International Finance Corporation (IFC), a member of the World Bank Group, is looking at five areas outside renewable energy for climate investments, a top IFC official said.
Climate Business Director and Global Head Vivek Pathak said that having mainstreamed solar and wind in its business, IFC is exploring a host of categories for climate investments, ranging from green hydrogen to Electric Vehicles to greening of SMEs, Blue Economy and Biodiversity.
“[for example] SMEs don’t have technology, don’t have access to capital but they constitute more than 50-60 percent of any economy, and if we are not able to green the SMEs, they get left out, they will not be part of value chains,” he explained while speaking at the World Green Economy Summit (WGES) panel.
Pathak said the IFC has set for itself a “huge task” of aligning its investment portfolio with Paris agreement by 2025.
Investments will be screened for resilience (impact of climate risk on operations) and mitigation (GHG emissions).
In FY21, IFC’s total climate-related commitments were over $4 billion, or 32 percent of its new investments, according to its recent climate disclosure document.
He admitted that capital is not flowing into climate technologies and sectors like green hydrogen are costly in terms of investments.
“With technology, some amount of blended finance and some risk appetite, we can make these prices come down,” he said.
Pathak also called for revisiting the risk appetite framework that dates back to the 1970s.
“We all need to reconsider what is an acceptable risk appetite. If we really want to make a serious impact, we need to re-look some of these things in emerging markets, what is bankable not bankable,” he said.
(Reporting by Anoop Menon; editing by Seban Scaria)