Numerous countries in Africa and Asia are highly exposed to climate risks such as floods, droughts, and rising heat. Disasters impose severe socio-economic costs and threaten long-term development. Vulnerable groups, especially women, face the greatest negative impacts. Countries in these regions face challenges and a significant funding gap in meeting their climate objectives.

Social and impact enterprises create social and environmental impact while maintaining financial viability. They help low-income populations cope with these impacts and improve their livelihoods sustainably. However, their growth is hindered by limited access to finance and technical expertise.

Impact-linked finance is a proven approach that bridges this gap by rewarding enterprises for verified social and environmental outcomes. It aligns financial sustainability with inclusion and resilience.

Primary target groups:

• Social and impact enterprises operating in sectors such as clean energy, climate-smart agriculture, circular economy, waste management, and green mobility. These enterprises serve low-income, rural, and climate-vulnerable populations while creating measurable environmental and social impact.
• Low-income and climate-vulnerable communities: In particular women, smallholder farmers, rural households, and urban populations directly benefiting from affordable, sustainable, and climate-resilient products and services.

Secondary target groups:

• Women and youth entrepreneurs: Inclusive participation is encouraged through targeted pipeline development, capacity building, and gender-sensitive technical assistance.
• Impact investors and financial intermediaries: Partners mobilized through blended and performance-based finance structures that de-risk investments and align incentives with verified impact.
• Governments, investors and development partners: Stakeholders adopting or co-financing impact-linked finance mechanisms as part of their climate and sustainable development strategies.

1. High-performing social and impact enterprises expand operations and scale their verified environmental and social impact.
2. Increased private investment flows into climate-resilient and low-carbon sectors through blended and performance-based finance mechanisms.
3. Enhanced institutional learning and policy influence through evidence and demonstration of the impact-linked finance model’s effectiveness.
4. Greater inclusion of women, youth, and marginalized groups in enterprise participation and benefits.

Risultati principali attesi:  

• A portfolio of enterprises supported by grants delivering measurable results in climate resilience (adaptation, mitigation), and livelihood improvement.
• Capacity building of social and impact enterprises, and use of impact measurement tools.
• Strengthened collaboration among donors, governments, investors, and implementing partners through shared learning platforms and data systems.
• Documented case studies, knowledge products, and policy briefs that promote replication and scaling of impact-linked finance approaches globally.

Risultati fasi precedenti:   This initiative builds on experiences and lessons from many programs that have successfully applied impact-linked finance to support social and impact enterprises across regions and topics. Independent reviews confirmed that linking financial rewards to verified impact helps these enterprises grow, serve more low-income people as suppliers or customers, and attract investment. Key lessons include combining finance with technical assistance, tailoring tools to enterprise maturity, and fostering donor collaboration. These form the starting point of this initiative, which will place greater focus on gender and ecosystem engagement.

• Impact-linked finance projects in Africa and Asia (SIINC Latam, ILF ESA, ACELI, Scaling-Up ILF, Access to Green Finance, ADB Seed Frontier, Hardest to Reach Initiative, etc.).
• Projects supporting social and impact entrepreneurs and ecosystem support organizations, such as the Global Social Impact Enterprise project with DRK Foundation, Energy and Environment Partnership Trust Fund, SDC’s Investment Credit
• Close collaboration between SDC’s Asia-Americas, Africa and Thematic Division, in particular SDC’s GCF focal point, and embassies and cooperation offices.