RFI Climate Finance 11232022.pdf

Subject: Request for Information (RFI) Issue Date: November 23, 2022 Deadline to submit feedback: January 9th, 2023 Anticipated Activity Title: Climate Finance Anticipated mechanism type: To be determined (TBD) Anticipated timeframe: 5 five years, 2023 - 2028 Anticipated total budget: $40-48 million USAID investment.

To All Interested Parties:

The United States Agency for International Development (USAID) is seeking feedback through this Request for Information (RFI) from entities interested in the attached Concept Paper for the USAID/Climate Finance Activity. This Activity will leverage and mobilize public and private finance to support Colombia’s climate adaptation and mitigation targets in key sectors.

Any interested organizations are invited to provide feedback on the Concept Paper included in Attachment A. The purpose of this RFI is to assess the soundness and robustness of the conceptual design.

This is NOT a Request for Proposals/Applications and is NOT to be construed as a commitment by the U.S. Government to issue any solicitation/notice of funding opportunity or to pay for any costs incurred in the preparation and submission of comments/answers on this RFI.

Responding to this RFI will not give any advantage to any firm or organization in any subsequent procurement and will not lead to an organizational conflict of interest. Responses will strictly be held confidential. Potential offerors/applicants must not expect a direct response from the U.S.

Government to any of the comments/suggestions.

Please strictly limit the response to the questions included in Attachment B and to comments/suggestions to the document. To expedite our review and be considerate of your time, please keep the response to no more than eight (8) pages in length. Please note not all questions must be answered. Responses to the notice must be written in English or Spanish and use 11 pt.

font.

Responses to this RFI must be sent by the closing date and time to:

Paula Cubillos Olano, Senior Acquisition & Assistance Specialist at pcubillos@usaid.gov

Thank you for your interest in USAID/Colombia programs and we look forward to your comments.

Heather Wirick Contracting/Agreement Officer USAID/Colombia mailto:pcubillos@usaid.gov

List of Attachments:

● Attachment A: Concept Paper - “Climate Finance Activity.”

● Attachment B: RFI Guiding Questions

Attachment A

USAID/COLOMBIA Climate Finance Activity Concept Paper

I. JUSTIFICATION

Climate change is defined as long-term shifts in global temperatures and weather patterns. Human-driven climate change is a global crisis, and it is disrupting ecological systems, affecting 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 caused Colombia to have economic losses equal to two percent of the country's Gross Domestic Product (GDP). It is important to address and mitigate the effects of climate change in order to ensure that other development efforts are successful and sustainable.

Climate finance refers to the use of public and private funding sources, like government bonds and low-interest loans, to support climate mitigation and adaptation actions. 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.

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 Contributions (NDC). It does this by allowing countries to access funds needed to reduce greenhouse gas (GHG) emissions, sequester atmospheric carbon dioxide (CO2), and decrease human and ecological systems’ vulnerability to climate change.

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. According to the Colombian National Planning Department (DNP), reducing GHG emissions by 20 percent will require an annual investment of USD $1 billion, with 62 percent of this investment coming from the private sector. The DNP also estimates that an additional USD $2.1 billion is needed to help key sectors and regions prepare for future climate events and probable climate change scenarios, like reduced rainfall and increasing temperatures. While the total value of climate finance that Colombia needs to comply with its NDC is still to be determined, current public and private investment flows are insufficient. In 2020, regional and national Colombian government climate-related expenditures were USD $369 million. Moreover, 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, USAID has helped Colombia’s carbon market mobilize USD $26 million in climate finance for nineteen Afro-Colombian communities and one indigenous community. USAID’s Agribusiness Fund has also used climate financing to invest in climate smart projects and businesses that protect forests by harvesting non-timber forest products, and by providing solar energy to rural families. The Climate Finance Activity will build upon USAID’s work in this sector by mobilizing finance to reduce GHG emissions, boost climate change resiliency, and reduce poverty and insecurity by creating jobs that are socially and environmentally sustainable. The activity will also channel climate finance into projects and businesses related to clean energy, climate adaptation, green transportation, and sustainable Agriculture, Forestry and Other Land Use (AFOLU).

