42478 - GGF 2

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Summary of Investment Information

Project Number

42478

Company Name

Green for Growth Fund, Southeast Europe S.A., SICAV-SIF

Date SPI Disclosed

Nov 12, 2019

Country

Southern Europe Subregion

Region

Europe

Projected Board Date

Dec 12, 2019

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Funds

Previous Events

Approved : Dec 18, 2019
Signed : Dec 27, 2019
Invested : Dec 31, 2019

Sector

Other Non-Private Equity Fund

Project Description

The proposed project is an IFC investment of up to USD 66 million in A shares in the Green for Growth Fund (“the Fund” or “GGF”) which was launched in December 2009 and by year-end 2018 has reached total investment portfolio of EUR 463 million.

Promoted by KfW Entwicklungsbank (“KfW”) and European Investment Bank (“EIB”), GGF is a collective investment vehicle with unlimited life, providing financing to sustainable energy projects primarily through financial institutions (“FI”s), renewable energy projects (“PF”), energy service companies (“ESCO”s), and service and supply companies, collectively partner institutions (“PI”s) in Europe and its neighborhood. IFC has initially invested in the Fund in 2010.

Through this Project IFC aims to provide financing for the Fund to continue its increasing reach in catalyzing the development and capacity building in sustainable commercial lending market for energy efficiency and renewable energy investments in the target regions.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	65.79
Equity

Development Impact

i) Project outcome: The most significant, expected Project-level outcome is increased access to climate mitigation finance, such as renewable energy, energy efficiency, and other green financing in the Fund's operational regions of ECA and MENA. The Project will also result in reducing carbon emissions and energy savings in energy intensive and highly polluted regions. ii) Market creation: IFC anticipates that the Project will enhance integration among public and private investors in the green financing segment by demonstrating to the wider investor community that climate mitigation investments represent an attractive risk-reward profile for all parties. IFC also anticipates that the investment will promote greater market sustainability through climate finance capacity building in ECA and MENA.

i) IFC's investment would provide long-term funding to the Fund to support its continued operation and increasing reach, including enabling it to provide longer-term direct investments. ii) Risk mitigation, trusted client partnerships - IFC's continued shareholding and an increasing commitment to GGF would signal confidence in the Fund and would support attracting more private sector funding in build-up of the climate financing in emerging economies.

E&S Category Rationale / Risks and Mitigation

Green for Growth Fund (GGF), is an existing IFC client, an unlimited life collective investment vehicle, that provides financing for sustainable energy projects namely energy efficiency ("EE") and renewable energy ("RE") projects. Financing is provided by the Fund through direct investments, financial institutions (“FIs”), energy service companies (“ESCOs”), service and supply companies, collectively partner institutions (“PIs”) in Europe and its neighborhood. FIs and PIs are local commercial banks, leasing companies and other selected financial institutions which are mostly clients of IFIs including IFC, EBRD, KFW, FMO, EIB, OeEB, EIB. Pipeline to be supported through this project is expected to have potential limited adverse environmental and/or social risks or impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures thus this project has been categorized as FI-2 in accordance with IFC Sustainability Policy. GGF does not have any exposure to IFC’s exclusion list and coal related activities directly and/or indirectly (through FIs, PIs and direct investments). Going forward, the fund (directly and/or indirectly though FIs, PIs and investments) will not support any coal-related activities and will not provide finance to companies or projects exposed to higher risk activities including: a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks, unless these risks and potential impacts are assessed by a qualified external expert and the fund manager is able to contractually agree on addressing identified risks or potential impacts with the borrower, including remedies in case of not satisfactory performance. IFC’s applicable E&S requirements for this project will be to comply with IFC Exclusion List, IFC Performance Standards (PSs) and host country E&S laws and regulations. In addition, GGF’s advisor will be required to comply with the requirements of IFC’s Performance Standard 2 on Labor and Working conditions.

The main E&S risks and impacts of this project relate to the ability of the “Fund” to identify and manage direct and indirect (through FIs, PIs and direct investments) E&S risks in line with IFC's applicable requirements. The fund has a documented E&S management system in place in line with IFC's requirements. When financing activities that involve higher E&S risks, the Fund is required to allocate an adequate level of E&S resources, including use of external qualified experts to manage E&S risks of these transactions in line with applicable IFC Performance Standards. Going forward, he fund will also be required to improve their disclosure process. All of its direct investments will be disclosed with by providing links to their ESRS/ESDD findings/ESIAs (as available) on its disclosure page. The fund will also disclose a summary of its own ESMS on its website. In addition, GGF's advisor will be required to continue applying their HR Practices in conformity with IFC's PS2 on Labor and Working conditions.

Task Title & Description	Actual Due Date	Status	Comments	Completion Date
Other1 Enhance an existing ESMS, to adequately manage E&S risks of higher risk transactions in line with IFC Performance Standards		Completed	Per the updated ESMS, provided by Llyod Stevens on 06/30/2020, saved to iportal, this action has been completed	06/30/2020
Other2 Improve disclosure process for direct, non-syndicated PF investments		Completed	Per the updated ESMS, provided by Llyod Stevens on 06/30/2020, saved to iportal, this action has been completed	06/30/2020

Contacts

For Inquiries About the Project, Contact

Finance in Motion GmbH
Lloyd Stevens
Director Investment Management
4969271035113
L.stevens@finance-in-motion.com
Carl-von-Noorden-Platz 5, 60596 Frankfurt/Main, Germany
http://www.finance-in-motion.com/

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