72051423R00006 Invest for Climate (IN4C).pdf

Issuance Date: September 20, 2023 Questions Due Date: October 03, 2023, 17:00 Bogota Local Time Full Proposal Due Date: November 03, 2023, 17:00 Bogota Local Time

Subject: Request for Proposal (RFP) No 72051423R00006, “USAID Invest for Climate (IN4C)” Activity

Dear Prospective Offerors:

The United States Government, represented by the United States Agency for International Development (USAID)/Colombia, is seeking proposals from U.S. or non-U.S., non-profit or for-profit organizations, to provide services to leverage and mobilize public and private finance to support Colombia’s climate adaptation and mitigation targets as described in the attached Request for Proposals (RFP).

The Authorized Principal Geographic Code for this solicitation is 937 – Default. The NAICS Code for this solicitation is 541611 - Administrative Management and General Management Consulting Services.

USAID anticipates awarding a single Hybrid - Cost plus Fixed Fee (CPFF) Completion - Indefinite Delivery, Indefinite Quantity (IDIQ) Contract. The Total Estimated Cost-Plus Fixed Fee for services under this contract (CLIN 001 & CLIN 002) is estimated to fall within the range of $55 million to $60 million. This procurement will be conducted under Full and Open Competition procedures, pursuant to Part 15 of the Federal Acquisition Regulation (FAR) (48 CFR Chapter 1). Please refer to Section L for information regarding proposal requirements. Offerors should consider the expected delivery time required by the proposal transmission method they choose, and they are responsible for ensuring proposals are received at USAID by the due date and time as specified in Section L. Any proposal not received by USAID by the date/time specified in this RFP will not be reviewed or evaluated. Faxed proposals are not acceptable, nor will they be reviewed or evaluated.

Section L of the RFP sets forth all instructions for the preparation and submission of required proposal contents, including critical dates/times for the submission of questions, and the proposal submission closing date and time. Section M states the criteria by which proposals will be evaluated. The competition will utilize a Highest Technical Rated with Fair and Reasonable Price and Realistic Cost (HTR) process, not a tradeoff process. In this process, USAID is concerned with getting the best technical solution that has a fair and reasonable price and realistic cost. Past

Performance will not be part of the technical evaluation; it will not be included in the HTR determination process and will be evaluated outside using a pass/neutral/fail approach.

Offerors must carefully review Sections L and M of this RFP for details of this process. Oral explanations or instructions given before award of the contract that are not formalized with an amendment will not constitute a formal amendment of the RFP and will not be binding.

This RFP in no way obligates USAID to award a contract or task order nor does it commit USAID to pay any cost incurred in the preparation and submission of a proposal. Award of a Contract under this RFP is subject to availability of funds and other internal USAID approvals.

USAID expects that Offerors will have equal access to all local organizations needed to implement this contract and strongly discourages exclusivity agreements with local organizations.

This RFP can be viewed and downloaded from www.sam.gov. USAID bears no responsibility for data errors resulting from transmission or conversion processes. Further, be aware that amendments to solicitations are occasionally issued and will be posted on the same website from which you downloaded the solicitation. USAID advises to regularly check the above website for amendments.

Interested firms can register and use the Interested Vendor List (IVL) accessible through this solicitation on www.sam.gov, so that firms can contact one another for consideration of teaming arrangements and/or small business subcontracting opportunities in response to this solicitation.

Sincerely, Heather Wirick Contracting Officer USAID/Colombia http://www.sam.gov/

SF 33 FORM

PART I – THE SCHEDULE

SECTION B – SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 PURPOSE

B.2 CONTRACT TYPE AND SERVICES

B.3 ESTIMATED COST, FIXED FEE AND OBLIGATED AMOUNT

B.4 CONTRACT BUDGET AND CEILINGS

B.5 OTHER DIRECT COST LIMITATIONS UNDER CLIN 002

B.6 LEVEL OF EFFORT (CLIN 002)

B.7 INDIRECT COST

B.8 COST REIMBURSABLE

SECTION C – STATEMENT OF WORK (SOW)

C.1 PURPOSE

C.2 BACKGROUND

C.3 COUNTRY DEVELOPMENT COOPERATION STRATEGY (CDCS) AND USAID´S CLIMATE

STRATEGY ALIGNMENT

C.4 RESULTS FRAMEWORK AND TASKS

C.5 ACTIVITY FUND

C.6 GENERAL ORGANIZING PRINCIPLES

C.7 SUPPLEMENTAL TECHNICAL ASSISTANCE (CLIN 002: 10% OF TOTAL ESTIMATED COST)

SECTION D – PACKAGING AND MARKING

D.1 AIDAR 752.7009 MARKING (JAN 1993)

D.2 BRANDING IMPLEMENTATION PLAN AND MARKING PLAN

SECTION E – INSPECTION AND ACCEPTANCE

E.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

E.2 INSPECTION AND ACCEPTANCE

SECTION F – DELIVERIES OR PERFORMANCE

F.1 NOTICE LISTING CLAUSES INCORPORATED BY REFERENCE

F.2 PERIOD OF PERFORMANCE

F.3 PLACE OF PERFORMANCE

F.4 PERFORMANCE STANDARDS

F.5 REPORTS AND DELIVERABLES

F.6 REPORTING AND DELIVERABLES MATRIX

F.7 FIXED FEE PAYMENT SCHEDULE [CLIN 001]

F.8 KEY AND NON-KEY PERSONNEL

F.9 AUTHORIZED WORKDAY/WEEK

F.10 ORDERING SUPPLEMENTAL TECHNICAL ASSISTANCE CLIN 002

SECTION G– CONTRACT ADMINISTRATION DATA

G.1 AIDAR 752.7003 DOCUMENTATION FOR PAYMENT (NOV 1998)