II. PURPOSE

To leverage and mobilize public and private finance to support Colombia’s climate adaptation and mitigation targets in key sectors.

III. DEVELOPMENT HYPOTHESIS

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.

IV. RESULTS FRAMEWORK

Mobilizing climate finance towards Colombia’s NDC targets requires commitment from financial institutions, private and community organizations, and government actors. For example, financial institutions need to improve conditions and increase borrower 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 objectives and intermediate results (IR) of the Climate Finance Activity are as follows:

Objective 1:

Financial institutions invest in climate smart projects and businesses.

Objective 2:

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

Objective 3:

There is an improved environment for climate smart investment.

IR 1.1:

Financial institutions have the capacity to use 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 have a reduced cost of accessing capital.

IR 2.2:

Bankable climate smart projects are structured.

IR 3.2:

Public and private institutions report climate metrics.

Objective 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 toward investments in climate adaptation and mitigation activities, like forest conservation and renewable energy. To limit global warming to

1.5 degrees Celsius, public and private climate finance flows in emerging markets, like Colombia, need to reach USD $1.5 trillion annually by 2030. Colombia’s banking sector has already taken steps to increase climate finance flow 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). Even so, Colombian financial institutions require additional capacity building and technical guidance to understand physical and transition risks of climate change and its financial impacts. A preliminary survey of Colombian financial institutions found that, with the exception of large banks like Bancolombia, few institutions have a robust green lending arm, nor in-house capacity for carbon accounting. 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.

To mobilize investment in climate smart projects and businesses, Colombian financial institutions need to have better understanding and use of green finance, climate risk, and carbon accounting in their lending practices. As such, the activity will provide technical assistance to financial institutions to increase these institutions’ understanding of, and capacity for, green lending. Technical assistance and capacity building support provided by the activity to financial institutions may also include developing risk-mitigation and concessional capital instruments through collaboration with actors like the U.S. Development Finance Corporation (DFC), but will not include creating or developing new financial intermediaries.

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

The activity will enhance financial institutions’ capacity to incorporate climate risk management and carbon accounting into their lending practices. This includes developing in-country capacity to structure green lending deals, and to measure and report on the carbon intensity and climate resiliency of lending portfolios. To accomplish this IR, the activity could train financial institutions in green banking fundamentals, like sustainable construction and Environmental, Social, and Corporate Governance (ESG). Alternatively, the activity could help financial institutions develop a green lending arm for renewable energy, sustainable agriculture, and other climate-friendly activities. The activity could also partner with financial institutions to improve their understanding and use of green banking tools, like net-zero target setting, and green financial instruments, like green bonds and carbon markets.

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

The activity will provide technical assistance to financial institutions so that they can more easily access capital from DFC and other pre-existing climate funding pools, like the Green Climate Fund (GCF). Improved access to existing sources of climate finance will lower the cost of capital, and will decrease risks to financial institutions associated with climate related lending. Under this IR, the activity could provide technical assistance to structure green lending guarantees offered to financial institutions by international donors, institutional investors, and development banks.

Alternatively, the activity could assist financial institutions to create new financial products that leverage first-loss tranches for climate projects, and that decrease investment risks for senior tranches funded by private investors. The activity could also establish partnerships between industry leaders, international investors, and development banks to incentivize climate finance investments. For example, the activity could work with organizations like the Inter-American Development Bank (IADB) to develop new financial instruments, like blended finance mechanisms. 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 access guarantees and understand the risks and opportunities in the climate finance sector.

Target 1: USD $70 million investment mobilized in climate-smart projects and businesses.

