Guarantees
Guarantees leveraged 19% of all private finance mobilized by developed country public finance between 2016 and 2022, and were among the preferred de-risking, or risk-sharing, tools for private investors. They have strong potential to mobilize more financing than loans for climate finance.
2030 Goals
- Increase the use of guarantees by MDBs and DFIs to mobilize greater climate finance, leveraging their effectiveness as a preferred de-risking instrument for the private sector and their historically low default rates.
- Adjust Official Development Assistance (ODA) accounting rules to view guarantees as fundamentally different than loans, supporting increased use.
StatusModerate progress
Moderate progress
- The World Bank announced its new guarantee platform, designed to drastically increase the ease & use of guarantee products across it's institutions.
- The Green Guarantees Group, a voluntary alliance of banks committed to improving guarantees, launched in 2024 with significant membership. The European Fund for Strategic Investments is also expanding their guarantee to address market gaps.
- Many EMDE banks have expressed an interest in increasing the use of guarantees from MDBs and other international sources, simplifying the implementation process, and supplying guarantees directly to MSMEs.
- In FY24, the Multilateral Investment Guarantee Agency (MIGA) issued a record USD 8.2 billion in new guarantees across 40 projects, with 75% of these initiatives identified as climate projects (representing 30% of total MIGA finance). The new MIGA platform went live on 1 July 2024 and aims to boost WBG annual guarantee issuance to USD 20 billion by 2030.
Leading Actors
Private FIs
The Green Guarantee Company, Guarant co., African Trade Insurance Agency, Africa Energy Guarantee Facility, Afreximbank, PIDG GuarantCo, Allianz, MEAG
Public FIs
DFC, British International Investment, US Development Finance Corporation, Japan Bank for International Cooperation, Sweden Investment Development Agency, African Energy Guarantee Facility
Multilateral Development Banks
MIGA, European Investment Bank (EIB), African Development Bank (AfDB), Inter-American Development Bank (IDB), European Bank for Reconstruction and Development (EBRD), World Bank, Asian Infrastructure Investment Bank (AIIB), International Finance Corporation , CAF, EFSD+, Guarantee Scheme, New Development Bank (NDB - BRICS Bank)
International Organizations
IRENA's ETAF
Leading Countries
Brazil, China, Denmark, Germany, India, Nigeria, Sweden, United Kingdom, United States of America
Alliances
BRICS, FiCS, International Development Finance Club (IDFC)
Supportive Stakeholders
Green Guarantee Group, European Association of Guarantee Institutions, Berlin Global Dialogue, Euro-Mediterranean Guarantee Network (EMGN), Green Hydrogen Business Alliance, African Energy Guarantee Facility, European Climate Foundation
Milestones
The below events contain milestones related to De-Risking Private Investment (with Guarantees).
November
UNFCCC COP30
Milestones
Guarantees
The GGG aims to launch a Directory of Guarantees, which will provide key details to help borrowers search, compare guarantee products, understand eligibility requirements, and navigate the application process efficiently. In parallel, the GGG Expert Group will identify three lighthouse projects that embody the innovation needed to unlock additional capital through guarantees. These projects will be featured to inspire replication and demonstrate practical applications of guarantees in diverse contexts.
Resources
The below resources all pertain to the topic of De-Risking Private Investment (with Guarantees).
Blog: Ways to de-risk Climate Finance
Private Finance, Guarantees
This blog by Climate Policy Initiative highlights the need to lay out a comprehensive plan for de-risking climate finance with a domain-centric approach.
The European Fund for Strategic Investments
Private Finance, Guarantees
The EFSI aims to overcome current market failures by addressing market gaps and mobilising private investment. It supports investments in areas such as infrastructure, education, research and innovation, as well as risk finance for small businesses.
Climate Finance Provided and Mobilised by Developed Countries in 2013-2022
Private Finance, Guarantees
World Bank MIGA Annual 2024 Report
Private Finance, Guarantees
World Bank Group Guarantee Platform
Private Finance, Guarantees
Scaling Up Green Guarantees: Recommendations by the Green Guarantee Group
Private Finance, Guarantees
Approach Paper: Mobilizing Private Capital for Development Through World Bank Group Guarantees, Fiscal Years 2015–24: An Independent Evaluation
Private Finance, Guarantees
Viewpoint Note: MDBs Working as a System for Impact and Scale
Private Finance, Guarantees