G.2 CONTRACTING OFFICER – CONTRACTING OFFICER’S REPRESENTATIVE

G.3 CONTRACTOR’S PRIMARY POINT OF CONTACT

G.4 PAYING OFFICE

G.5 ACCOUNTING AND APPROPRIATION DATA

G.6 CONTRACTOR’S PAYMENT ADDRESS

G.7 CONTRACTING OFFICER'S AUTHORITY

G.8 TECHNICAL DIRECTION/RELATIONSHIP WITH USAID

SECTION H – SPECIAL CONTRACT REQUIREMENTS

H.1 ADDITIONAL REQUIREMENTS FOR PERSONNEL COMPENSATION

H.2 AUTHORIZED GEOGRAPHIC CODE

H.3 ELECTRONIC PAYMENTS SYSTEM

H.4 EXECUTIVE ORDER ON TERRORISM FINANCING

H.5 SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY (DDL) (OCTOBER

2014) 70

H.6 GRANTS UNDER CONTRACTS (GUC)

H.7 USAID-FINANCED THIRD-PARTY WEB SITES (NOVEMBER 2017)

H.8 FOREIGN GOVERNMENT DELEGATIONS TO INTERNATIONAL CONFERENCES

H.9 PROHIBITION OF ASSISTANCE TO DRUG TRAFFICKERS

H.10 ENVIRONMENTAL COMPLIANCE

H.11 EXCHANGE VISITORS AND TRAINING

H.12 GOVERNMENT FURNISHED FACILITIES OR PROPERTY

H.13 INHERENTLY GOVERNMENTAL AND CLOSELY ASSOCIATED FUNCTIONS

H.14 PERFORMANCE MANAGEMENT INFORMATION SYSTEM

H.15 PRESS RELATIONS

H.16 SECURITY CONDITIONS

H.17 LIFE SUPPORT AND SECURITY SERVICES

H.18 TITLE TO AND CARE OF PROPERTY

H.19 FAR PART 4.21 PROHIBITION ON CONTRACTING FOR CERTAIN COVERED

TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT (SECTION 889)

(JUNE 2023)

PART II - CONTRACT CLAUSES

SECTION I – CONTRACT CLAUSES

I.1 FAR 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998)

I.2 752.252-2 AIDAR SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (MAR

2015) 85

I.3 52.203-13 CONTRACTOR CODE OF BUSINESS ETHICS AND CONDUCT (NOV 2021)

I.4 52.204-1 APPROVAL OF CONTRACT (DEC 1989)

I.5 52.204-25 PROHIBITION ON CONTRACTING FOR CERTAIN TELECOMMUNICATION AND

VIDEO SURVEILLANCE SERVICES OR EQUIPMENT (NOV 2021)

I.6 52.216-18 ORDERING (AUG 2020) (CLIN 002)

I.7 52.216-19 ORDER LIMITATIONS (OCT 1995) (CLIN 002)

I.8 52.216-22 INDEFINITE QUANTITY (OCT 1995) (CLIN 002)

I.9 52.229-8 TAXES – FOREIGN COST-REIMBURSEMENT CONTRACTS (MAR 1990)

I.10 52.244-2 SUBCONTRACTS (JUNE 2020)

I.11 52.247-67 SUBMISSION OF TRANSPORTATION DOCUMENTS FOR AUDIT. (FEB 2006) 99

I.12 752.229-71 REPORTING OF FOREIGN TAXES (JUL 2007)

I.13 752.7007 PERSONNEL COMPENSATION (JUL 2007)

I.14 752.228-3 WORKER’S COMPENSATION INSURANCE (DEFENSE BASE ACT) (DEC 1991)

[(DEVIATION JUN 2022)] CLASS DEVIATION NO. M-OAA-DEV-AIDAR-22-10C

I.15 LIMITATION ON ACQUISITION OF INFORMATION TECHNOLOGY (APRIL 2018)

PART III – DOCUMENTS AND OTHER ATTACHMENTS

SECTION J - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

J.1 REFERENCE DOCUMENTS

J.2 ACRONYMS LIST

J.3 COORDINATION WITH USAID ACTIVITIES

J.4 PERFORMANCE INDICATORS

J.5 BRANDING AND MARKING TEMPLATE

J.6 PAST PERFORMANCE REPORT - SHORT FORM

J.7 BUDGET GUIDANCE AND TEMPLATE

J.8 AMELP TEMPLATE

J.9 AMELP GUIDANCE

J.10 INITIAL ENVIRONMENTAL EXAMINATION (IEE)

J.11 SECTION 889 RULE GUIDANCE

J.12 USAID DIGITAL STRATEGY 2020-2024

J.13 BIOGRAPHICAL DATA SHEETS

J.14 SMALL BUSINESS SUBCONTRACTING PLAN TEMPLATE

J.15 NON-U.S. ORGANIZATION PRE-AWARD SURVEY GUIDELINES AND SUPPORT

J.16 USAID DIGITAL STRATEGY 2020-2024

J.17 STANDARD INDICATORS

J.18 REGIONAL INTEGRATION STRATEGY GLOSSARY

J.19 REGIONAL INTEGRATION STRATEGY TWO PAGER

J.20 LOCAL COMPENSATION PLAN – PAY SCALE 2022

J.21 HACIA EL ENVERDECIMIENTO DEL SISTEMA FINANCIERO COLOMBIANO

J.22 PRODUCTOS FINANCIEROS VERDES EN COLOMBIA

J.23 MARCO DE REFERENCIA DE BONOS VERDES SOBERANOS

J.24 ESTRATEGIA DE SOSTENIBLIDAD ASOBANCARIA

J.25 ADMINISTRACION DE RIESGOS Y OPORTUNIDADES CLIMATICAS PARA LOS

ESTABLECIMIENTOS DE CREDITO

PART IV – REPRESENTATION AND INSTRUCTIONS

SECTION K – REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS 106

K.1 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY REFERENCE

K.2 52.204-8 ANNUAL REPRESENTATIONS AND CERTIFICATIONS (MAR 2023)