Objective 2: There is a robust pipeline 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 too few, viable climate smart projects and businesses that can apply for climate finance in Colombia. In a 2022 report by Latimpacto, a lack of climate smart projects and poor understanding and measurement of climate indicators were identified as some of the main factors negatively impacting climate-smart investment in Latin America. On a positive note, Colombian 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 structuration rules and platforms to access financing for climate-related projects. Even so, climate smart initiatives are still too broad and indicative, and do not yet constitute a robust and aggregated portfolio of bankable projects and businesses. According to Colombia’s latest NDC status update, the country needs more support in the areas of climate smart project structuration and implementation in order to successfully request and channel climate finance.

To increase potential investments in climate mitigation and adaptation, Colombia needs to develop a robust pipeline of climate smart projects and businesses. The activity will support the development of this pipeline by identifying and accelerating climate smart projects and businesses that reduce emissions and/or mitigate the impacts of climate change in key sectors and in the activity’s target geography. The activity will also identify and nurture opportunities for the vertical and horizontal aggregation of climate smart projects and businesses as a means to increase the scope and scale of climate results, and to make projects and business more technically feasible. The activity will prioritize engaging marginalized communities, including youth, women, ethnic communities, migrants and members of the lesbian, gay, bisexual, transgender, queer and intersex (LGBTQI+) community, so that they are able to implement climate smart projects and businesses according to their needs and interests. Prioritizing marginalized communities under this objective will generate greater social and economic benefits and increase the potential of attracting finance from impact investors.

IR 2.1: Climate-smart businesses are accelerated.

The activity will accelerate the development and aggregation of climate smart businesses to make them financially viable, legally established, and sustainable. To achieve this result, the activity will identify climate smart businesses at different stages of maturity, and provide business support services, like legal and financial advice, to help them become self-sufficient businesses with access to the financial sector. Businesses will also receive assistance to quantify GHG emission reductions, assess and respond to climate risks, and/or estimate mitigation and adaptation results, so that they have clearer climate objectives and impacts. The activity could achieve this IR by supporting research and development work needed for climate smart businesses, and by assisting businesses in accessing existing policy incentives, like green tax incentives. The activity could also help scale-up the impact and profitability of businesses, like renewable energy and non-timber forest products, through innovation, technological advancements, and vertical aggregation of supply chain actors. This IR will support IR 1.2 by linking climate smart businesses with business associations and financial institutions during the structuring phase, so that they can align with sector priorities, understand capital requirements, and effectively close finance deals.

IR 2.2: Bankable climate-smart projects are structured.

The activity will support the design and implementation of climate smart projects with the potential to generate revenue, and that have positive social and environmental development objectives and impacts. To achieve this result, the activity will work with community, public, and private actors, including businesses supported under IR 2.1, to develop and implement aggregated and jurisdictional projects with climate mitigation and adaptation priorities. For example, the activity could support the development and horizontal aggregation of deforestation projects that have the shared objective of reducing GHG emissions in a given geography. The activity could also work with government actors to establish a project preparation facility for priority climate adaptation projects that will reduce climate risks to target populations, regions, and/or business sectors. The activity could also engage with international funds, development banks, and other sources of financial resources to direct capital towards these projects. Lastly, the activity could provide technical assistance to local actors, prioritizing members of marginalized communities including youth and women, to structure projects according to the technical requirements of each finance source. For instance, the activity could provide local actors with support needed to conduct feasibility studies addressing legal, technical, and financial components of a project.

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

Objective 3: There is an improved environment for climate-smart investment.

Colombia has climate finance investment potential but attracting this investment requires a robust domestic enabling environment, with reduced risks, strong competition, and enhanced capital flows. To this end, the Colombian Government has started to implement climate policies that help create an enabling environment for climate-smart investment. For instance, Colombia’s introduction of a carbon tax in 2016 incentivized GHG emissions reductions and has generated over USD $525 million in revenues for environment protection. Likewise, Colombia’s domestic voluntary carbon market has mobilized USD $293 million for projects that reduce GHG emissions from deforestation and energy production. Despite this progress, Colombia still needs to improve existing instruments to increase the amount of funds mobilized and generate greater climate impacts. For example, Colombia´s carbon tax ought to include coal in the list of taxable fuels, and the next generation of green bonds should target projects that restore Colombia´s ecosystems and improve carbon removals. Colombia also needs to develop regulations and mechanisms to increase public and private actors’ access to information about climate finance. As it stands, the National Planning Department (DNP) is using a climate finance tracking system to improve the transparency of climate finance in Colombia, and the Ministry of Finance has developed a green investment classification system, called the Green Taxonomy. Although positive initiatives, the finance tracking system is unable to identify the climate impacts of the tracked funds and the Green Taxonomy still needs to be broadly implemented throughout the financial sector.

To improve the environment for effective, climate-smart investment, Colombia needs to continue developing climate-related regulation and incentivize the generation and disclosure of climate information from public and financial institutions. The activity will help the Colombian Government steer public finance to achieve priority climate objectives and develop and improve inclusive policies for climate-related economic and financial instruments, like carbon markets, green bonds, and tax incentives. It will also help governmental and financial institutions implement climate reporting standards and regulations and modernize climate finance reporting systems.

IR 3.1: Public policies enable public and private climate finance.

The activity will develop and improve policies and mechanisms that facilitate public and private climate finance by shifting market incentives towards climate smart investments and increasing public funding allocated to climate goals. For example, the activity could help the Colombian Government structure a climate change fund that channels public funding into priority climate adaptation and mitigation projects. Alternatively, the activity could support the development of policy guidelines that harmonize the use of different carbon pricing instruments, like carbon markets and carbon taxes. Improved use of carbon financing instruments would mobilize public and private finance towards climate mitigation projects, including finance available through the cooperative approaches established in the Paris Agreement. The activity could also provide technical assistance to the Colombian Government to expand climate financial mechanisms, like green bonds. Understanding that policy reforms demand public support and political will, the activity will create partnerships with the media, academia, and civil society organizations to advocate for the social and economic benefits of climate finance.

IR 3.2: Public and private institutions report climate metrics.

The activity will encourage public and private institutions to measure and report inclusive climate metrics. When institutions use climate metrics in their reporting, they increase transparency in climate financial flows and increase information available for investors to help them allocate funds towards climate resilient and low carbon investments. In this regard, the activity could work with financial institutions to improve their understanding and application of climate metric reporting, and encourage the Colombian Government to update regulations requiring financial institutions to report climate metrics. The activity could also help financial institutions adopt the Colombian Green Taxonomy to identify and monitor which investments are environmentally sustainable in coordination with the interventions under IR 1.2. In addition, the activity could help modernize existing climate finance tracking systems to allow for systematic reporting from financial institutions and public entities. The activity would advocate that any financial reporting used or developed include a social inclusion lens by measuring their contribution and alignment with other socio-economic indicators. Finally, the activity would enhance local and national actors’ capacities to use climate change scenarios in sectorial, regional, and public investment planning.

Target 3: Ten public policy instruments that enable climate finance implemented.

VI. GEOGRAPHIC AND POPULATION TARGETING

The Climate Finance Activity will prioritize regions with the highest technical and financial potential to reduce GHG emissions and support climate adaptation actions. The criteria used to define the activity's target geography will include variables related to climate mitigation potential like: 1) current land-based GHG emissions; 2) the potential to support sustainable transport, energy efficiency, and solar and wind energy projects and businesses; and 3) existing AFOLU projects and businesses. Criteria will also consider variables associated with adaptation potential like: 1) climate vulnerability; 2) hydrometeorological disaster risk; and 3) existing adaptation initiatives, with an emphasis on nature-based solutions.

Based on the criteria listed above, and to maximize social, climate, and economic impacts, the activity will select geographic corridors for activity implementation. These geographic corridors will be selected after performing a detailed analysis of where the highest potential lies in terms of achieving emissions reductions and climate finance targets within the activity’s performance period. It is very likely that some of the municipalities within these geographic corridors will be outside USAID/Colombia’s prioritized geography, and they will likely include rural and urban areas. Within the selected regions, the activity will have an inclusive approach towards migrants, conflict victims, and marginalized communities.

