SIDBI, the principal financial institution for MSME development, on Monday, announced a new fund to enable investment into early-stage startups and MSMEs harnessing technology-led innovation to spur climate solutions and sustainability in India. The $120 million Avaana Sustainability Fund (ASF) anchored by SIDBI as an accredited entity was approved by the world’s largest climate fund Green Climate Fund (GCF). The latter contributed $24.5 million to the ASF.
“Anticipated outcomes include significant contributions to climate change mitigation, adaptation, and the enhancement of resilience in vulnerable sectors of the Indian economy,” SIDBI said in a statement.
The Green Climate Fund, a pivotal component of the historic Paris Agreement, aims to expedite climate action in developing countries through a partnership-driven approach and the deployment of finance and climate investment expertise.
As an investment strategy, the new fund will target four significant transitions viz., built environment, energy industry, human security, livelihood, wellbeing; and land use-forests and ecosystems.
Importantly, the latest quarterly survey by analytics firm Dun & Bradstreet India and SIDBI in December 2023, which examines the assessment of factors contributing to the perception of sustainability in MSMEs, had cited that only 25 per cent of MSMEs claim to have internal expertise or proficiency to implement sustainability measures in business.
According to MSMEs, technical expertise and capital availability have been their primary challenges in implementing sustainability initiatives. Moreover, only one in three MSMEs part of the survey said they are aware of green financing and the impact of sustainability on improving brand image and their competitiveness.
As per the Nationally Determined Contribution (NDC) with respect to the UN’s Framework Convention on Climate Change (UNFCCC), India aims to cut emissions intensity of its GDP by 45 per cent by 2030, from the 2005 level and achieve about 50 per cent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
In 2022, SIDBI had partnered with multiple stakeholders including German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Technology Information, Forecasting and Assessment Council (TIFAC), France’s public financial institution Agence française de développement (AFD), etc., in the sustainable development ecosystem to help MSMEs embrace energy efficiency in their operations.