K.3 52.204-24 REPRESENTATION REGARDING CERTAIN TELECOMMUNICATIONS AND

VIDEO SURVEILLANCE SERVICES OR EQUIPMENT (NOV 2021)

K.4 52.204-26 COVERED TELECOMMUNICATIONS EQUIPMENT OR SERVICES-

REPRESENTATION. (OCT 2020)

K.5 52.209-7 INFORMATION REGARDING RESPONSIBILITY MATTERS (OCT 2018)

K.6 52.209-12 CERTIFICATION REGARDING TAX MATTERS (OCT 2020)

K.7 52.209-13 VIOLATION OF ARMS CONTROL TREATIES OR AGREEMENTS CERTIFICATION

(NOV 2021)

K.8 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (JUN 2020)

K.9 52.230-7 PROPOSAL DISCLOSURE—COST ACCOUNTING PRACTICE CHANGES (APR

2005) 121

K.10 INSURANCE - IMMUNITY FROM TORT LIABILITY

K.11 CERTIFICATION REGARDING LOBBYING (22 CFR 227)

K.12 SIGNATURE

SECTION L - INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS

L.1 NOTICE LISTING CLAUSES INCORPORATED BY REFERENCE

L.2 52.216-1 TYPE OF CONTRACT. (APR 1984)

L.3 52.233-2 SERVICE OF PROTEST. (SEP 2006)

L.4 WAIVERS UNDER FAR PART 4.2101 PROHIBITION ON COVERED

TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES AND EQUIPMENT (JUNE 2023)

L.5 GENERAL INSTRUCTIONS TO OFFERORS

L.6 GENERAL SUBMISSION INSTRUCTIONS

L.7 INSTRUCTIONS FOR THE PREPARATION OF THE TECHNICAL PROPOSAL

L.8 INSTRUCTIONS FOR THE PREPARATION OF PAST PERFORMANCE INFORMATION

L.9 INSTRUCTIONS FOR THE PREPARATION OF THE COST/BUSINESS PROPOSAL

SECTION M – EVALUATION FACTORS FOR AWARD

M.1 GENERAL INFORMATION

M.2 METHOD OF EVALUATION

M.3 TECHNICAL EVALUATION CRITERIA

M.4 PAST PERFORMANCE

M.5 COST EVALUATION

M.6 DETERMINATION OF COMPETITIVE RANGE

ATTACHMENTS AND OTHER DOCUMENTS

J.1. REFERENCE DOCUMENTS

J.2. ACRONYMS LIST

J.3 COORDINATION WITH USAID AND GOC PROGRAMS

J.4. PERFORMANCE INDICATORS

J. 5 - BRANDING AND MARKING - GUIDANCE AND TEMPLATE FOR ACQUISITION AWARDS . 165

J.6 - PAST PERFORMANCE REPORT – SHORT FORM

72051423R00006 – Invest for Climate (IN4C) SECTION B

PART I – THE SCHEDULE

SECTION B – SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 PURPOSE

The purpose of this contract is to provide the services described in the Statement of Work (SOW) to implement the “Invest for Climate (IN4C)” Activity (henceforth ‘the Activity’), as described in Section C.

The purpose of the Activity is to leverage and mobilize public and private finance to support Colombia’s climate adaptation and mitigation targets. The Activity will take a systems approach aimed at transforming markets and financial systems to better value natural systems, incorporate climate risks and emissions-reduction targets in economic and financial decisions, and prioritize resilient and low emissions investments. This Activity will aim to reach impact at scale in its local interventions by expanding USAID’s work to mobilize finance for businesses and projects that reduce Greenhouse Gas (GHG) emissions from agriculture, forestry, and other land use (AFOLU);

promote clean energy; and enhance climate resilience and reduce vulnerability, while promoting local economic and social development.

B.2 CONTRACT TYPE AND SERVICES

This is a FAR 16.102(b) combination award consisting of a Cost-plus Fixed Fee (CPFF) Completion (CLIN 001) and a single-award Indefinite Delivery/Indefinite Quantity (IDIQ) type contract (CLIN

002) for the purpose of providing supplemental technical assistance.

Under the CPFF portion of the contract, which represents 90% of the total estimated cost, (CLIN 001), the Contractor must furnish all personnel, materials, equipment, supplies, facilities, services (except as expressly set forth in this contract as furnished by the U.S. Government (USG)) and perform all activities necessary for, or incidental to, the performance of work described in Section C and other sections of the contract not specifically identified under CLIN 002 as the IDIQ Supplemental Technical Assistance.

Under the IDIQ portion of the contract, which represents 10% of the total estimated cost, (CLIN 002), the Contractor must furnish additional supplemental technical assistance arising out of or related to the completion portion of the contract as required by USG-issued Level of Effort (LOE) Task Orders.

For the consideration set forth below, the Contractor must achieve the performance objectives and deliverables, or outputs described in Sections C and F, and otherwise comply with all contract requirements.

B.3 ESTIMATED COST, FIXED FEE AND OBLIGATED AMOUNT

The Total Estimated Cost (TEC) for CLIN 001 and CLIN 002 is [TBD].

a. Estimated Cost and Fixed Fee for CLIN 001

The Total Estimated Cost for this CLIN is [TBD], exclusive of fixed fee, if any. The fixed fee, if any, is [TBD]. The estimated Cost-Plus-Fixed-Fee, if any is [TBD].

b. Estimated Cost and Fixed Fee for CLIN 002

The Total Estimated Ceiling Cost for this CLIN is [TBD], exclusive of the associated maximum fee of [TBD]. The total estimated ceiling cost and maximum fee is [TBD].

c. Payment of Fixed Fee

CLIN 001: Pursuant to FAR 16.306(d), the fixed fee is payable under CLIN 001 and will be tied to the conditions and completion of the deliverables specified in Section F.7 of this contract and in accordance with the amounts in B.3.a.

