Emerging solutions to drive private investment in climate resilience

This working paper analyzes the experiences of seven Development Finance Institutions (DFIs) between 2011 and 2014 to identify strategies for driving private sector investment in climate resilience, specifically within agriculture, water-intensive industries, and infrastructure.

• DFIs have utilized a combination of policy alignment, regulatory compliance, and long-term debt to catalyze private investment. In Western European high-income countries, the European Investment Bank provided long-term debt finance to help water companies integrate climate resilience into the renewal of ageing water and wastewater infrastructures, addressing a shortage of such finance in EU countries.
• Technical assistance is critical for overcoming knowledge gaps regarding the materiality of climate change risks, particularly for small and medium-sized enterprises (SMEs) in developing and middle-income countries. DFIs such as the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) have used audits, studies, and advisory services to demonstrate the business case for resilience investments. In Turkey, a market study was specifically used to encourage local commercial banks to finance water-efficient technologies.
• To address debt funding gaps for micro-enterprises and SMEs in developing countries, DFIs are employing credit enhancement measures and on-lending structures. The IFC, Inter-American Development Bank (IDB), and Asian Development Bank (ADB) have built alliances within agricultural value chains, while the IFC, IDB, and EBRD have engaged local financial institutions for on-lending to improve the ability of small businesses to cope with climate impacts.
• The paper identifies four primary opportunities to scale private investment: adjusting government regulatory frameworks to create stronger incentives; providing businesses with data and impact assessment tools; enhancing collaboration between DFIs and local financial systems (including insurance companies and local banks); and using middle-income countries to pilot evidence-based approaches that can later be replicated in lower-income countries.
• The Pilot Program for Climate Resilience (PPCR) governing body decided in May 2015 to open its private sector set-aside to all Climate Investment Funds countries. This move aims to remove geographic restrictions that previously limited funds in low-income countries where the formal private sector is small and investment environments are challenging, allowing for the testing of scalable business models in middle-income countries first.

APA

Climate Policy Initiative (2015). Emerging solutions to drive private investment in climate resilience. https://www.climatepolicyinitiative.org/publication/emerging-solutions-to-drive-private-investment-in-climate-resilience/

Chicago

Climate Policy Initiative. Emerging solutions to drive private investment in climate resilience. 2015. https://www.climatepolicyinitiative.org/publication/emerging-solutions-to-drive-private-investment-in-climate-resilience/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Emerging solutions to drive private investment in climate resilience |date=9 June 2015 |url=https://www.climatepolicyinitiative.org/publication/emerging-solutions-to-drive-private-investment-in-climate-resilience/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2015emerging, author = {{Climate Policy Initiative}}, title = {{Emerging solutions to drive private investment in climate resilience}}, institution = {Climate Policy Initiative}, year = {2015}, month = jun, url = {https://www.climatepolicyinitiative.org/publication/emerging-solutions-to-drive-private-investment-in-climate-resilience/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }