As COP 30 approaches in Belem, Brazil, global discussions on climate finance take center stage.
The sustainable funding gap is still significant. To achieve the Sustainable Development Goals (SDGs) at the global level, it is estimated that the additional investment required ranges from 5 to 7 trillion dollars each year until 2030. However, for now the investment is around 1 trillion in public and private funds.
Graphic: SDG funding gap.
Faced with this scenario, the German company Invest in Visions, dedicated to global investments, provides loans that have a sustainable benefit in microfinance projects around the world.
Director Edda Schröder explained that in the last 10 years of operation, they have disbursed 2.3 trillion euros in loans, with the idea of opening access to impact investments for public institutions and private investors. They currently provide access to financial services to 400,000 people.
Sometimes these loans fill in funding gaps for projects that did not find the banks the support they were looking for. This is because banks have rigorous risk analyses or are not adequate enough for this type of project in developing countries.
Impact Funds
One of the company's most important initiatives is located in Africa. Photo: Juan García.
Until recently, impact funds, those that seek returns and achieve measurable changes, did not provide easy access to private investors. This is because they were closed, with fixed terms of up to 15 years and where only institutions could invest, said Moritz Isenmann, Senior Manager of Impact and Sustainability.
“One of the reasons is that most impact investment funds are not accessible to private investors. This is because they are usually closed end funds with a duration of 10 to 15 years, structured as special alternative investment funds, in which private investors cannot participate,” he explained.
However, a new European Union instrument offers new possibilities. This is the European Long-Term Investment Fund (ELTIF) created in 2015 and revised in 2023, where the list of investment projects was expanded, including projects of lower value and of a wider range.
Thus, individuals could finance these projects.
“Therefore, until the advent of this new fund structure, private investors had very little chance of investing in impact investing. And this is important because impact investing is more efficient in private markets: that's where money is actually delivered directly, capital is raised and those additional resources are channeled to projects and companies,” Isenmann said.
This fund could even be used for global bonds. The investment gap is also reflected in these financial instruments, those issued with sustainability criteria being around 11% of the total in 2024, according to data from the United Nations.
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