GEF Latam: preparing the ground for climate mitigation and adaptation funding

How does GEF Latam ensure alignment with the Paris Agreement?

GEF Latam demonstrates its unwavering commitment to the Paris Agreement with policies that proactively exclude high-emission sectors, including major carbon emitters and the fossil fuel industry. It uses proprietary assessment tools to meticulously evaluate and validate each invest - ment’s climate compatibility, actively engaging with Limited Partners (LPs) for rigorous scrutiny. Post-investment, GEF fosters transparency and accountability by assisting companies with accurate carbon reporting, continually monito - ring environmental performance, and relentlessly pursuing carbon footprint reduction, all within the framework of clearly defined net-zero objectives.

What tools does the fund use to assess climate and ESG risks?

The GEF Latam approach to climate and ESG risk assessment is holistic and robust, leveraging multiple structured tools, which include the following : 

What proportion of the portfolio aligns with climate goals, and how is this verified from the outset and during the holding period?

We proudly maintain a 100% climate-aligned portfolio. Every investment opportunity undergoes rigorous initial screening and an extensive external ESG due diligence adhering to IFC standards. This comprehensive process ensures consistent climate alignment at entry and continuous verification throughout the investment lifecycle, with climate integrity embedded at the core of the strategy.

How does the fund balance business growth with emissions reduction?

GEF Latam excels by embedding a strategic alignment of business growth and emission reduction from the outset. Climate governance principles are integral, beginning with the earliest stages of investment evaluation. Term sheets explicitly define climate commitments, supported by rigorous, enforceable climate-focused ESAPs. Each investee company forms a dedicated Sustainability Stewardship Committee, overseen by specialized Sustainability Officers, ensuring climate performance goals are seamlessly integrated with financial objectives, creating sustainable value for stakeholders.

What are the fund’s climate adaptation and mitigation comparative allocations?

Currently, our portfolio strategically allocates approximately 75% to climate mitigation, prioritizing transformative renewable energy projects, cutting-edge energy efficiency solutions, and pioneering circular economy initiatives. The remaining 25% of our investments focus on climate adaptation, particularly on resilient critical infrastructure such as advanced water and wastewater management systems. With its commitment to evolving climate resilience, the fund aims to increase its adaptation investments significantly, to address urgent and emerging environmental challenges.

What indicators does the fund use to track its climate performance?

Rigorously monitoring the fund’s climate impact entails using clear and comprehensive indicators. Mitigation projects are tracked for emissions avoided, comprehensive emissions inventories, renewable energy adoption, water usage, and waste management efficiency. Adaptation metrics evaluate tangible resilience benefits – including beneficiaries strengthened against climate impacts – hectares restored, and water conserved. This extensive dataset informs a dynamic dashboard, which is regularly updated and externally verified to ensure transparency and accuracy.

In your view, what are the most promising climate sectors in the near future?

Sustainable agriculture and land management are foundational to Brazil’s climate and development strategies, offering profound potential for impactful change. The fund closely tracks the exciting rise of bio-inputs. These simultaneously address economic resilience, by reducing dependency on imported agrochemicals, and enhance climate resilience, through improved soil health and significant emission reductions. 

 Brazil also boasts exceptional potential in clean energy, generating over 82% of electricity from renewables. Yet, heavy reliance on hydropower combined with infrastructural inefficiencies heightens its vulnerability to climate-induced stress. Thus, expanding non-hydro renewable sources like solar and wind are essential to securing sustainable energy resilience. Furthermore, significant opportunities exist in advanced wastewater and sludge management solutions. With only 51% of Brazil’s population connected to proper wastewater systems, addressing this critical gap using innovative infrastructure will significantly enhance community resilience, public health, and sustainable economic growth.

What lessons has GEF Latam learned from investing in climate?

Our journey has reinforced the crucial importance of region-specific climate risk assessments and integrating climate governance early in the investment process, expanded on below

Region-specificity. Climate change is inherently local, manifesting unique risks and opportunities across different regions. Relying solely on international benchmarks without local context can result in overlooked risks and missed opportunities. Metrics built exclusively around European transition frameworks often miss critical adaptation needs and supply chain vulnerabilities specific to Latin America.

Climate governance. In earlier investments, the introduction of ESG and climate governance frameworks following investment decisions led to slower adoption and resistance from management teams. Today, embedding climate governance from the earliest stages is prioritized. This significantly enhances management engagement, fosters timely identification of climate risks and opportunities, and ultimately improves investment outcomes.

How does the current geopolitical ecosystem influence climate investments in Brazil?

Brazil enjoys a strategic advantage in climate investment, benefiting from growing global demand for renewable energy, sustainable commodities, and critical minerals. Its potential as a candidate for supply chain diversification further enhance its strategic appeal. 

Brazil’s active role in international forums like the G20 and COP30 reinforces its credibility and attractiveness to international climate finance. Nonetheless, global macroeconomic uncertainties and persistent domestic challenges present layers of capital risks that must be navigated carefully. The fund’s strategy involves proactively managing these factors to ensure resilient and impactful investments.

What impact does Proparco’s investment have on mobilizing other climate finance?

Proparco’s partnership1 significantly enhances GEF Latam’s credibility, enabling it to mobilize substantial additional climate finance from institutional and private investors. Its stringent climate diligence, robust reporting standards, and expert technical guidance have been instrumental in refining GEF Latam’s internal impact assessment frameworks, aligning it closely with global climate commitments. 

Proparco’s active role has also been catalytic in attracting investments from key institutions such as the Japan International Cooperation Agency (JICA) and BNDES, as well as from several institutional investors currently in discussions as potential future partners. This collaboration empowers GEF Latam to confidently engage in frontier climate sectors, including critical materials, positioning it as a leader in innovative, impactful climate investing.