VII. RISKS AND ASSUMPTIONS

The activity will be designed and implemented under the following assumptions:

● The newly elected Colombian Government will be willing to adopt mechanisms to reduce the risk of climate investments for the private sector.

● There will be political will to address gaps and contradictory policies related to climate finance.

● The Colombian Government will continue to promote the green taxonomy and the financial sector will accept it as a useful tool.

● During the life of the award, the activity will cultivate enough viable projects that the financial sector will see climate-smart businesses as a good investment for the foreseeable future

● Climate-smart businesses supported by the activity will generate sufficient income to be competitive with other non-climate smart businesses.

● The impacts of climate-smart businesses will be aggregated to the scale necessary for achieving Colombia’s NDCs.

● Colombia’s economic and political situation will remain relatively stable.

● The Colombian Government and key stakeholders will continue to support the implementation of the Peace Accord.

The main risks identified are:

● Changes in local, national, and international government administrations may result in decreased support for climate change commitments.

● Changes in local, national, and international government administrations may result in a decreased private sector investment appetite in emerging markets like Colombia.

● The Colombian Government and the financial sector may develop parallel climate reporting and accounting systems that do not coordinate with each other.

● The private sector may maintain its preference for investing in climate mitigation and neglect climate adaptation investments.

● Without sufficient social and environmental safeguards, climate investment may bring the risk of greenwashing and dispossessing local communities.

● Without adequate government risk sharing and incentive mechanisms, private sector climate investment flows may be entirely responsive to market fluctuations and return on investment, leading to funding gaps and increasing the vulnerability to climate change risks of particular geographies or social groups.

● Over the life of the activity, there may not be sufficient climate smart projects in the pipeline to motivate sustained private sector investment.

● It may be challenging to mobilize funds for the forestry sector given the long-term horizon for return on investment.

● Results from investments in climate smart businesses may be slower than expected, thereby discouraging sustained interest from the private sector.

● Availability of private sector resources may be affected by the economic impact of COVID-19 and future pandemics.

● The Colombian security situation may deteriorate further, increasing the private sector’s perception of investment risk.

● Corruption in the private sector and government institutions may undermine climate finance and its impact.

VIII. ADAPTIVE MANAGEMENT

The Climate Finance Activity will employ a Collaborating, Learning, and Adapting (CLA) approach to adapt interventions and to create positive feedback loops. As part of the CLA approach, the activity will establish channels of communication with financial institutions to understand their concerns and restrictions, and design and adapt its interventions to accelerate their engagement. In addition, the activity will analyze the development stages and capacities of the climate smart projects and businesses it supports, to design and adapt technical assistance tools to meet the needs of these projects and businesses. Adapting technical assistance tools will also ensure that activity interventions remain flexible and responsive to changing economic and political environments. Likewise, the activity will monitor national and international government priorities, and implement a government engagement strategy to facilitate local ownership and collaboration. The activity may work in a wide array of business sectors, such as forestry, agriculture, clean energy, and green transportation, and in very different target geographies.

Recognizing this, the activity will adapt to the needs and reality of each sector and geography, while maximizing positive climate and socio-economic impacts.

The activity will use a variety of tools to adaptively manage risks and assumptions. These tools will include: 1) establishing a baseline of the current climate finance and climate smart project and business context in Colombia; 2) monitoring context changes through context indicators to flag political, environmental, and security concerns; 3) using performance indicators to monitor activity progress and desired results; and 4) analyzing data and information gathered to understand and adapt activity interventions when needed. To this end, the activity will adopt pause and reflect practices including but not limited to: quarterly work planning meetings; scenario planning; annual workshops; stocktaking reviews; and after action reviews.

IX. ALIGNMENT

The Climate Finance Activity will advance 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 adaptation objectives.

The activity will also contribute to CDCS IR 3.1, expanded licit livelihood opportunities, and CDCS IR 3.2, more competitive licit economies. 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. 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 climate smart value chain development.

