By now it’s clear, the climate crisis must be addressed immediately, and doing so will cost US$4.3 trillion by 2030 according to the latest reports.

Public finance will be insufficient, which means that new investors and finance mechanisms will be needed to unlock private finance at scale. A recent report from the British Expertise International (BEI) Climate Finance working group explores the role of climate finance and the challenges of mobilising capital and shares a set of case studies that demonstrate solutions.

Climate finance, as defined by the report, is the financial flow to all activities intended to mitigate or adapt to the impacts of climate change in all economic sectors around the world.

The report draws from BEI member capabilities and case studies, including Palladium’s Rebuild Facility, Regeneration's finance facility, to demonstrate on-the-ground work mobilising and deploying climate finance. The Rebuild Facility is a finance initiative committed to nurturing sustainable cocoa and coffee enterprises across East and West Africa, specifically in Côte d'Ivoire and Ghana for cocoa, and Ethiopia, Kenya, and Uganda for coffee.

BEI aims to promote British expertise overseas, across infrastructure, capacity building, and international development, with a focus on emerging markets, explains Palladium Senior Manager of Nature Based Solutions, Emma Davies. “This paper is designed to meet the needs of a range of agencies seeking rapid insights and technical support in implementing Climate Finance mechanisms, at a key moment in the lead up to COP28.”

Rebuild’s Case Study

Since 2020, the Rebuild Facility has provided over 13 million euros in returnable grants to 19 grantees, securing the incomes of over 50,000 smallholder farmers, and keeping over 100,000 hectares of land under sustainable land management. A returnable grant provides an opportunity for grantees to achieve business growth; and as opposed to a non-returnable one, it helps build a credit history, which improves their investment profile during or beyond the duration of the grant.

“The Rebuild Facility provided support to businesses deeply committed to transitioning and expediting sustainable practices yet constrained by insufficient liquidity to achieve a significant business scale,” explains Shasi Wagle, Rebuild Facility Team Leader. “The financial assistance is repaid once the business achieves the projected growth levels and secures external financing to sustain and expand its operations. Returned funds are reinvested in other enterprises.”

The team’s work shows how access to finance mechanisms like returnable grants can challenge and incentivise local organisations to invest in the institutional changes and internal capacity required to scale sustainably. But this requires commitment from the grantee company’s top management. It takes extensive engagement with key decision-makers to ensure that the grantee allocates resources to address identified gaps.

“The Rebuild Facility's due diligence and capacity-building assistance was pivotal to the growth aspirations of these businesses,” Wagle says. “It helped smallholders to receive enhanced revenues and support for their sustainable agricultural practices.”

The need for climate finance is enormous if the world is going to sustainably transition to low carbon and climate resilient development pathways. “BEI members like Palladium are helping to design solutions like the Rebuild model, which is helping to bridge the finance gap and support more sustainable businesses reducing global emissions,” Davies concludes. “We want others to learn from these, and work with us and other members to help massively scale these solutions.”.

Read the report, learn more about Rebuild, and contact info@thepalladiumgroup.com for more information.