CLIN 002: Payment of the corresponding fixed fee for each Task Order will be negotiated at the task order level upon receipt of a proper invoice and must directly correspond to the percentage of level of effort being paid. In no event, the fixed fee percentage of the Task Orders under CLIN 002 will exceed the fee percentage negotiated under CLIN 001.

d. Amount Obligated

CLIN 001: Within the estimated cost-plus fixed fee (if any) specified in paragraph a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance hereunder is [TBD]. The Contractor must not exceed the aforesaid obligated amount, nor will the United States Government (USG) be responsible for costs incurred should the Contractor do so.

Funds obligated hereunder are anticipated to be sufficient through [TBD].

B.4 CONTRACT BUDGET AND CEILINGS

CLIN 001

Direct Costs $TBD Activity Fund (At least 46% of the TEC of CLIN 001) $TBD Indirect Costs $TBD Total Costs $TBD Fixed Fee $TBD

Total Estimated Cost-Plus Fixed Fee $TBD

CLIN 002

Direct Costs $TBD Indirect Costs $TBD Maximum Fee $TBD Total Ceiling $TBD Total Estimated Cost-Plus Fixed Fee CLIN 001 and CLIN 002: $TBD

B.5 OTHER DIRECT COST LIMITATIONS UNDER CLIN 002

The estimated cost of this CLIN includes estimates for material, equipment, subcontracts, travel, and training required for performance of the total amount of work that can be ordered by the government under this CLIN during the life of this contract. The amount of ordered Other Direct costs will not exceed $1,500,000.

B.6 LEVEL OF EFFORT (CLIN 002)

a. In performing Government orders for Technical Assistance under CLIN 002, the Contractor is obligated to provide up to a maximum of 7,600 person-days.

b. The CLIN 002 fee set forth in B.3.b is based upon furnishing the level-of-effort specified in B.6.a. The total estimated cost and fixed fee will be established in the individual Government-issued Task Order and will not exceed the amounts set forth in Section B.4.

B.7 INDIRECT COST

The contract clause entitled “Allowable Cost and Payment (AUG2018)”, FAR Subpart 52.216-7, specifies that the indirect cost rates must be established for each of the Contractor’s accounting periods which apply to this contract. Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs shall be reimbursed based on the following negotiated provisional or predetermined rates and the appropriate bases:

Description Rate Base Type Period

[TBD] [TBD] 1/ 1/ 1/

[TBD] [TBD] 2/ 2/ 2/

[TBD] [TBD] 3/ 3/ 3/

1/ Base of Application:

Type of Rate:

Period:

2/ Base of Application:

Type of Rate:

Period:

3/ Base of Application:

Type of Rate:

Period:

B.8 COST REIMBURSABLE

Allowable costs shall be limited to reasonable, allocable, and necessary costs determined in accordance with FAR 52.216-7, Allowable Cost and Payment, FAR 52.216-8, Fixed Fee, if applicable, and AIDAR 752.7003, Documentation for Payment.

[END OF SECTION B]

72051423R00006 – Invest for Climate (IN4C) SECTION C

SECTION C – STATEMENT OF WORK (SOW)

INVEST FOR CLIMATE ACTIVITY

C.1 PURPOSE

The Invest for Climate Activity (IN4C) will leverage and mobilize public and private finance to support Colombia’s climate adaptation and mitigation targets.1 The Activity will take a systems approach aimed at transforming markets and financial systems to better value natural systems, incorporate climate risks and emissions-reduction targets in economic and financial decisions, and prioritize resilient and low emissions investments. This Activity will aim to reach impact at scale in its local interventions by expanding USAID’s work to mobilize finance for businesses and projects that reduce Greenhouse Gas (GHG) emissions from agriculture, forestry, and other land use (AFOLU); promote clean energy; and enhance climate resilience and reduce vulnerability, while promoting local economic and social development.2

C.2 BACKGROUND

Climate change is defined as long-term shifts in global temperatures and weather patterns.3 Human-driven climate change is a global crisis that is disrupting ecological systems, impeding economic growth, and increasing poverty, conflict, and instability. In Colombia, increased intensity and duration of extreme weather events have negatively impacted communities, the economy, and the environment. For example, the 2010 La Niña resulted in economic losses equal to two percent of Colombia’s Gross Domestic Product (GDP).4 It is important to address and mitigate the effects of climate change to ensure development efforts are successful and sustainable.

Climate finance refers to the use of public and private funding sources, such as directed (“earmarked”) government funds, concessional loans, green bonds or insurance services to support climate mitigation and adaptation actions.5 USAID can leverage climate financing to increase funding in projects and businesses that address climate change and help limit global warming to 1.5 degrees Celsius, as called for under the Paris Agreement.6 Increasing different actors’ access to climate finance also helps countries advance their climate action plans to cut emissions and adapt to climate impacts, otherwise known as Nationally Determined

1 Climate mitigation refers to anthropogenic intervention to reduce the sources or enhance the sinks of greenhouse gasses. Climate adaptation refers to adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities.

2 For a more detailed definition of the type of activities that can be categorized as AFOLU or sustainable landscapes, clean energy and adaptation please refer to section C.5.

