Investment Strategy
GEEREF's funds invest in emerging markets with appropriate regulatory frameworks for clean energy, where high quality renewable energy resources and steadily reducing technology costs create compelling investment opportunities.
A TRIPLE BOTTOM LINE
GEEREF's investments aim to bring equal benefits for a triple bottom line:
- People: GEEREF seeks to provide access to sustainable energy and increase energy efficiency in developing countries and economies in transition;
- Planet: GEEREF seeks to fight climate change and contribute to a sustainable environment; and
- Profit: GEEREF seeks to achieve robust financial returns.
GEEREF publishes its Impact Report annually. The GEEREF Impact Report is available here for 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022. You can access GEEREF's impact methodology by clicking here.
Geographical Scope
GEEREF invests exclusively in funds targeting projects in emerging markets that qualify as recipients for Official Development Assistance. There are currently 144 countries recognised as such by the Organisation for Economic Co-operation and Development and GEEREF’s funds can target all of these other than candidates for accession to the European Union. The full list of Development Assistance Committee countries for 2018-2020 flows is available here.
Priority is given to investment in countries with appropriate policies and regulatory frameworks on energy efficiency and renewable energy.
GEEREF's investment period closed in the end of May 2019 and it is now fully invested.
Technological Scope
GEEREF invests in specialist funds developing small to medium-sized projects in the following sectors:
- Renewable Energy – including small hydro, solar, wind, biomass and geothermal; and
- Energy Efficiency – including waste heat recovery, energy management in buildings, co-generation of heat and power, energy storage and smart grids.
GEEREF funds typically work with experienced local developers with a pipeline of projects seeking investment pre-construction.
GEEREF's investment period closed in the end of May 2019 and it is now fully invested.
TARGET FUNDS' CHARACTERISTICS
GEEREF engages with funds early in their development and seeks to enhance strategy, team capability and structure, being often the first cornerstone investor in a fund. Underpinning GEEREF's investment strategy is a fundamental commitment to financial, environmental and social sustainability, principles which are mutually reinforcing.
GEEREF funds typically have:
- Strong technical and private equity transaction skills;
- A regional focus, an established local presence and networks to generate deal-flow; and
- An overall size of between € 50 million and € 200 million.
GEEREF's investment period closed in the end of May 2019 and it is now fully invested.
Disclosures related to Sustainable Finance Disclosure Regulation (SFDR)
A sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investments made by the Fund. In the context of the Fund, sustainability risks are risks, which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of the Fund.
Such risk is principally linked to climate-related events resulting from climate change (i.e. physical risks) or to the society’s response to climate change (i.e. transition risks), which may result in unanticipated losses that could affect an investment. Sustainability risks can also affect companies by introducing social risks (e.g. gender gaps, social inequality) and governance risks (e.g. bribery issues, selling practices).
The impacts following the occurrence of a sustainability risk event may be numerous and vary in significance depending on industries, regions and asset classes. Such sustainability risks are integrated into the investment decision making and risk monitoring to the extent that they represent a potential or actual material risks and/or opportunities to maximizing the long-term risk-adjusted returns.
The Fund has an explicit objective to promote clean energy and energy efficiency with the intention to foster regional sustainable development. The Fund does not consider adverse impact of investment decisions on sustainability factors within the meaning of the SFDR at the present time considering that it is not clear that there is sufficient data, and data of a sufficient quality, to support entities that do so, in the relevant asset classes, industries or sectors in which investments have been/may be made. However, the Fund has developed its own sustainability framework (which is described below) and the Fund intends to monitor the industry position closely and update its approach in due course as the position evolves and further regulatory guidance is made available. Sustainability factors are environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
GEEREF is registered with the Organisation Economic Co-operation and Development (OECD) as an instrument qualifying as Official Development Assistance.
Investments of GEEREF are channelled through its investee funds, in compliance with the ODA rules to Beneficiary Projects with a development focus and located in countries of the OECD’s Development Assistance Committee (DAC) and with a specific intention to serve the needs of the ACP countries.
Sustainability factors are therefore a key part of the due diligence process through which GEEREF selects its target investments and sustainability factors are integrated in the monitoring of such investments.
The consideration of sustainability factors is not least framed by the policy and organizational framework of EIB Group acting as advisor/sub-advisor to GEEREF and, in particular
- The organizational cooperation within EIB Group, which allows an optimal pooling of financial aspects and technical aspects within a harmonized and proven policy framework on environmental and social Key Performance and Key Risk Indicators;
- A solid set of policy and procedural parameters on the level of EIB Group complementing the investment guidelines of GEEREF to address key elements of an ESG and Sustainability Policy Framework, including AML/CFT/KYC, Anti-Tax Avoidance (EIB Group Policy towards weakly regulated, non-transparent and non-cooperative jurisdictions and tax good governance), the fight against fraud and corruption (EIB Group Anti-Fraud Policy), Guidelines on Restricted Sectors (Guidelines on the EIF Restricted Sectors ), principles of transparency and public access to documents (EIF Transparency Policy), as well as policies to report (EIB Group Whistleblowing Policy) or complain against (EIB Group Complaints Mechanism Policy) maladministration of process failures.
GEEREF issues on an annual basis in Impact Report including information on Environmental, Social and Impact aspects. The reports provides details on Fund’s contribution to Sustainable Development Goals, as well as Clean Energy and protection of the environment. (GEEREF 2020 Impact Report).