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Financing green sectors: An opportunity for investors to yield healthy returns

  • By KCV
  • March 8, 2021

Although there is an urgent need for innovation and investment on large scale to help sustain the economic growth of the green industrial revolution, financing of green sectors has presented a great opportunity for investors to reap significant positive returns.

In a report by International Finance Corporation (IFC) Climate Investment Opportunities in Emerging Markets, the Paris Agreement on climate change that was adopted in December 2015 was identified to have the potential of accelerating opportunities for climate-smart investments by nearly $23 trillion in certain emerging markets between 2016 and 2030 and lays down the readiness of IFC to support the private sectors in their quest to invest in more industries as they simultaneously reap healthy yields on investments.

The report also identified several sectors with the greatest potential for investment and high returns from climate-resilient infrastructure in Southern Asia to clean energy in Africa with solar photovoltaic (PV) and wind power taking center stage.


Source of image: climate investment report data

In 2015, the global investment in clean energy was nearly $350 billion. This was twice the amount invested in coal and gas. At the same time, farmers also continued to invest in climate-resilient agricultural practices and the green buildings market has doubled every three years for the past decade.

Climate-smart agriculture has been seen to be a growing sector opportunity as companies seek to increase crop resilience and food productivity as well as their profits. A recent study found 14 major business opportunities worth US $ 2.3 trillion annually by 2030 in this sector. This has attracted multilateral development banks and private investors who have seen opportunities for growth and high returns and have since invested in this market.

One such investment firm in Kenya is Kenya Climate Ventures (KCV), a company that greatly invests in green sectors has been on the frontline incentivizing startups, large companies and farmers on the urgent need to ensure that their operations are resilient against supply chains disruption and other effects of climate change.

Having invested USD 3.2 million to 15 climate-smart enterprises in the renewable energy, water management, agribusiness, commercial forestry and waste management sectors, the impact investing firm sees a great opportunity in Kenya’s agricultural sector which is a major contributor to Kenya’s economy and the renewable energy sector which continues to rise drastically.

They believe there are healthy returns to yield based on Kenya’s plan to make clean energy a significant part of its ambitious Least Cost Power Development plan 2013-2033, which looks forward to having 50 percent of a total 22.7 GW of capacity coming from renewables by 2033, and the agricultural sector that seeks to enhance resilience in crop productivity, water resources and use of sustainable fertilizers.