SUNREF, AFD`S GREEN FINANCE LABEL

Agence Française
de Développement
SUNREF,
AFD’S GREEN
FINANCE LABEL
Solar panels at Strathmore University in Nairobi – Kenya © Boisseaux-Imageo / French Red Cross
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
SUNREF,
AFD’S GREEN FINANCE LABEL
Towards a shared
sustainable
development model
Encourage banks to finance
the ecological transition
Despite significant technological progress and increasing international
awareness, the current development model (characterized by an
overexploitation of natural resources and the belief in the infinite
resilience capacity of our ecosystems) has impacts on the environment
and the viability of the economy:
■■ Geopolitical and economic tensions caused by the explosion in
demand for raw materials, in a context of strong population growth,
particularly in urban areas;
■■ Ecosystem degradation and a threat to biodiversity due to the emis‑
sion of undesirable byproducts (gaseous, liquid or solid). The costs
of dealing with these negative effects are constantly increasing
(water treatment, climate change adaptation).
Seize the opportunities of the ecological
transition
To address these issues, the international community is gradually
converging towards a common agenda that recognizes the need to
build a model with a reduced carbon footprint in order to achieve the
Sustainable Development Goals.
As the main financers of companies, local banks can play a key role
in financing this transition.
Removing technical and financial barriers allows these institutions
to finance “green” investments.
Companies are vectors of low-carbon and resource-efficient innova‑
tions. They are central to the transition towards a more sustainable
economic model. This ecological transition leads to the rapid expan‑
sion of a number of markets, particularly in the fields of energy
(renewable energies and energy efficiency), sustainable natural
resource management, eco-technologies and pollution reduction.
However, a number of obstacles continue to hold back the implemen‑
tation of investments, despite the dynamism of these sectors and the
performance of technologies: low level of awareness of companies
and individuals, lack of capacity of actors, overestimation of risks, low
level of appropriation by banks vis-à-vis this type of project, limited or
inappropriate financial resources…
Geothermal exploitation, Olkaria area – Kenya © James Keogh
AFD’s strategy: Mobilize banks and companies for green growth
For many years, AFD has been engaged in an active partnership with banks in its countries of operation. The aim is to finance projects
at the intersection of the objectives for development and environmental protection.
AFD provides its expertise and appropriate financial resources in order to make investments attractive in sectors where there is little
or poor coverage, while banks provide their knowledge of the local context, their network and their clients’ confidence.
This rich and diversified experience, which makes AFD one of the most dynamic donors for this type of financing, has made it possible
to develop the SUNREF (Sustainable Use of Natural Resources and Energy Finance) initiative in order to promote investments
in energy and environmental services in developing countries. AFD’s aim, via a specific product line, is to offer its partners an innovative
approach as part of an integrated process.
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
SUNREF,
AFD’S GREEN FINANCE LABEL
SUNREF, AFD’s “green finance” label
AFD, a pioneer in an “integrated” approach to environmental finance
The innovation of the SUNREF product lies in the combination of a
financial approach and technical approach.
It provides a range of tools and services for this, which are intended
to meet the demand of all actors: financial incentives, technical assis‑
tance, support for the creation of a new organization in local banks,
valorization of the results obtained…
SUNREF offers an integrated approach that aims to cover all mecha‑
nisms capable of advancing the positioning and strategy of companies.
SUNREF offers benefits to actors involved in the ecological transition…
To banks and companies:
■■
Access to new markets related to green growth: dedicated financing
and consulting services for banks, new production methods that
strengthen the resilience of companies to external shocks;
■■ Management of environment-related risks: assessment and man‑
agement of the financial and image risk for economic and financial
actors in sectors that are dependent on fossil fuels;
■■ Upgrading of production facilities and competitiveness gains by
reducing the energy bill;
■■ Greater societal recognition by clients, employees, civil society and
international financial partners;
■■
Reduction of risks of non-compliance with environmental protec‑
tion rules thanks to a better anticipation.
To individuals:
Access to low-cost new technologies;
Use of renewable energies, which are often the only way for isolated
households to access energy;
■■ Use of more environmentally friendly and less harmful solutions,
thereby safeguarding the physical capital and health.
■■
■■
…And places partnership innovations at the center of an integrated approach
With SUNREF, AFD offers its partners an integrated approach that:
■■ Provides banks and their clients with structured financing with
tariffs tailored to “green” investments;
■■ Builds banks’ capacities to sustainably finance its activities;
■■ Assists companies in structuring their “green” investments;
Shares, via guarantee mechanisms, certain credit risks borne by
banks seeking to develop their “green” finance portfolios;
■■ Feeds into the public policies of the governments concerned;
■■ Facilitates access to “green” finance for individuals and companies.
