🧭 $120B for climate finance & female-led fintechs

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Last week, we highlighted key ESG tools for SMEs, rising sustainability mandates in Latin America, and Allianz’s pioneering green project bonds. This week, we dive into COP29’s historic $120 billion climate finance pledge, the rise of female-led climate fintechs achieving funding parity, and groundbreaking green finance initiatives across the globe.

At the BIG Risk Navigator, we offer the latest insights into sustainability, climate finance, and tech innovation, equipping decision-makers to build resilient, forward-thinking businesses.

Now let’s get into the news.

• World’s top development banks commit $120 billion for climate finance by 2030: COP29: Major development banks committed to increasing climate finance for low- and middle-income countries by 60% compared to 2023 levels.

• 80% of global financial regulators aligned with ISSB, TCFD recommendations: FSB Report: The Financial Stability Board (FSB) has released its 2024 progress report on climate-related financial disclosures

• Microsoft and RBC purchase 10,000 carbon removal credits from Deep Sky: The purchase will boost the development of Direct Air Capture (DAC) technologies.

• Saudi Arabia launches first voluntary carbon credit exchange platform at COP29: This initiative is part of Saudi Arabia’s Vision 2030 plan to diversify its economy and boost renewable energy investments.

• Singapore joins EU and China in expanded green financing taxonomy: Singapore, the EU, and China unveil the Multi-Jurisdiction Common Ground Taxonomy (M-CGT), boosting cross-border green financing.

🎯'Setting new standards for inclusion': Female-founded climate fintechs achieve early-stage funding parity

A groundbreaking shift is underway in the climate fintech sector, as female-led startups are achieving funding parity at early stages, according to a new report by Tenity. This marks a significant departure from the broader tech industry, where women-led firms typically receive a fraction of venture capital funding.

The report analyzed data from 750 climate fintech startups worldwide. It found that female-founded or led climate fintechs secured 50.4% of funding in pre-Series B rounds during 2022-2023, a stark contrast to the 3.4% typically received by female-led fintech companies overall. Notably, women have co-founded or lead one third of all climate fintechs, a figure that rises to 45% among companies founded in 2023.

Why it matters for climate fintech:The rise of female-led climate fintechs is a positive development for the industry. It signals a growing recognition of the importance of diversity and inclusion in driving innovation and addressing climate change.

Moreover, female founders often bring unique perspectives and experiences to the table, leading to the development of innovative solutions that can have a significant impact on the environment and society.

Key implications for startups: For climate fintech startups, particularly those founded or led by women, this trend offers several opportunities:

• Increased Funding Opportunities: The growing recognition of female-led climate fintechs can lead to increased investment from venture capital firms and other investors.

• Enhanced Innovation: Diverse teams can drive innovation and develop more effective solutions to address climate challenges.

• Stronger Networks: Female founders can benefit from supportive networks and mentorship programs to accelerate their growth.

🎯 Africa Secures $10.9M for Clean Energy Transition

The Rockefeller Foundation, a US-based philanthropic medical research and arts funding organization, has announced $10.9 million for Africa to help the continent transition to green energy.

This project will fund clean energy initiatives in several African regions and support energy systems planning in Africa, with designs and modelling tailored to the continent's requirements.

Why it matters for climate fintech: The integration of fintech with renewables paints a picture of how energy expansion can be complemented by other development needs. Agent networks introducing affordable energy alternatives in rural areas can be put to use just as effectively towards registering users for digital services. And widening access to digital financial services hosts a scope of possibilities for poverty reduction.

An approach that merges financial services and renewable energy has been adopted by InfiBranches, a Nigerian fintech company. InfiBranches’s two main products, OmniBranches and Green Energy Plug, focus on the distribution and financial components of clean energy development. As of last year, InfiBranches has secured $2 million in funding from All On, a Shell-backed impact investment firm.

Climate fintech startups can play a crucial role in supporting this transition by developing innovative products and services, such as:

• Green finance platforms: Facilitating the flow of capital to renewable energy projects.

• Climate risk assessment tools: Helping financial institutions assess the climate-related risks of their portfolios.

• Carbon credit trading platforms: Enabling the trading of carbon credits generated from clean energy projects.

• Insurtech solutions: Providing insurance products to protect renewable energy assets from climate-related risks.

Key implications for startups: The alignment of green innovation with fintech holds potential to accelerate development initiatives. As other investments in Africa’s green transition command attention, the continent must assess how they fit into existing infrastructure and specific development needs. When greater foresight is incorporated into tech solutions, accessibility is widened and development is fostered that is sustainable not just environmentally, but generationally.

🎯 Growth-powering strategy: Data center financing for a sustainable future

The rapid advancement of artificial intelligence (AI) and the increasing reliance on cloud computing have fueled an unprecedented demand for data centers. These massive facilities, which house servers and storage systems, are the backbone of the digital economy. However, their energy consumption and carbon footprint have raised significant environmental concerns.

Data centers around the world are looking to decarbonise their emissions while expanding to cater to global demand. Reaching out to partners with deep sector knowledge like Crédit Agricole CIB brings advantages as they can customize innovative financing solutions with specific features to support decarbonisation trajectories. When designed thoughtfully, sustainable finance can also address ESG priorities beyond climate goals, such as diversity and community engagement.

Why it matters for climate fintech: The data center industry offers significant opportunities for climate fintech startups. As data centers seek to reduce their carbon footprint and improve energy efficiency, there is a growing need for innovative financial solutions.

Climate fintech startups can develop technologies to:

• Monitor and measure carbon emissions: Tracking energy consumption and identifying opportunities for reduction.

• Optimize energy usage: Implementing AI-powered solutions to optimize energy efficiency and reduce costs.

• Facilitate green financing: Connecting data center operators with impact investors and sustainable finance providers.

