SIDBI Launches USD 120 Mn Avaana Sustainability Fund to Boost Climate Solutions in India

In a move to foster technological innovation aimed at addressing climate challenges, the Small Industries Development Bank of India (SIDBI) has launched the Avaana Sustainability Fund (ASF), a USD 120 million initiative targeting early-stage startups and Micro, Small, and Medium Enterprises (MSMEs) in India.

Announced on March 11, 2024, the ASF is set to facilitate investments in ventures leveraging technology-led solutions to drive sustainability and combat climate change. SIDBI, serving as the anchor investor, has secured accreditation from the Green Climate Fund (GCF), the world's largest climate fund, which has contributed USD 24.5 million to the ASF.

The ASF's primary objective is to support early-stage companies that utilize technology-driven approaches to address climate challenges and promote sustainability. By investing in such enterprises, the fund aims to drive significant contributions to climate change mitigation, adaptation, and resilience-building across various sectors of the economy.

This initiative marks a significant milestone for SIDBI, as it represents the first project of its kind initiated by the institution. By leveraging its expertise in green and climate finance, SIDBI aims to advance India's nationally determined contributions to combating climate change on a global scale.

The ASF's investment strategy focuses on four key transitions: the built environment, energy industry, human security and livelihoods, and land use, including forests and ecosystems. By targeting these areas, the fund aims to catalyze transformative change towards a more sustainable and climate-resilient future.

As an accredited entity and direct access entity with the GCF, SIDBI will utilize climate finance to implement low-carbon and climate-resilient projects, working closely with the Ministry of Environment, Forests, and Climate Change and other key stakeholders.

Green Climate Fund, established as part of the Paris Agreement, aims to accelerate climate action in developing nations by providing financial resources and expertise for climate-related projects. Through partnerships and innovative financing mechanisms, it seeks to expedite the transition to low-carbon, climate-resilient economies.

India, with its significant population and high vulnerability to climate risks, faces pressing challenges in mitigating the impacts of climate change while fostering economic growth. The ASF represents a crucial step towards addressing these challenges by supporting the development and deployment of innovative climate technologies.