3 https://www.un.org/en/climatechange/what-is-climate-change

4 BID, CEPAL. 2011. Valoración de Daños y Pérdidas. Ola Invernal en Colombia 2010-2011.

5 https://unfccc.int/topics/climate-finance/the-big-picture/introduction-to-climate-finance

6 https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement https://www.un.org/en/climatechange/what-is-climate-change https://unfccc.int/topics/climate-finance/the-big-picture/introduction-to-climate-finance https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

Contributions (NDCs).7

Colombia has an ambitious NDC to reduce GHG emissions by 51 percent by 2030 and reduce the risks and impacts of climate-related events, like extreme flooding.8 According to the Colombian National Planning Department (DNP), Colombia´s NDC requires an annual investment of at least USD $2.3 billion to achieve a reduction in its carbon emissions by 51 percent, with most of this investment coming from the private sector.9 The DNP also estimates that an additional USD $1.6 billion is needed to help key sectors and regions prepare for future climate events, under a conservative scenario.10 While the total value of climate finance required for Colombia’s NDC is only an estimate, current public and private investment flows, even if they are increasing11, are still clearly insufficient. In 2020, the Colombian government’s regional and national climate-related expenditures were USD $369 million.12 However, the actual emissions reduction and adaptation impact of these expenditures was not established.

USAID/Colombia’s experience has demonstrated that climate finance helps entrepreneurs, communities, and private sector actors reduce GHG emissions while enhancing licit livelihoods and local development. Through eight Reducing Emissions from Deforestation and Forest Degradation (REDD+) projects developed under the BioREDD and Paramos and Forests activities, USAID helped Colombia’s carbon market mobilize USD $26 million in climate finance for nineteen ethnic communities. USAID/Colombia’s Agribusiness Fund13 has also used climate financing to invest in climate-smart projects and businesses14 that protect forests by harvesting non-timber forest products, and by providing solar energy to rural families. The Energy for Peace Activity uses blended finance to unlock private capital to plan, build, and operate renewable energy generation projects in conflict- affected sites in rural Colombia prioritized in the peace accords.

Attachments in Section J provide additional information related to the state of the art of climate finance in Colombia, as well as existing Colombian government strategies and multiple-actors initiatives that are mobilizing funds for climate adaptation and mitigation in Colombia.

C.3 COUNTRY DEVELOPMENT COOPERATION STRATEGY (CDCS) AND USAID´S CLIMATE

STRATEGY ALIGNMENT

The Invest for Climate Activity will advance USAID/Colombia’s CDCS Development Objective 3, promote equitable and environmentally sustainable economic growth. It will do this by engaging with community, public, and private sector actors, including financial institutions, to develop, finance, and implement initiatives that help Colombia achieve its climate mitigation and

7 https://www.un.org/en/climatechange/all-about-ndcs 8https://www.minambiente.gov.co/cambio-climatico-y-gestion-del-riesgo/documentos-oficiales-contribuciones-nacionalmente-determinadas/ 9 UK Pact Colombia, CCADI, Transforma. 2023. Productos Financieros Verdes en Colombia.

10 Idem.

11 According to the Social Private Investment Index the environment-related investments are increasing. In 2020, the largest companies operating in Colombia invested USD $ 400 million while in 2021 their investments were USD $ 667 million.

12 Departamento Nacional de Planeación, 2021. MRV de Financiamiento Climático. Financiamiento Público Doméstico en 2020.

13 SEAF Agribusiness Fund Colombia 14 For this document, “climate-smart projects” refer to sustainable interventions that are to be implemented in a short time frame, with specific climate benefits and transversal development objectives (i.e. REDD+ projects). “climate-smart businesses” refer to indefinite term interventions that are profit driven and result in positive climate results (i.e. a renewable energy company).

https://2017-2020.usaid.gov/documents/colombia-country-development-cooperation-strategy https://www.un.org/en/climatechange/all-about-ndcs https://www.minambiente.gov.co/cambio-climatico-y-gestion-del-riesgo/documentos-oficiales-contribuciones-nacionalmente-determinadas/ https://www.seaf.com/investing/latin-america/seaf-colombia-agribusiness-fund/ adaptation objectives. The Activity will also contribute to CDCS Intermediate Result (IR) 3.1, expanded licit livelihood opportunities, and CDCS IR 3.2, more competitive licit economies.

Additionally, the Activity will contribute to IR 3.1 by: 1) providing business development assistance; 2) improving financial access for climate-smart projects and businesses; and 3) increasing climate-smart investment to expand markets. Finally, the Activity will contribute to IR

3.2 by: 1) improving public and private actors’ access to information on climate-smart opportunities; 2) reducing the risks and costs associated with climate-smart investment; and 3) supporting the development of sustainable value chains with climate benefits. The Activity is also aligned with the CDCS’ cross-cutting topics: private sector engagement, environmental sustainability, gender and inclusive development, technology and connectivity, marginalized population focus and local development systems (See sections C.6.3, C.6.4, C.6.7, and C.6.11).

This Activity also aligns with the USAID Climate Strategy’s objective of advancing equitable and ambitious actions to confront the climate crisis. It will do this by mobilizing funds for Colombia’s mitigation and adaptation goals. In particular, the Activity will contribute to the Strategy’s Objective 1 Target Direct Action, IR 1.1 Reduce Emissions - Catalyze urgent mitigation (emissions reduction and sequestration), IR 1.2 Build Resilience - Strengthen resilience of populations vulnerable to climate impacts (adaptation); and Objective 2 Systems Change, IR 2.1 Transform Key Systems - Advance the transformation of key systems and essential services to reduce emissions and enhance climate resilience, and IR 2.2 Shift Market Signals - Support a transition to resilient, net-zero economies and financial systems.

C.4 RESULTS FRAMEWORK AND TASKS

Mobilizing climate finance towards Colombia’s mitigation and adaptation targets requires commitment from financial institutions, private and community organizations, and government actors to engage in transforming markets and financial systems to incorporate climate risks and emissions-reduction targets in economic and financial decisions and prioritize resilient and low emissions investments. For example, financial institutions need to improve conditions and increase access to capital for climate initiatives, and community and private sector actors must develop portfolios of climate-smart projects and businesses that are eligible to receive climate finance. The Colombian government also needs to develop public policies that steer public finance toward priority climate objectives, and that move the productive sector towards implementing climate projects. Recognizing these needs, the Activity has three components, six intermediate results (IR), and three targets as follows:

https://www.usaid.gov/policy/climate-strategy

Component 1:

Financial institutions invest in climate-smart projects and businesses.

