SIDBI launches First Green Climate Fund project to invest $120M in MSMEs

The Small Industries Development Bank of India (SIDBI) has secured approval from the Green Climate Fund (GCF) for its first-ever green climate project, the Avaana Sustainability Fund (ASF). 

The initiative, which involves a $120 million investment, aims to support early-stage companies and micro, small, and medium enterprises (MSMEs) that are pioneering technology-led innovations for climate solutions and sustainability in India. The GCF, the world's largest climate fund based in South Korea, is contributing $24.5 million to the ASF.

Targeting climate change and sustainability

The ASF project is designed to make substantial contributions towards climate change mitigation, adaptation, and enhancing resilience in vulnerable sectors of the Indian economy.

By focusing on four significant transitions—built environment, energy industry, human security, livelihood, wellbeing, and land use-forests and ecosystems—the fund aims to drive transformative climate action in line with the historic Paris Agreement. 

Challenges and opportunities for MSMEs

Recent surveys have highlighted the challenges faced by MSMEs in adopting sustainability measures, including a lack of technical expertise and capital. Despite these challenges, there is a growing awareness among MSMEs about the benefits of green financing and sustainability, not only for environmental impact but also for improving brand image and competitiveness.

SIDBI's ASF project seeks to address these challenges by providing the necessary support and resources to enable MSMEs to implement sustainability initiatives effectively.

Implement low-carbon projects in India 

As an Accredited Entity (AE) of the GCF, SIDBI plays a crucial role in accessing climate finance to implement low-carbon and climate-resilient projects in India. The bank said it actively supports national action plans on climate change and champions responsible business practices within the MSME sector.

With more projects planned, SIDBI aims to support and finance MSME development, help India meet its NDCs, and contribute to global change through green and climate finance.