Climate Finance at
scale: emerging
opportunities
Helena McLeod, KPMG
Thomas E Downing, Global Climate Adaptation Partnership
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 1
A growing market for adaptation
© Global Climate Adaptation Partnership
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 3
Change
readiness: a country’s capacity to
anticipate, prepare for,
manage, respond to
change & cultivate
resulting opportunity
No government, business or society is immune to change
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 4
Established methodology:
Three pillars underlie a country’s change readiness
Enterprise capability
Government capability
People & civil society capability
A wealth of data & insight
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 5
Structure of the Change Readiness Index
Enterprise capability Government capability People & civil society capability
Relates to broad capability of
private and state-owned enterprises
Relates to capability of
governmental and public regulatory
institutions
Relates to individual, societal and
cultural determinants of capability
■ Labor markets ■ Macroeconomic framework ■ Human Capital
■ Economic diversification ■ Public administration and
state/business relations
■ Entrepreneurship
■ Economic openness ■ Regulation ■ Civil society
■ Innovation and R&D ■ Fiscal and Budgeting ■ Safety nets
■ Business environment ■ Rule of law ■ Technology use
■ Financial sector ■ Government strategic planning
and horizon scanning
■ Gender
■ Transport and utilities
infrastructure
■ Environment and sustainability ■ Inclusiveness of growth
■ Informal sector ■ Food and energy security ■ Demographics
■ Technology infrastructure ■ Land rights ■ Access to information
■ Security ■ Health
Combines original primary survey data with existing secondary data across a
range of key indicators structured around three pillars:
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 6
2015 Change Readiness Index results
Top 10
High income countries
Population less than 10 million
Strong representation from Nordic region
1 Singapore
2 Switzerland
3 Hong Kong
4 Norway
5 United Arab Emirates
6 New Zealand
7 Qatar
8 Denmark
9 Sweden
10 Finland
A wealth of data & insight
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 7
2015 Change Readiness Index results
Countries with the most improved ranking since
2013
Top 5 performers compared to gross
national income
Mozambique
Rwanda
Uganda
Cambodia
Tanzania
Algeria
India
Russia
A wealth of data & insight
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 8
Lovelock: Out of the building site……
…….comes something beautiful
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 9
We are creating the future
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 10
What differentiates humans is the ability to innovate
‘Never doubt that a small group of thoughtful, committed citizens can change
the world. Indeed, it is the only thing that ever has.’
Margaret Mead (cultural anthropologist)
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 11
We can achieve scale
Public, NGO, donor and private sector leadership,
delivery and funding is all required
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 12
Drivers of climate resilience
Private Sector
Civil society/people
Public Sector
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 13
Innovation is required across all modes of investment
Public-Private Partnership
Corporate action
Reform for readiness
Innovation & technology
Supply & value chains
Creating shared value
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 14
The context for investing in resilience shapes types of finance
Reduce actions to manage smaller processes and short-term outputs
MANAGED SIMPLE RESULTS CHAINS
TRANSFORMED COMPLEXITY
CRISIS IN
CHAOS
COMPLICATED MULTI-ACTOR OUTCOMES
Regimes shifts for major outcomes
Learning across actors & scales to bridge outputs to outcomes
Scale actions for enabling conditions in more complex situations
MLE ARCHETYPESFour situations guide project design and choice of instruments for monitoring, learning and evaluation (MLE).
© Global Climate Adaptation Partnership
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 16
500m climate
portfolio within
IDAS Africa
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 17
Achieving Scale - Regular Periodic Competitions
Floating and scaling of ‘gems’ and increased impact
General competition
Targeted competition
Scaling competition
Targeted competition
General
Increasing profile and brand strength of the Global Resilience Challenge
2018
Regular competitions, targeted on an area of climate resilience, generate
demand and push the innovation frontier
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 18
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Time
Scale of
impact
Innovative
finance options
finance at scale
Challenge floats
not for profit and
private sector
innovation
solutions – some
teams drop away
Evidence based
platform of
nurtured
solutions
increases
credibility &
interest from
sponsors
Policy
influencing
adds to
scale
impact
Once competitions surface ‘gems’ and these successes are proven, a systematic
approach to scaling, profit or not for profit, will create industries and traverse
countries, regions, continents.
Achieving Scale – Scaling “Gems”
© 2015 KPMG Kenya, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. 19
We seek to create industries
20
Tailor scale up plans to gems – Social enterprise scaling
BUSINESS IS
DEVELOPMENT
SIZING IMPACT AND RISK
IN SOCIAL ENTERPRISE
FINANCE
FINANCIAL
INSTRUMENTS
SOURCE OF
FINANCE
EQUITY
GRANTS
CHALLENGE FUNDS
GRANT FUNDS
ANGELS
FRIENDS & FAMILY
INVESTORS
CHALLENGE FUNDS
GRANT FUNDS
ANGELS
FRIENDS & FAMILY
INVESTORS
VENTURE CAPITALIST
IMPACT INVESTORS
CHALLENGE FUNDS
GRANT FUNDS
VENTURE CAPITALIST
IMPACT INVESTORS
MFIS / BANKS
PRIVATE
EQUITY IPO
BANKS
PRIVATE
EQUITY IPO
BANKS
EQUITY GRANTS
RECOURSE LOANS
EQUITY
GRANTS
DEBT
MEZZANINE
EQUITY
DEBT
MEZZANINE
EQUITY
DEBT
MEZZANINE
> 25M > 7M
< 20M
> 2M
< 7M
> 250K
< 2M ≥ 50K AMOUNTS
IMPACT
START UPS
RISK
CHALLENGE
FUNDS
MID CAP
EARLY STAGE SME
LARGE
CAP IMPACT
INVESTMENT
SME CONSOLIDATION /
SCALE UP
KPMG International Development Advisory Services ©
fGAIA
21
Lessons
• Lack of systematic scaling of game changing projects,
programmes and businesses
• Need to break cycle of short funding time horizons
• Tailor different types of capital to different innovations
• Work across the policy spectrum including enabling
environment, complementary required to scale
• Work in partnerships and collegiately to scale the best
perfromers, pool funds and resources
• Be ambitious
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