Component 2:

There is a robust and inclusive pipeline of viable climate-smart projects and businesses.

Component 3:

There is an improved enabling environment for climate-smart investment.

Target 1: USD $75 million investment mobilized in climate-smart projects and businesses.

Target 2: 20 million tons of GHGs emissions reduced, sequestered, or avoided through climate-smart projects and businesses.

Target 3: Twenty laws, policies, regulations, or standards that enable climate finance, adopted formally, proposed, or implemented.

IR 1.1:

Financial institutions are using climate finance instruments.

IR 2.1:

Climate-smart businesses are accelerated.

IR 3.1:

Public policies enable public and private climate finance.

IR 1.2:

Financial institutions and climate investments have a reduced cost of accessing capital.

IR 2.2:

Viable climate-smart projects are structured.

IR 3.2:

Public and private institutions report climate metrics.

The Invest for Climate Activity’s theory of change links the Activity’s components with the intended outcome: IF the supply of climate finance by financial and government institutions increases in conjunction with increased demand for this finance by climate-smart projects and businesses, and Colombia’s enabling environment encourages more climate-smart investment, THEN Colombia will leverage the funds needed to advance its climate adaptation and mitigation targets.

Component 1: Financial institutions invest in climate-smart projects and businesses.

The financial sector plays an important role in mobilizing climate finance by ensuring that capital flows away from carbon-intensive activities and increasingly toward investments in climate adaptation and mitigation, such as forest conservation and renewable energy. The banking sector, a section of Colombia´s financial institutions, has already taken initial steps to increase climate finance in alignment with the country’s environmental goals. For example, 65 percent of Colombian banks have a decarbonization strategy, and 53 percent of banks have reporting aligned with the Financial Stability Board's Task Force on Climate-related Financial Disclosures

(TCFD).15 Even so, financial institutions in Colombia still require additional capacity building and technical guidance to understand the physical and transition risks of climate change and its financial impact.

A preliminary survey of financial institutions in Colombia found that, with the exception of large banks like Bancolombia, few institutions have a robust green lending arm, or in-house capacity for carbon accounting.16 An analysis of Green Financial Products in Colombia found that only 36 percent of commercial banks and 16 percent of trust funds offer green financial products, mostly in the areas of green loans and agricultural insurance.17 Moreover, financial institutions are often hesitant to provide climate finance due to a combination of real and perceived project risk and low return on climate-related investment.

The Invest for Climate Activity will work with financial institutions, including commercial, investment and development banks; insurance companies and other institutional investors;

micro-financial institutions; guarantee funds, trust funds, and impact and philanthropic funds, to catalyze transformational and systemic change in the financial systems in order to accelerate and scale climate investments.18 In particular, the Contractor will strengthen financial institutions' understanding of, and capacity for, green lending, climate risk and carbon accounting in their lending practices and financial services. In addition, the Contractor will provide capacity building support and technical assistance to expand existing or develop new risk-mitigation and concessional capital instruments.19 To facilitate engagement with the financial sector, the Contractor will collaborate with financial institutions associations such as Asobancaria. When working with financial institutions, the Contractor must demonstrate a clear case for additionality, and will not provide capital for financial institutions or financial vehicles.

IR 1.1: Financial institutions have the capacity to use climate finance instruments.

Invest for Climate will co-fund and build financial institutions’ capacity to mainstream climate into their investment and business decision-making. This includes providing capacity building to financial institutions in green finance and inclusive banking fundamentals20 and products, in developing the tools to incorporate climate risk management and carbon accounting into their lending practices; and to measure and report on the carbon intensity and climate resilience of lending portfolios. The Contractor will assist financial institutions with expanding their capacity to use international reporting standards such as those established by the International Financial Reporting Standard (IFRS), the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TFND).21

15 IFC. 2022. Colombia Country Progress Report.

16 This preliminary study was conducted in conjunction with ASOBANCARIA in the spring of 2022.

17 UK Pact Colombia. CCADI. Transforma. 2023. Productos Financieros Verdes en Colombia.

18 Climate investments refers to public or finance investments in initiatives, projects or businesses that produce mitigation and/or adaptation benefits.

19 Concessional capital instruments are financial instruments that provide finance at a lower rate than is typical in a given market.

20 Sustainable banking refers to an area of the financial markets that aims to promote a positive environmental impact from its operations, including mitigating climate change.

21 IFRS Climate Related Disclosures. TFCD. TFND.

https://www.ifrs.org/projects/work-plan/climate-related-disclosures/ https://www.fsb-tcfd.org/ https://tnfd.global/

Furthermore, the Contractor will support financial institutions in developing a green lending arm to expand and scale the supply of financial products, including insurance products to cover climate-related losses, and financial products that mobilize funding for inclusive climate mitigation and adaptation projects and businesses at scale. As part of this, the Contractor will develop open, secure, and interoperable digital tools to assess the profitability and inclusivity of climate-smart projects/businesses, develop alternative scoring systems and forms of collateral.

The Contractor will work with financial institutions to improve their understanding of green bonds, carbon markets, and the adoption of tools, such as net-zero target setting, using methodologies like those established under the Science Based Target Initiative (SBTi).22 Through this IR, the Contractor will hold financial institutions to high performance standards upon reception of the technical assistance and support provided by the Activity. Finally, to achieve this IR, the Contractor will learn from and collaborate with existing initiatives such as the International Finance Corporation (IFC)’s Green Banking Academy.

IR 1.2: Financial institutions and climate investments have a reduced cost of accessing capital.