This activity also aligns with USAID’s Climate Strategy 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 Climate Strategy IR

1.2 reduce emissions, IR 1.3 build resilience, IR 1.3 mobilize finance, IR 2.1 Transform Key Systems and Essential Services, and IR 2.2 shift market signals. Lastly, the activity aligns with USAID/Colombia’s 2022 Private Sector Engagement Plan, and it will contribute significantly to Colombia climate action plans to cut emissions and adapt to climate impacts.

X. REGIONAL INTEGRATION STRATEGY

Collaboration and integration with other USAID activities is key to mobilizing climate finance to support Colombia’s climate targets. Given the nature of this activity, it will most closely coordinate with activities that contribute to CDCS Development Objective 3. The activities that the Climate Finance Activity will coordinate with include, but are not limited to: Productive Ecosystems

Activity, Amazonia Connect, Sustainable Agriculture, Partners for Transparency, Weaving Lives and Hope, and Sustainable Economic Territorial Transformation. The Climate Finance Activity will also coordinate very closely with the Equitable and Resilient portfolio of activities, particularly the new Equitable Finance Activity, to avoid duplicating efforts, and to incorporate lessons learned and best practices from financial sector engagement. The activity may also build upon projects and businesses previously supported by other USAID activities, especially those located in shared geographies and that have clear climate impacts and objectives. The Climate Finance Activity will coordinate with activities like Youth Resilience, Generating Equity, and the Indigenous Peoples and Afro-Colombian Empowerment Activity to guarantee that marginalized populations are effectively engaged in activity interventions.

As part of its CLA approach, the activity will engage with other USAID activities to identify Regional Integration Opportunities. For example, the activity will collaborate with USAID activities that operate in shared geographies to further economic inclusion and the strengthening of environmentally sustainable value chains. The activity’s monitoring, evaluation, and learning (MEL) efforts will also support the Regional Integration Strategy’s (RIS) Basket of Targets (BOT).

This activity will contribute to BOT indicators for: licit livelihoods (7); inclusive economic growth (8); youth, women and Indigenous Peoples and Afro-Colombian empowerment (10); and environmental sustainability (11).

Lastly, multiple international donors and local organizations are currently working to enhance climate finance in Colombia. For example, the United Kingdom is supporting the Climate Finance Accelerator, an initiative that provides financial coaching to projects looking for financial deals.

Likewise, Norway, through the Global Green Growth Institute, is implementing the Technical Assistance Project Structuring Facility focused on the land use sector in six Colombian departments with high deforestation rates. In terms of local organizations, Transforma Global is providing consulting services to Colombian financial institutions and government actors on issues related to climate finance, like green taxonomy. The activity’s implementing partner will work closely with these and other international donors and local organizations to leverage their experience, connections, lessons learned, and best practices when designing and implementing interventions.

XI. CROSS-CUTTING ISSUE INTEGRATION

The Climate Finance Activity will place significant focus on engaging youth with the recognition that the climate crisis is, and will continue to be, especially impactful to this population. Although youth will bear most climate change impacts, they are currently excluded from the decision-making spaces that discuss and plan climate actions and finance. To support youth initiatives, Objective 2 will tailor its tools to ensure that youth receive technical assistance to develop climate smart projects and businesses, and according to their needs and interests. The activity will improve youth access to climate finance by addressing known barriers, including perceived high business risks, lack of compliance with conditions to access financial services, and lack of technical capacity to develop their businesses and apply for finance.

Recognizing that women are also disproportionately affected by climate change, the activity will identify and address gender disparities in financial mechanisms discussed in Objective 1 and value chains and initiatives supported under Objective 2. For example, the activity will tailor business acceleration and project structuring support to engage women entrepreneurs, and to increase women's leadership and participation in climate adaptation and mitigation efforts. The activity will also incorporate gender elements in the climate metrics that projects and businesses report to their financial partners. The activity may improve financial institutions’ understanding of women’s roles in building a climate project pipeline, and in designing appropriate financial deals that address the barriers that women-led initiatives face when trying to access finance.

