Green startup companies are helping to solve some of the most pressing environmental problems through the development of innovative solutions. There are a number of green funding options available to finance projects and programs with positive environmental and social benefit, from government funds and grants for sustainability challenges, to angel investors and VCs with an eye on sustainable finance.
Types of green finance products
Below are some of the most common finance products available to green startups or existing businesses looking to be more sustainable and environmentally responsible.
- Grants
- Concessional debt
- Debt
- Equity
- Budget Expenditure
Top green investing opportunities
Green investing seeks out investment opportunities that benefit the natural environment, this includes:
– Clean Energy
– Energy efficiency & demand side management
– Low carbon transport
– Water conservation, supply & demand
– Agriculture, food production, fisheries and forestry
– Circular economy
– Buildings and the built environment
– Material substitution
– General eco-system support
Responsible Investing
While traditional financing institutions focus primarily on profit, green investing has sustainability at its core. Environmentally conscious investors use the environmental, social, and governance (ESG) criteria to screen potential investments. ESG is the consideration of material environmental, social and governance risks and opportunities alongside traditional financial factors. It is increasingly a major factor used to assess the long-term viability, resilience and financial prospects of an organisation.
The list below provides a breakdown of available climate finance that can be used by green economy companies and projects in South Africa.
Green Energy Fund (https://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/sustainable-energy-fund-for-africa)
The AFD Green Energy Fund is a R1 billion fund that provides finance to renewable energy and energy efficiency projects of smaller scale and manufacturing of green products in South Africa.
Green Tourism Incentive Programme (GTIP) (https://www.idc.co.za/green-tourism-incentive-programme/)
This programme forms part of a R142.5 million fund by the National Department of Tourism. The GTIP is managed by the Industrial Development Corporation (IDC) on behalf of the Department with the key objective of encouraging privately-owned tourism enterprises to implement responsible tourism practices utilising cleaner and renewable energy sources and the efficient utilisation of water.
Green Energy Efficiency Fund (https://www.idc.co.za/afd-green-energy-fund/)
The Green Energy Efficiency Fund is the result of a partnership between the IDC and the German Development Bank (KfW) to fund energy efficiency and self-use renewable energy projects. The R500 million fund is only open to businesses registered and operating in South Africa for equipment and technologies across a range of sectors.
WWF Nedbank Green Trust (https://www.wwf.org.za)
The Green Trust funds projects with a strong community-based conservation focus in multiple areas, including climate change. Applications are subject to the specified criteria, must have the potential for great change in the community and impact on the environment, and must be able to be taken to scale.
The Revego Energy Fund (https://revegoenergy.com)
Revego is an equity fund managed by Revego Fund Managers (Pty) Ltd. The fund’s current size is R1.5 billion and has a mandate to invest equity into the renewable energy sector and energy projects in sub-Saharan Africa. Their target sectors are generation, transmission and distribution projects.
Persistent Energy Capital (PEC) (https://persistent.energy)
Early-stage companies that provide energy services on the continent can access funding from Persistent Energy Capital (PEC) which invests in climate ventures. They focus on providing off-grid households and small businesses with access to basic energy services such as electric light, mobile phone charging, fans, radios, TV and Internet.
GreenTec Capital Partners (https://greentec-capital.com/start-ups/)
GreenTec looks to invest in early-stage proof of concept companies with operations in sub-Saharan Africa with a focus on impact and sustainable development goals. They target startups with the ability to scale up and be sustainable as well as creative positive social and environmental impact in the communities in which they operate.
Technology Venture Capital (TVC) (http://www.thedtic.gov.za/financial-and-non-financial-support/incentives/technology-venture-capital/)
TVC looks to provide seed capital for the commercialisation of innovative products, processes and technologies. The fund was established by the Department of Trade, Industry and Competition (dtic) and is managed by the IDC. TVC aims to increase the number of economically-productive companies in the country.
National Empowerment Fund (https://www.nefcorp.co.za)
The NEF provides business loans from R250 000 to R75-million to black entrepreneurs across all industry sectors, for startups, expansion and equity acquisition purposes. The fund backs renewable energy and biofuels (solar, biomass, hydro, co-gen and wind) projects that fit into South Africa’s ambition to build a renewable energy industry.
The Green Fund (https://www.gov.za/about-government/government-programmes/green-fund)
This R800 million fund was established by the Department of Environmental Affairs with the aim of supporting South Africa’s transition towards the green economy. The fund seeks to promote innovative and high impact green programmes and projects that support poverty reduction and job creation..The fund is managed by the Development Bank of Southern Africa on behalf of the Department of Environment, Forestry and Fisheries (DEFF).
Lebohang Thulo is a writer and editor with over 15 years journalism experience. Her areas of focus are entrepreneurship and sustainability issues. She is also the founder of Digital Wingwoman, a digital marketing agency that helps small businesses build powerful and profitable online brands.