One barrier to accessing and scaling finance for climate-smart investments is the high cost of capital due to factors such as lower expected financial returns, and high-risk profiles of these investments. Under this IR, Invest for Climate seeks to design and facilitate the implementation of financial mechanisms that lower the cost of capital for climate investments and catalyze investments at scale, through collaboration with Development Financial Institutions (DFI) including the U.S. Development Finance Corporation (DFC), the IFC, or the Inter-American Development Bank (IADB). Although this is a priority, the Contractor will not use USG funds to provide capital for financial institutions or financial vehicles.

The Contractor will work with DFIs and other actors to structure innovative financial instruments offered to financial institutions to help de-risk climate investments. This in turn will increase the financial sector’s investment appetite for climate initiatives. In addition, the Contractor will assist in the creation of financial products that leverage first-loss tranches for climate projects, and that decrease investment risks for senior tranches funded by private investors.23 The Contractor will also support the design of green bonds or impact bonds with payment for climate results, and other capital market transactions.

The Contractor will also develop or enhance financial instruments that lower the cost of capital for climate investments. To this end, the Contractor will establish partnerships between industry leaders, international and national investors, and development banks. For example, the Contractor may develop new market-based financial instruments, such as blended finance and/or credit enhancement mechanisms, for investments with lower expected financial returns and higher risk profile. In addition, the Contractor will collaborate in the creation or strengthening of funds that provide impact investment at scale for climate-smart projects or

22 SBTi 23 Tranches are a collection of securities that are separated and grouped based on various characteristics such as maturities, credit ratings, and yields–or interest rates. First loss tranches are meant to absorb the first losses that impact the portfolio thereby reducing risk for other investors. Only if losses are bigger than what can be absorbed by the first tranche are other tranches impacted.

https://sciencebasedtargets.org/ businesses. Clear criteria for additionality and development and climate impact must be used.

The Contractor will co-fund technical assistance to financial institutions so that they can more easily access capital from the DFI like the DFC and pre-existing climate funding pools, like the Green Climate Fund (GCF).

To lower the cost of capital by reaching investments of larger scale, Invest for Climate will partner with corporations and financial actors that have committed to net-zero targets to pilot innovative value chain finance mechanisms that enable micro, small and medium suppliers to transform the production cycle, reduce emissions, and improve climate resilience. In addition, the Contractor will promote investments in climate aggregators,24 and the development of portfolio guarantees to backstop local lenders, each of which can be supported by the development of a high-quality pipeline of projects. To tackle the foreign exchange risk for larger climate-smart investments, the Contractor may support the design of creative standby liquidity facilities to help investors hedge against foreign exchange risk.

To achieve this IR, the Contractor will learn from and collaborate with existing initiatives working in Colombia to accelerate private climate flows in Colombia, such as the Climate Finance Leadership Initiative (CFLI).25

To facilitate and increase the appetite of the financial sector by reducing risk, costs and incentivizing the provision of climate finance at scale, the Contractor will use the Activity Fund.

The Contractor may give priority to performance and results-based grants from the Activity Fund to hold financial and private sector institutions accountable for results, such as increased mobilization of funds for climate investments. Grant funds will encourage innovation, leverage new funding sources and co-fund training and technical assistance.

Importantly, IR 1.2 will work in concert with IR 1.1 to mitigate real and perceived risks in climate finance by helping financial institutions understand the risks and opportunities found in climate investments.

Component 2: There is a robust and inclusive pipeline26 of viable climate-smart projects and businesses.

In addition to increasing the supply of climate finance by financial institutions, there also needs to be increased demand for climate finance resources by climate-smart projects and businesses.

However, there are very limited viable climate-smart projects and businesses with access to climate finance in Colombia. In a 2022 report by Latimpacto, a lack of climate-smart projects and

24 Financial aggregation has the potential to unlock new sources of capital investment for the development of climate projects and businesses in developing countries by providing the opportunity to invest in a diversified portfolio and gain exposure. UNDP’s Climate Aggregation Platform offers examples.

25 Climate Finance Leadership Initiative.

26 A robust pipeline of projects refers to projects that have been structured, proved technically, financially and legally feasible and which have the option of being bankable or eligible for public funding. Bankable projects means that projects/business have financial metrics that could attract financing institutions interest.

https://www.undp.org/climate-aggregation-platform https://www.undp.org/climate-aggregation-platform https://www.bloomberg.com/cfli/mobilizing-investment/colombia/ poor understanding and measurement of climate indicators were identified as some of the main factors negatively impacting climate-smart investment in Latin America.27

On a positive note, Colombian government institutions have identified 148 strategic actions for climate mitigation and 30 actions for climate adaptation to help meet Colombia’s NDCs, and they have been using the Colombian government’s project structuring rules and platforms to access public financing.28

Even so, climate-smart initiatives are still too broad, specific and indicative, and do not yet constitute a robust and aggregated portfolio of bankable and eligible projects and businesses.

According to Colombia’s latest NDC status update, the country needs more technical and financial support in the areas of climate-smart project structuring and implementation to successfully request and channel climate finance.29 Also, only 7% of total private equity and venture funding in emerging markets is targeted towards female-led businesses and just 3% of philanthropic environmental funding supports girls’ and women’s environmental activism. Although women-led businesses often have difficulty accessing funding from climate finance providers, women-led companies are more likely to reach climate targets.30

To increase potential investments in climate mitigation and adaptation, Colombia needs to develop a robust pipeline of market-based and inclusive climate-smart projects and businesses that reach mitigation and adaptation objectives at scale. Invest for Climate will support the development of this pipeline by identifying and accelerating climate-smart businesses and projects that reduce emissions in the AFOLU sector, promote clean energy and/or enhance climate resilience and adaptation, within the contract’s target geography. The Contractor will seek to reach scale, impact, and commercial sustainability by nurturing vertical or horizontal aggregation of climate-smart projects or businesses.31

IR 2.1: Climate-smart businesses are accelerated.