■■
Grant
Loan/Guarantee
STIMULATE
DEMAND
Technical
assistance + capacity
building
Partner banks
Loan agreement or
loan + investment
premium
Technical assistance for the bank’s potential
clients: financing of energy or material
audits, support for project design,
monitoring of implementation…
Companies
STIMULATE
SUPPLY
Financial incentives for “green”
investment via financing
at attractive rates, investment
premiums…
SUNREF,
AFD’S GREEN FINANCE LABEL
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
SUNREF in figures (end of 2014)
Over 35 projects successfully implemented
by AFD since 2006
■■ Over 50 partner financial institutions
■■ Over EUR 2bn of loans allocated by AFD…
including over EUR 1bn already disbursed
■■
SUNREF range of services
In the context of a partnership, AFD and banks identify the investment
potential, select the most promising thematic areas and develop an action
plan to reduce the barriers to investment in the country in question.
Results and impacts
In order to promote the investment, the bank’s client is allocated a loan on
terms which provide incentives (maturity, rate, investment premium…).
Annual reduction of 14 million tons
of CO2 equivalent
■■ Annual saving of over 1 billion KWh
■■ Creation of a new green capacity of 300,000 KW
■■ Annual generation of 1.5 million MWh of green energy
■■
SUNREF also offers a set of additional and continuously available tools via a
dedicated platform in order to measure the impact of projects and train banks
in new technologies and methods, which allows them to offer better advice
and products to their clients.
Investments supported by SUNREF
Industry
Services
Individuals
and professionals
Agriculture
Energy efficiency
of industrial processes
■■ Renewable energy
development
(independent power
producers, use of biomass
by the agroindustry…)
■■
Energy efficiency
in buildings
■■ Small-scale renewable
energies
■■
High energy performance
housing
■■ Solar water heaters,
biodigesters.
Photovoltaic solar power
■■ Class A+ household
appliances: air
conditioning,
refrigerators, washing
machines…
■■
Development
of the environmental
certification of services
(tourism…)
■■ Recycling and sanitation
for local authorities
■■
Energy
management:
energy efficiency
and renewable
energies
■■
Environmental
performance
■■
Reduction of pollutant
emissions and
environmental compliance
■■
High environmental
quality housing
Methanization
of agricultural waste
■■ Access to energy:
photovoltaic solar power
systems for irrigation
Conversion
to sustainable/organic
farming
■■ Sustainable forestry
exploitation
■■
Key and structuring role of technical assistance in the sustainability of the partnership
The specific objective of a technical assistance program is to support
and expand the financing market for “green” investments. Its aim
is to promote:
■■ The development of an energy and environmental management
culture in companies and with individuals;
■■ Capacity building for companies in order to optimize the use of
energy and natural resources;
■■ Support for banks in the mobilization of funds to finance these
projects.
Cogeneration system in the company El
Mazraa – Tunisia © AFD
Thanks to grants allocated by the French Government, European
Union or other partners, technical assistance is made available to
actors without any charge or at a very affordable cost.
The main expected outcomes are as follows:
■■ Development and consolidation of a financing market for “green”
investments: “green” financing central to the commercial strategy
of banks;
■■ Support for the development of eligible, innovative and profitable
“green” projects;
■■ Support for the “green” strategies of companies that are leaders
in their markets;
■■ Support for the emergence of experts;
■■ Capacity building for the various actors and knowledge transfers;
■■ Increased awareness of “green” issues;
■■ Broad dissemination of experiences and good practices;
■■ Long-term viability of “green” investments.
SUNREF,
AFD’S GREEN FINANCE LABEL
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
Development of SUNREF’s range of services
TURKEY
• •
•LEBANON •• ARMENIA
JORDAN
•
•
MOROCCO
•
TUNISIA
MEXICO
•
EGYPT
WAEMU *
•
( )
•
PERU
•
BRAZIL
•
•
•
•
•
CHINA
INDIA
EAST AFRICA
•
INDONESIA
• •
•
NEW CALEDONIA
INDIAN
OCEAN
SOUTH
AFRICA
* Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, Togo.
