Harmful emissions from fossil fuels are a major contributor to climate change. With CO2 levels at their highest in 650,000 years, the economic livelihoods of low-income earners are increasingly threatened. At the same time, there is a growing demand for electricity in low-income countries. By investing in renewable energy Oikocredit aims to meet the growing demand for electricity in underserved regions in a way that is economically, socially and environmentally sustainable.
Oikocredit has developed an environmental policy that provides guidelines on the selection of projects according to environmental criteria. The policy also outlines how Oikocredit can reduce its environmental impact by reducing the carbon emissions of its business operations. Oikocredit’s environmental guidelines have been inspired by similar tools from other organizations, such as the International Finance Corporation, European Union, Food and Agriculture Organization, World Bank and United Nations Environment Programme.
Renewable energy unit
In 2014 Oikocredit established a renewable energy unit in Amersfoort, the Netherlands. In close cooperation with Oikocredit’s network of offices around the globe, the renewable energy unit identifies and develops investment opportunities in renewable and energy efficiency projects in low-income countries. The unit provides financing for solar, wind, small hydropower, biomass and energy-efficiency projects.
The renewable energy unit is responsible for building and managing a portfolio of debt and (project) equity investments, which includes investments in:
- Infrastructure projects that provide clean power to the electricity grid. A typical investment size for these projects is US $5 to US $10 million.
- Projects where the electricity (or heat) is generated at the location where it is used. Although small when measured in power capacity or capital outlay, such projects contribute significantly to Oikocredit’s mission when measured in environmental and social impacts. An example of such a project is a loan in local currency (GHS) equivalent to US $500,000 to PEG Africa, whose subsidiaries provide solar home systems to low-income and rural households on a pay-as-you-go basis.
Triple bottom line
Renewable energy contributes to Oikocredit’s triple bottom line of financing projects and organizations that are financially sustainable, create a positive social impact for low-income earners and protect the environment.
Investments in renewable energy have many tangible benefits, such as job creation, reduction in the use of imported fossil fuels and slowing the pace of climate change. Oikocredit is applying its expertise gained in promoting positive social impact with our partner organizations in microfinance and agriculture to its renewable energy investments.