Invest for Climate will accelerate an inclusive group of climate-smart businesses and strengthen their commercial viability by making them financially viable, legally established, and sustainable;

and, by supporting their engagement with capital suppliers. The Contractor will design sustainable methodologies to reach businesses at scale, in lieu of providing business development services and support to single business units.

To achieve this result, the Contractor will identify climate-smart businesses at different stages of maturity and with different risk/return profiles, and provide development support services, 27 Latimpacto. 2022. Informe Anual.

28 Departamento Nacional de Planeación. 2021. MRV de Financiamiento Climático. Financiamiento Público Doméstico en 2020.

29https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Colombia%20First/NDC%20actualizada%20de%20Colombia.pdf 30 PNUD. Gender, climate and finance: How financing female-led businesses can lead the way to a net-zero future for people and the planet. 2022.

https://www.unepfi.org/themes/climate-change/gender-climate-and-finance-how-financing-female-led-businesses-can-lead-the-way-to-a-net-zero-future-for-people-and-the-planet/ 31 Horizontal aggregation involves identifying projects and businesses in the same geographic area, that share common climate vulnerabilities, or that operate in the same sector, like agriculture. In contrast, vertical aggregation involves integrating different actors within the same supply chain.

https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Colombia%20First/NDC%20actualizada%20de%20Colombia.pdf https://www.unepfi.org/themes/climate-change/gender-climate-and-finance-how-financing-female-led-businesses-can-lead-the-way-to-a-net-zero-future-for-people-and-the-planet/ https://www.unepfi.org/themes/climate-change/gender-climate-and-finance-how-financing-female-led-businesses-can-lead-the-way-to-a-net-zero-future-for-people-and-the-planet/ including technical assistance and training to develop business plans, financial data, improve management performance, and technical support to overcome other types of barriers, to help them become self-sufficient with access to the financial sector. Target businesses will also include fintech and technology solutions that enhance climate resilience and reduce vulnerability and accelerate mitigation in the AFOLU and clean energy sectors.

To scale the impact and profitability of climate-smart businesses, the Contractor will help businesses to identify and accelerate opportunities for innovation and technological advancements, by supporting research and development work, and by assisting businesses in accessing existing policy incentives, like green or innovation tax incentives.

Businesses will also receive assistance to quantify their impact in reducing, capturing or removing GHG emissions, including their impact in reducing climate vulnerability and increasing climate resilience in the regions where they operate, so that businesses can report their climate impacts to their investors and other stakeholders. Climate indicators reported by businesses must be aligned and contribute to the Contract´s main indicators.

The Contractor must identify opportunities to support aggregated businesses, for example, by supporting business associations and cooperatives in the agricultural sector, aggregated community projects, portfolios of solar mini-grids, electrification of mass transport systems or commercial fleets, in lieu of single business units, so that greater impact and scale is achieved through the contract. The Contractor must also utilize an inclusive approach to address the massive gap in gender and marginalized groups equitable climate finance.32

In addition, Invest for Climate will select, foster and accelerate innovative, technology-based, well designed, early-stage solutions and business ideas to tackle mitigation and adaptation challenges. Moreover, the Contractor will provide business mentoring to smaller but high-growth entrepreneurs to help them scale and bring their business ideas to fruition.

Under this IR, Invest for Climate will link climate-smart businesses with financial institutions including those supported under IR 1.1 and 1.2, by providing transaction advisory services, so that businesses can understand capital requirements, and effectively close finance deals.

The Contractor will prioritize engaging marginalized communities, including youth, women, ethnic communities, migrants and members of the lesbian, gay, bisexual, transgender, queer and intersex (LGBTQI+) community throughout the approaches described under IR 2.1 and 2.2, so that they are able to implement climate-smart projects and businesses according to their needs and interests. Prioritizing marginalized communities under this component will generate greater social and economic benefits, advance climate goals, and increase the potential of attracting finance from social impact investors. Engagement with ethnic communities requires a process of meaningful informed consultation process and should aim at conceiving communities as partners

32 USAID and Medium. 2023. https://medium.com/usaid-2030/the-multiplier-effect-how-investing-in-women-led-climate-solutions-drives-sustainable-impact-ae4d9b188a52 https://medium.com/usaid-2030/the-multiplier-effect-how-investing-in-women-led-climate-solutions-drives-sustainable-impact-ae4d9b188a52 https://medium.com/usaid-2030/the-multiplier-effect-how-investing-in-women-led-climate-solutions-drives-sustainable-impact-ae4d9b188a52 in development.

The Contractor must use the Activity Fund and find innovative, market-driven results and performance-based strategies to provide business development services, to help climate-smart businesses strengthen their ability to attract future private sector investment through improved business planning, financial management and reporting, marketing, technology transfer, and regulatory compliance. Business development will be provided upon identification of market inefficiencies throughout the supply chain, and by helping businesses improve their financial and operational performance. For more mature businesses, grant funds will be used to partially off-set the cost to the businesses, through direct transfer or payment vouchers or other innovative approaches.

The Contractor is encouraged to learn from and collaborate with existing climate businesses incubators and accelerators working in Colombia and other parts of the world, such as the UK Government Climate Finance Accelerator33, the Norwegian Global Green Growth Institute Facilidad de Asistencia Técnica para la Estructuración de Proyectos34, and the Global Innovation Lab for Climate Finance.35

IR 2.2: Viable climate-smart projects are structured.

The Contractor will take a systems approach and work with local communities, non-government organizations (NGO), public, international and private actors, including businesses supported under IR 2.1 to support the design and preparation of climate-smart projects with the potential to reach climate impacts at scale, generate revenue, and that have positive social and economic impacts. Projects that provide public goods without the capacity to generate revenues, for example, a project to improve flood protection in a vulnerable community, will also receive support for their design and preparation.

The Contractor is encouraged to work with national development banks…