( )
A project financed
by the Cooperative Bank
of Kenya: Improving the energy
efficiency of a dairy cooperative
The dependence of Kenya’s economic growth
on its resources and its demographic pressure make
the sustainable management of energy resources
a key challenge for the country. AFD has allocated
a EUR 30m concessional SUNREF loan to Co‑operative
Bank of Kenya, the country’s third largest bank, in order
to support projects with high energy efficiency
and renewable energy potential. This loan is combined
with a technical assistance program financed by the
European Union.
Under this program, Co-operative Bank of Kenya has
allocated a loan to the Meru Central Dairy Cooperative
Union whose processing activities (production
of ice-cream, milk powder) offer beneficial growth
drivers on a dynamic market. The financing of more
efficient equipment in terms of energy consumption
(boilers, electrical and compressed air systems…)
has reduced operating costs, increased the processing
capacity and reduced production losses.
With a total cost of USD 2.3m, the project allows
an annual energy saving of 1.4 GWh and a reduction
of 532 tons of CO2 equivalent.
This project meets the eligibility criteria of SUNREF.
It has been assessed, then validated from a technical
point of view, by the consultants of the technical
assistance program. A project financed by UBCI
in Tunisia: Recovering industrial
waste and improving the energy
efficiency of a company
in the agri-food sector
Faced with an increasing structural energy deficit,
Tunisia has implemented a proactive energy
management and environmental preservation strategy.
In the industrial sector, AFD assists these public policies
by supporting productive investment. The partnership
initiated by AFD with the bank UBCI to finance
environmental projects results in investments financed
by a dedicated credit line. This range of environmental
financing is also followed up by a technical assistance
program and a grant allocated by the European Union.
One of the beneficiaries of this program
is the company El Mazraa (Poulina Group), for a total
amount of EUR 4.9m, to finance energy efficiency
investments (installation of a 5 MW cogeneration unit)
and recover industrial poultry waste to produce food
for animals.
This project has reduced the company’s consumption
by 2,500 toe fuel, thereby reducing greenhouse
gas emissions by 5,500 tons of CO2 equivalent.
Some 7,300 tons of poultry waste are also recovered
every year.
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
PROPARCO, AFD’s subsidiary dedicated to
private investment, promotes private
investment in emerging and developing
countries in order to boost growth, promote
sustainable development and reach the
Millennium Development Goals. Its financing
is tailored to the specific needs of investors in
the productive sector, financial systems,
infrastructure and private equity investment.
www.proparco.fr
The French Facility for Global Environment / Fonds Français pour l’Environnement
Mondial (FFEM) is a bilateral public fund initiated by the French Government in 1994.
The FFEM secretariat and its financial management are entrusted to Agence Française
de Développement (AFD). FFEM co-finances projects that encourage the protection
of the global environment in developing countries. Its co-financing is exclusively via
grants and is used for the implementation of pilot projects that combine environmental
protection and economic development in the recipient countries. FFEM is an
influential strategic instrument for the French policy on Official Development
Assistance regarding global environmental protection. Its activities focus on the
topics of biodiversity, international waters, the climate change, land degradation and
desertification, persistent organic pollutants and the stratospheric ozone layer. By the
end of 2014, FFEM had co-financed 275 projects with EUR 317m. Two‑thirds were
earmarked for sub-Saharan Africa and the Mediterranean.
www.ffem.fr - ffem@afd.fr
Agence Française de Développement
https://www.facebook.com/AFDOfficiel
AGENCE FRANÇAISE
DE DÉVELOPPEMENT
5 rue Roland Barthes
75598 Paris Cedex 12 – France
Tel. +33 1 53 44 31 31
Fax +33 1 44 87 99 39
www.afd.fr
@AFD_France
https://twitter.com/AFD_France
PRIVATE SECTOR,
BANKS AND LOCAL AUTHORITIES
DEPARTMENT (EBC)
FINANCIAL INSTITUTIONS
AND PRIVATE SECTOR DIVISION (IFP)
Agence Française de Développement
https://www.youtube.com/user/GroupeAFD
Creation: Planet 7 – July 2015
Project to preserve forests against climate change – Mexico © AFD
/ PEFC certified / This publication comes from sustainably managed forests and certified sources. / pefc-france.org
Agence Française de Développement (AFD), a public financial institution that implements the policy defined by the French
Government, works to combat poverty and promote sustainable development. AFD operates on four continents via a
network of 71 offices and finances and supports projects that improve living conditions for populations, boost economic
growth and protect the planet. In 2014, AFD earmarked EUR 8.1bn to finance projects in developing countries and for
overseas France.