Afro-Colombian and indigenous communities play a leading role in the fight against deforestation in protected areas. The activity will support Afro-Colombian and indigenous initiatives that reduce GHG emissions, like forestry and land use, and that help these communities adapt to climate change. All initiatives undertaken with ethnic communities will highlight these communities’ cultural assets and heritage, and will respect local, cultural, environmental practices, and the right to prior consultation. The activity will also identify and address the unique needs of ethnic communities’ projects and businesses and will help these communities establish financial partnerships to advance their climate objectives. All work with ethnic communities will follow USAID’s Policy on Promoting the Rights of Indigenous Peoples.

This activity will engage migrants, conflict victims, and members of the LGBTQI+ community as part of its work with marginalized populations. Migrants, conflict victims, and LGBTQI+ individuals that live in the activity's geography will be encouraged to participate in activity interventions, especially those under Objective 2 that relate to the creation of licit economic opportunities via climate smart projects and businesses.

The activity will leverage digital technology innovations, like mobile applications, to channel climate funds towards regions, initiatives, and populations with the greatest climate needs and development potential. To ensure that digital innovation supported by the activity has the greatest positive impact on beneficiaries, the activity will use the principles for Digital Development. The activity will also promote the use of data analytics and digital technologies to help projects and businesses supported under Objective 2 report climate metrics. The activity may support the Digital Economy through the development of business solutions that rely on digital technologies.

For example, the activity could support projects and businesses that use satellite data to create insurance or payment for results tools. In addition, the activity will help financial and government institutions supported through Objectives 1 and 3 to incorporate climate risk management and carbon accounting in their digital solutions. The activity will also encourage financial and government institutions to implement digital technologies needed to disclose and report climate metrics in alignment with national and international standards. All digital technology used during the life of the activity will consider and address: 1) beneficiaries’ digital literacy; 2) the digital divide between marginalized and non-marginalized populations; and 3) cybersecurity issues and the need for digital hygiene education.

Lastly, private sector engagement and environmental considerations are at the core of the Climate Finance Activity’s design, implementation, and adaptation processes. The activity will provide private financial institutions with technical assistance to incorporate climate risk management and carbon accounting in their operations. The activity will also work with financial institutions to design or enhance financial mechanisms that reduce the cost of capital for climate-smart investments. The activity will encourage private sector actors, including small and medium enterprises (MSMEs), community enterprises, and large businesses, to adopt sound business practices to accelerate these businesses, and to increase their bankability. The success of the activity relies on selection and delivery of support service tools, and on implementing partners’ capacity to leverage private sector funds through deals with financial institutions. To this end, the activity will follow the USAID’s Private Sector Engagement Policy.

[END OF ATTACHMENT A]

ATTACHMENT B

USAID/Colombia Request for Information Climate Finance Activity

Guiding Questions:

Questions below are guiding questions, and as such, not all questions need to be answered. Please submit your feedback regarding the desired results outlined in the concept (the “what”) rather than describing how your organization would propose to achieve the results (the “how”).

1. Based on your organization’s experience, what potential barriers do you identify that could arise for the fulfillment of the Activity’s Result Framework and Objectives?

2. In your opinion, what type of interventions should be a priority to achieve objectives 1, 2 and 3?

3. In what type of businesses and projects in the AFOLU, Energy and Electric Mobility sectors do you think this activity would more effectively achieve the mobilization of resources?

4. What additional elements does your organization suggest should be considered to generate the enabling environments necessary to achieve objective 3?

5. What major gaps have you identified that are missing within the scope of this concept note?

6. Overall, are the objectives and targets feasible?

7. Do you have any additional suggestions or comments?

8. Would your organization be interested in applying to this upcoming opportunity or partnering with another organization to participate? If yes, please provide a description of your organization’s background and experience related to the purpose of the activity.

[END OF ATTACHMENT B]