separate but operationally linked ‘Facilities’ each with a unique role across the project lifecycle; each with a unique thematic sub-sector focus:
The consortium parties will collaborate through the Origination Facility for deal origination. Subsequently each Facility will make its investment decisions in an independent Investment Committee in accordance with the DFCD Assessment Framework. FMO and CFM will be granted a seat on the Investment Committee of the Origination Facility to increase the likelihood of projects receiving follow on finance after the Origination Facility has completed its activities on a project. The Origination Facility has a total value of €30 million and will run for five years.
The consortium will be governed through a DFCD Advisory Board, which has the primary role to:
Monitor/report/evaluate the implementation & progress and financial & impact results of the three facilities;
Act as a general forum for communication; and
Monitor significant trends in global climate policy & finance and assess its ramifications for the DFCD.