Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental, Social, and Governance (ESG)

Environmental Achievements

• Successful implementation of the Environmental and Social Management Framework (E&S Risk Management Framework), with 91% of PLIs assessed having minimal exposure to high-risk activities.
• Development and implementation of Client Protection Framework aligned with Social Performance Task Force standards.
• Launched a TA package to support 10 PLIs in strengthening Environmental Social Performance Management through the adoption of the Universal Standards for Social and Environmental Performance Management (USSEPM).

Social Achievements

• Continued diversifying its outreach and impact, adding PLIs operating in agriculture, renewable energy, and fintech. These sectors make up a quarter of the amount disbursed and committed in 2022.
• Continued working with small Tier 2 and Tier 3 institutions, providing funding to nine such PLIs in 2022.
• Added new countries to the Fund's exposure: Cameroon, Botswana, and Mauritius.
• Provided 16 training scholarships to 8 PLIs from 6 countries through the TAF’s annual scholarship program.

Governance Achievements

• Attracted private investors to leverage on the C and B Share junior tranches, issuing USD 8 million and EUR 15 million of Notes to three different private investors.
• C-Shares recovered their initial value, allowing the Fund to serve target dividends for all Share Classes and pay complementary dividends.

Climate Goals & Targets

Environmental Challenges

• New Challenges in 2022: COVID-19, the invasion of Ukraine, macroeconomic risks, global trade disturbances, supply chain vulnerabilities, increased commodity prices, high inflation, limited capital flows, increased risk aversion, currency depreciations, high public debt, and social unrest.
• High hedging costs due to increasing currency volatility, depreciation risks, and higher interest rates.

Mitigation Strategies

• The Fund was successful in a number of aspects during 2022, with satisfactory growth, investments taking the loan portfolio at market value to USD 163.5 million, and 13 new partner lending institutions added.
• Continued supporting existing investees with loans renewed and top-ups.
• The Fund remains committed to supporting PLIs, adding new partners, and providing them with funding in local currency at competitive rates.
• The Fund has an adequate structure to bear the decreasing spreads.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SFDR Article 9 Fund

Third-party Assurance: Ernst & Young S.A.

UN Sustainable Development Goals

• 1
• 5
• 8
• 2
• 7
• 10
• 11

The Fund contributed to SDGs 1, 5, and 8 through investments in microfinance, SME loans, and housing loans. Additional SDGs (2, 7, 10, and 11) were addressed through a smaller share of investments.

Environmental Metrics

ESG Focus Areas

• Environmental and Social (E&S) Risk Management
• Client Protection Standards
• Gender Equality

Environmental Achievements

• 69% of PLIs underwent ESG assessment, 94% showing minimal exposure to high-risk activities.
• E&S action plans incorporated in loan agreements with 12 PLIs.
• 5 out of 10 PLIs with 2022 E&S action plans successfully implemented.

Social Achievements

• 20 PLIs engaged in Client Protection Pathway.
• Three PLIs with insufficient client protection practices received tailored action plans.
• Technical Assistance Facility (TAF) provided capacity building to 20 PLIs across five projects, including risk management and business development services.

Governance Achievements

• Successful implementation of SFDR reporting.
• Enhanced delivery of local currency funding through Open Currency Exposure strategy.
• 13th consecutive year of meeting target dividends for A and B Share Class investors.

Climate Goals & Targets

Environmental Challenges

• Turbulent macroeconomic context in Sub-Saharan Africa (SSA) due to the COVID-19 pandemic and the war in Ukraine.
• High inflation, increased interest rates, and risk aversion leading to funding squeeze and pressure on local currencies.
• Increased workout cases (8 in 2023 vs 6 in 2022), particularly in Nigeria due to inflation and Naira devaluation.
• Increased loan loss provision of USD 12.8M resulting in NAV deficiency for C-Shares.

Mitigation Strategies

• Implemented Open Currency Exposure Strategy to provide local currency funding at competitive rates.
• Earmarked FX compensation amount for C-Shareholders to mitigate currency losses.
• Additional loan loss provision to address increased risk.
• Continued collaboration with PLIs in Nigeria despite increased country risk.
• Effective asset and liability management resulting in exceptional distributable income.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SFDR (Article 9 Fund), UN Global Compact (UNGC), OECD Guidelines

Third-party Assurance: KPMG Luxembourg

UN Sustainable Development Goals

• SDG 1: No Poverty
• SDG 5: Gender Equality
• SDG 8: Decent Work and Economic Growth
• SDG 2: Zero Hunger
• SDG 7: Affordable and Clean Energy
• SDG 10: Reduced Inequalities
• SDG 11: Sustainable Cities and Communities

Investments in PLIs supporting MSMEs, women entrepreneurs, and sustainable development initiatives.