• Develop carbon offsetting strategies: Helping data centers offset their carbon emissions through investments in renewable energy projects.

Key implications for startups: 

Gathering billions of funding within a relatively short period of time is not a straightforward process – it requires specially designed solutions and access to a variety of credit and debt financing sources including project finance, securitisation and private credit, to accumulate sufficient investment. Banks play a critical role in this complicated process – they can help tailor suitable financing structures and tap the right liquidity pools, such as seeking funds from private debt providers or issuing credit facilities themselves, and line up independent credit rating and legal reviews for funding.

🎯 World’s top development banks commit $120 billion for climate finance by 2030: COP29

✅ Key Insights

• Major development banks committed to increasing climate finance for low- and middle-income countries by 60% compared to 2023 levels.

• Development banks aim to mobilize an additional $65 billion from the private sector to support climate initiatives.

• The plan includes $42 billion for adapting to extreme weather, a 70% increase from 2023 levels.

At COP29 in Azerbaijan, a significant early pledge emerged as major development banks, including the World Bank, committed to raising climate finance to $120 billion annually by 2030. This figure marks a 60% increase from the funding levels in 2023, targeting support for low- and middle-income countries grappling with climate change.

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🎯 80% of global financial regulators aligned with ISSB, TCFD recommendations: FSB Report

✅ Key Insights

• 19 out of 24 FSB member jurisdictions have climate-related disclosure regulations or guidelines in place, influenced by the ISSB.

• 17 jurisdictions have set or proposed disclosure requirements aligned with ISSB Standards and TCFD recommendations.

• The report urges continued support for SMEs and emerging markets facing challenges in adopting ISSB standards.

The Financial Stability Board (FSB) has released its 2024 progress report on climate-related financial disclosures, underscoring the strides made by global jurisdictions in implementing International Sustainability Standards Board (ISSB) disclosure standards. This report draws insights from a survey involving FSB member jurisdictions and input from key standard-setting bodies and international organizations.

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🎯 Microsoft and RBC purchase 10,000 carbon removal credits from Deep Sky

✅ Key Insights

• The purchase will boost the development of Direct Air Capture (DAC) technologies.

• Deep Sky Labs will host eight DAC technologies to accelerate the scalability and efficiency of carbon capture.

• The collaboration is set to create green jobs and inject over $100 million into the local economy in Innisfail, Alberta, over the next decade.

Deep Sky, a leader in carbon removal technology, has finalized a significant deal with Microsoft and Royal Bank of Canada (RBC) for the sale of 10,000 carbon removal credits. This transaction marks a pivotal step for the industry and highlights Deep Sky’s mission to scale Direct Air Capture (DAC) solutions.

Read more.

🎯 Saudi Arabia launches first voluntary carbon credit exchange platform at COP29

✅ Key Insights

• Saudi Arabia’s Regional Voluntary Carbon Market Company (RVCMC) unveiled the first carbon credit trading platform at COP29.

• This initiative is part of Saudi Arabia’s Vision 2030 plan to diversify its economy and boost renewable energy investments.

• The move aligns with a growing Middle Eastern push towards carbon market participation.

Saudi Arabia, the world’s largest oil exporter, marked a significant milestone in its environmental strategy by launching its first carbon credit exchange at the UN Climate Change Conference (COP29) in Baku on November 12. Managed by the Regional Voluntary Carbon Market Company (RVCMC), the platform is designed to strengthen the voluntary carbon market as the country pushes for economic diversification under its Vision 2030 plan.

Read more.

🎯 Singapore joins EU and China in expanded green financing taxonomy

✅ Key Insights

• Singapore, the EU, and China unveil the Multi-Jurisdiction Common Ground Taxonomy (M-CGT), boosting cross-border green financing.

• M-CGT now includes 110 economic activities across eight sectors, up from 72 activities in the previous taxonomy.

• The M-CGT aims to reduce fragmentation and lower costs, benefiting investors and issuers in green finance.

Singapore has joined the European Union (EU) and China in presenting the Multi-Jurisdiction Common Ground Taxonomy (M-CGT), a significant step towards harmonizing sustainable finance taxonomies across the three regions. Developed by the People’s Bank of China (PBOC), the EU Directorate-General for Financial Stability (FISMA), and the Monetary Authority of Singapore (MAS), the M-CGT builds on the existing EU-China Common Ground Taxonomy (CGT) to include the Singapore-Asia Taxonomy (SAT).

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The countries making waves in carbon markets today – and how they’re doing it

Abatable’s 2024 VCM Investment Attractiveness Index is out, and Colombia leads the ranking this year thanks to a rich supply of in-demand credits and a healthy developer ecosystem. The shifts in country positions seen in 2024 were spurred by focused engagement with Article 6 and show trends of strong regional activity.

✅ Highlights 

• The VCM Investment Attractiveness Index

• The countries topping 2024’s rankings

• Significant changes from 2023

The Index also tracks whether a country has actually revoked any Article 6 credits. It’s worth noting that while countries progressing well with Article 6 may have jumped up the rankings this year, there could be a need to be cautious with countries authorizing Article 6 credits without a clear strategy against overselling, and thus potentially jeopardizing their NDC targets.

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Gartner: The Hype Cycle of climate technologies

✅ Highlights 

• Understanding the Gartner Hype Cycle

• Decoding the Hype Cycle’s insights

• Advancing sustainable technology

As the planet continues grappling with the escalating climate crisis, the corporate world is increasingly channeling investments into technology. Tech doesn’t just support sustainability targets but can also help businesses to adapt to the evolving environmental landscape. Global consultant Gartner’s 2024 Hype Cycle for Environmental Sustainability shows that companies must shift to climate adaptation strategies to survive.

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