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Acre Export Finance Fund I
Environmental and Social Policy
January 2025
Version 3.0
Table of Contents
1. INTRODUCTION ...................................................................................................................3
2. ENVIRONMENTAL AND SOCIAL POLICY ............................................................................5
2.1. Purpose and Scope ..........................................................................................................5
2.2. Principles............................................................................................................................5
2.3. Commitments ...................................................................................................................6
2.4. Policy implementation .....................................................................................................7
2.5. Policy reference framework ............................................................................................7
APPENDIX 1: INVESTMENT EXCLUSION LIST .........................................................................9
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1. INTRODUCTION
The African Development Bank (AfDB) estimates an infrastructure financing need of $130-170bn a year across the continent, with an annual financing gap of up to $108bn. The Global Infrastructure Hub estimates an average annual financing gap of ~ $165bn up through 2030 for energy, transport and water infrastructure in Africa. This takes into account the increased spending to fulfil the Sustainable Development Goals (SDGs). These financing gap estimates cover hard infrastructure in sectors such as power, water, ICT and various forms of transportation, they do not cover the funding requirements for social infrastructure. Among others, these sectors include healthcare, education and social housing, where the financing gaps are similarly large. For example, there is an estimated healthcare f inancing gap of $66bn annually based on a 5% of GDP threshold for government spending. Likewise, the World Bank estimates that there is at least a $28bn annual adaptation deficit in coastal flood protection in sub-Saharan Africa.
The Export Finance Fund I (the “Fund”) will finance climate-aligned essential infrastructure projects serving underserved populations in Africa.1 The Fund co-invests alongside well-established Export Credit Agency (ECA) partners and international banks — mobilising up to US$5.6 of private sector capital for every dollar invested by the Fund. The Export Finance Fund is an innovative finance strategy aiming to increase the amount of debt financing available for essential infrastructure projects.
Some of these projects have potential for adverse impacts. Managing these is fundamental to the operations of the Fund Manager. The Environmental and Social Policy (E&S) and Environmental & Social Management System (ESMS) sets out how the Fund will integrate environmental and social considerations into its operations to minimise any adverse effects and ensure the effective delivery of the Fund’s overarching objectives. The ESMS will conform to the requirements of global standards, in particular the IFC Performance Standards and other international standards, as detailed below.
The Fund’s ESMS processes occur in parallel with other investment and due diligence activities (e.g. credit analysis, legal due diligence, etc.) and are of equal importance with these processes in defining how investments are made and managed.
Definition of key terms:
The Fund’s goal is to invest in climate-aligned infrastructure projects that provide access to essential services for underserved populations. For the purposes of clarification, the following definitions are used:
(i) Essential infrastructure: is defined as essential services and facilities which create or enhance opportunities for improved quality of life and inclusive community. This can be achieved through both creating initial access to such services or by improving and upgrading services to increase access and deliver consistent, reliable outputs. The Fund integrates this consideration into the investment strategy by only considering investment opportunities that qualify as essential infrastructure, in one of the four target impact sectors defined by Acre: (i)
1Key terms are defined below.
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renewable power; (ii) health, food and water scarcity; (iii) sustainable cities; and (iv) green transportation.
(ii) (iii) Climate-aligned: is defined by Acre through the application of a climate lens throughout the investment process. At a minimum this involves physical and transition climate risk assessments3; at a minimum scope 1 and 2 emission tracking, and wherever feasible scope 3 emissions tracking; identification of resilience, resource efficiency and emission reduction opportunities at the project level; and support to implement these. Acre operationalises a climate lens by ensuring that investments are in line with and do not conflict with Nationally Determined Contributions (NDCs) in the country of operation and also by ensuring alignment with the European Investment Bank (EIB) Group Climate Bank Roadmap. This includes not investing in any restricted activities and compliance with the technical criteria detailed therein as appropriate and relevant. Underserved populations: is a relative term. The Fund adopts the definition used by Impact Frontiers: ‘consumers, particularly within the bottom of the pyramid, who lack access to mainstream suppliers of goods and services.’ Access can be affected by several factors, including geographical location and price. Acre also recognises that women and other vulnerable groups are often disproportionately affected by lack of access to essential infrastructure. All investments are screened against this criterion to ensure that they are enabling improved living standards for underserved populations, those at the bottom of the pyramid, and/or enabling improved operating conditions for small and medium enterprises.