Climate Strategy
Supporting Climate and Ecological Sustainability of Private Entrepreneurship in Emerging and Developing Markets
Context
One of BIO’s missions is to support Climate and Ecological Sustainability of Private Entrepreneurship in Emerging and Developing Markets. Such mission is based on 4 key global drivers:
Acting to fight climate change and nature loss is one of the main global priorities of our time to protect well-being and economic prosperity in all regions and sectors
Climate and nature are interrelated with other social and economic challenges, requiring a holistic approach to achieve better overall outcomes
Developing countries are particularly vulnerable to climate change and nature loss, but they are also in a very good position to benefit from opportunities linked to climate and nature action
DFIs have the ability and the responsibility to support the development of new business models that reconcile socio-economic development with the planetary boundaries
Ambition and priorities
BIO’s ambition is to engage with and support its clients to steer capital towards projects in line with the low-carbon, resilient and ecological transition as defined in the Paris and Kunming-Montreal Agreements on climate and biodiversity, also considering important related social issues of gender inequalities and just transition.
This is expressed in 3 priorities:
Priority 1: Ensure alignment with long-term climate & ecological sustainability
The foundation of BIO's approach lies in the application of the do no significant harm principle towards long-term climate and ecological sustainability goals. BIO adheres to the 1.5°C objective of the Paris Agreement and to the International Finance Corporation (IFC) Performance Standards to ensure responsible environmental management by all project developers it supports. BIO will tighten its assessment if the project presents specific climate change and environmental risks, and will identify how to mitigate them. The risks will be assessed systemically, also considering potential interdependencies (e.g. between climate mitigation and biodiversity for forestry projects) and related socio-economic development issues (e.g. inequalities generated by climate change impacts).
Priority 2: Mainstream climate and ecological sustainability in BIO’s investments
BIO’s objective is to support clients in their transition, reducing the negative and strengthening the positive impact on climate and nature (e.g. reduce GHG emissions or impact on soil, water, ecosystems) and increasing their resilience to the adverse impacts of climate change and nature loss. Building on the risk assessment of priority 1, BIO will work with its clients to implement the most relevant actions, both directly within their operations and indirectly in their value chain, and will leverage its Business Development Support Fund to offer technical assistance.
Priority 3: Increase investments in climate and nature-positive projects
One of BIO’s objectives is to increase the share of funding for private entrepreneurs who substantially contribute to fighting climate change, to building climate resilience or to protecting and restoring nature. As a priority, BIO will build on its strong track record of investments in climate mitigation projects such as renewable energy and energy efficiency, but will also explore how it can increase its support in other key sectors for the climate and ecological transition (e.g. in overall green energy value chains, in regenerative agriculture and agroforestry, or in innovative low-carbon and circular industries and infrastructure). Over the next five years, BIO will dedicate specific attention to grow the pipeline of commercially viable projects qualifying as adaptation finance. While it is challenging due to inherent risk factors and uncertain revenue streams, adaptation finance serves a vital role in building resilience in communities most vulnerable to climate change impacts.
Engagement and capacity building
BIO internally develops the technical skills required for project assessment in terms of climate and ecological impact, and ensures it effectively shares climate related information. BIO also builds on its current engagement approach to support its clients’ capacity on those topics, encouraging the adoption of climate and nature-positive best practices, and the development of new initiatives towards decarbonisation and resilience. The Business Development Support Fund plays a key role in engaging BIO’s clients and supporting them in their climate and ecological transition through technical assistance.
Furthermore, BIO actively and regularly engages with stakeholders, collaborating with other development finance institutions, Enabel, DGD-subsidised programmes and networks, civil society, and NGOs. Through collaboration, BIO aims to share best practices on climate change and related topics, including biodiversity, just transition and gender equality, and work towards a collective goal of promoting sustainable development.
Monitoring and disclosure
BIO has reviewed its development impact framework to reflect the new climate ambition and targets defined in the 2024-2028 Management Contract. BIO will track and monitor indicators covering both new commitments and the overall portfolio, and will report on a yearly basis how it contributes to the transition of the global economy towards climate neutrality, climate resilience and nature-positivity.
Implementation
The strategy includes elements that are already applicable, and elements yet to be developed and implemented. These are the key milestones of the strategy implementation:
BIO will continue developing tools and guidance to deliver on the 3 priorities
- Formalise the approach to identify risks and opportunities that align with long-term climate and ecological transition goals (priority 1)
- Develop sectoral guidance to identify relevant climate and biodiversity actions in projects (priority 2)
- Define criteria for projects to qualify as climate and biodiversity finance (priority 3)
By the end of 2024, BIO will
- Develop the internal capacity and training plan on climate and ecological sustainability
- Estimate portfolio GHG emissions (scope 1, 2 and 3)
- Define the relevant pathway(s) for the long-term alignment of the portfolio with the 1.5°C objective
In the course of 2025, BIO will
- Disclose its portfolio GHG emissions (scope 1, 2 and 3)
- Disclose its climate and ecological sustainability management approach in line with TCFD and TNFD recommendations
BIO will aim to assess its climate strategy in 2026, and revise it if needed.