GIZ-SIDBI Project on Responsible Enterprise Finance Small and Medium Enterprises : Energy Efficiency Knowledge Sharing (SAMEEEKSHA) Platform – 9 th Meeting 7 April 2015 Seite 1
Implemented by Ind India: ia: La Land nd of diverse of diverse r rea eali liti ties es After twenty years of continuous growth, India still ranks high in poverty 2/3 Population still live in rural 300 million areas many of India needs jobs Resource crunch people live in them depending on absolute poverty agriculture for their livelihood 75% 90% Rising pollution Employment caused by Graduates are considered antiquated in the unorganized unemployable Demographic sector technology dividend or 40% Demographic 13 million Bomb Input markets entrants are workforce added / A very young and ( land, water, illiterate rapidly growing year energy) are population is eager to have its share of the Only a massive malfunctioning growing wealth of the industrial country Only 3 million development combined with a large receive some form expansion of the skill Rising prices of training development system can fit that bill 13.04.2015 XXX Seite 2
Th The e pivo pivotal tal po point fo int for r this this ch chan ange ge is the is the M MSME SME se secto ctor! r! Share of Value Industrial Units 95% (aprox. 29,8 Mio.) Industrial Output 45% Exports (in value) 40% Gross Domestic Product (GDP) 8% (total of Industry: 11%) Employment (in Million) 69 Innovative Start Ups and MSME in traditional sectors MSME in modern sectors MSME in export-oriented MSME develop Solutions for (e.g. Foundry) often use (e.g. Automotive) are driven sectors and value chains social and ecological dirty and old technologies by competitive pressures to (e.g. Textile sector) are challenges in sectors and and do not comply to social innovate sustainably driven by buyer pressure address unserved needs at and environmental and customer demands the BoP standards 13/04/2015 company presentation 2012 Seite 3
Key challenges Tackling Promoting environmental Boosting jobs competitiveness challenges Enabling Appropriate Being inclusive framework incentives conditions Seite 4
Responsible Finance – A key gap and a key factor? By improving the supply of risk capital and loans for sustainability oriented investments of micro, small and medium-sized enterprises (MSME) Health and viability of Financial Sector Contribution to sustainable economy and benefits to people Integrating environmental, social and economic risks and opportunities in business thinking, decision making, operations, products and services (lending and investments ) Seite 5
6 Rol Role e of the Fina of the Financ ncial ial Se Secto ctor Risks & opportunities Innovation Financial institution Reputation Human capital Governance Credit quality Green financial products I Sustainable procurement M Social impacts of activities P Insurance for green sectors A Investments in clean tech C Renewable energy T investments External Environment Seite 6
Some building blocks Risk Capital Quality Impact Fund Samridhi of Growth SIDBI Mandate : Innovator Sustainable Banking Sustainable Investment Forum India GRI Report Energy Efficiency Energy Efficiency Cell Innovation ESG -Risks and E&S Framework Opportunities & disclosure Aavishkaar Missing Middle Indo-German BR-Initiative Energy Efficiency Environment Growth 13/04/2015 Seite 7
Project Structure Responsible Enterprise Finance Impact : The supply of risk capital and loans for sustainability oriented investments of micro, small and medium-sized enterprises (MSME) has improved. PILLAR4 PILLAR1 PILLAR 2 PILLAR 3 ESG framework in Sustainability oriented Risk Capital for ESG Guidelines for SME Financing Products & Services Social Enterprises the Financial Sector SYSTEMATIC BLUE RISKS OPPORTUNITIES FINANCING IMPACT PRINT FOR ACTION Seite 8
Approach (and integration among pillars) Macro Development of voluntary guidelines and guidance on ESG for FIs Reinforcing the Meso Policy Dialogues understanding across Capacity development (of relevant ministries and associations for example: regulators (MoF, RBI, SEBI) NIBM, IIBF, CAFRAL, Impact investors Council, Incubators Awareness Micro WG: is accountable to the EG & building & responsible for overseeing the Leveraging sensitization Pilot initiatives and research implementation of activities in capacity experiences of through to demonstrate business case development component relevant Secretariat: comprise members from workshops and eg: Links between NPAs and the Project team . The secretariat is national and events ESG performance, responsible for rollout of activities international Benchmarking tools, good Other Stakeholders : include external actors agencies whose expertise will be practice booklets, leveraged for specific assignments Sustainability knowledge series, Seite 9
Output: Pillar 1 (ESG Framework) Result: • A common ESG-framework has been introduced and is applied. Banks introduce an • Formation of a multi stakeholder ESG risk working group to drive management development and adoption of the framework for SME framework lending • Evidence Studies linking ESG factors with Banks’ portfolio performance Seite 10
Output: Pillar 2 (Sustainability oriented Products and Services) Result: • Banks integrate energy efficiency in their lending Banks have • Energy Efficiency Investments – End to End increased the Energy Efficiency (4E) Model for SIDBI has been introduced share of loans for sustainability • Banks increase renewable energy financing in their lending portfolio oriented investments • Increase uptake of loans offered by Public Sector Banks for women entrepreneurs in the SME sector Seite 11
Output: Pillar 3 (Risk Capital for Social Enterprises) Result: • Market Transparency has increased and contributes to capital flow to social enterprises: Report Indian Impact Investing Higher number Story, Reporting and Benchmarking Tool for (Impact) Funds (PRISM), Indian Impact Investor Council strengthened of start-up • More Risk Capital is available for social enterprises: Support enterprises and to Angel Networks, SIDBI Social Enterprise Recognition award and financing (PRAISE),, Awareness Raising amongst social Banks, National Innovation Financing Platform entrepreneur, • More Social Enterprises are investment ready: Virtual Incubation Platform (startupwave), Impact Stream in Incubator receive risk Indian Angel Network, Capacity Building of Incubators with CIIE, Support to SVCL Investee Companies, Entrepreneur’s capital Guide De-mystifying Impact Investing Seite 12
Output: Financial Sector Guidelines for Responsible Banking Result: • Guidelines and Implementation Guidance on Private and public- Responsible Financing are developed sector banks apply • Non-financial Reporting Framework is a voluntary developed • Various advocacy measures are implemented banking code for (Research-dialogue-workshops) the integration of • Capacities of up to 4 intermediary sustainability organisations are enhanced on ESG integration aspects. Seite 13
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