BACKGROUND

Green Climate Fund (GCF) – a critical element of the historic Paris Agreement - is the world’s largest climate fund, mandated to support developing countries raise and realize their Nationally Determined Contributions (NDC) ambitions towards low-emissions, climateresilient pathways. Climate change offers businesses an unprecedented chance to capitalize on new growth and investment opportunities that can protect the planet as well. IDCOL and GCF will jointly mobilize concessionary fund for both public and private sector to address the needs of Bangladesh in combating the impacts of climate change.

IDCOL: BANGLADESH’S 1st ACCREDITED ENTITY OF GCF

In the 17th Board meeting of GCF held on 6th July 2017, IDCOL was approved to become the 1st Direct Access Entity (DAE) from Bangladesh for financing climate change mitigation or adaptation project to be implemented in Bangladesh. The fund is first of its kind to enter Bangladesh through IDCOL which will be channelled directly to private/public sector entity or through private sector banks or financial institutions. Primarily, IDCOL was accredited for the funding instrument of “Senior Loan” and eligible to receive up to USD 250 million for each GCF project. Later, on 7th July 2019, IDCOL upgraded its accreditation status to access “Grant” of up to USD 250 million per project. As an accredited entity, IDCOL will be able to access the GCF fund directly for any climate change mitigation/ adaptation project to be implemented in Bangladesh. IDCOL will be able to channel the fund directly to private/ public sector entity or through private sector banks and financial institutions. As of 12th September 2018, IDCOL has successfully executed the Accreditation Master Agreement (AMA) with GCF. Subsequently, project specific Funded Activity Agreement (FAA) will be executed for each approved project proposal of IDCOL under the AMA.

On 10 November 2020, IDCOL received approval of its first GCF funding proposal titled “Promoting private sector investment through large-scale adoption of energy-saving technologies and equipment for textile and readymade garments sectors of Bangladesh.” At the time of approval, this was also the highest approved funding proposal for any DAE of GCF, accredited globally. Subsequently, on 20 July 2022, the Green Climate Fund (GCF) and IDCOL entered into a Funded Activity Agreement (FAA) to undertake a significant energy-saving project specifically tailored for Bangladesh’s textile and garment industries. The signing ceremony was held online. The signing marks the arrival of the first concessional GCF credit line for Bangladesh, as well as the first private sector financing of GCF in the country. This program, valued at USD 340.5 million, stands as the GCF's most substantial contribution to a private sector project in a single country. The approved GCF financing for the project amounts to USD 256.5 million, including USD 250 million in the form of concessional loan (tenor 20 years with 5 years grace period) and USD 6.50 million as Technical Assistance (Grant) for creation of enabling

environment, market awareness and capacity building of the relevant stakeholders. The rest of the amount will be co-financed by IDCOL and other implementing partners.. This program aims to offer both financial and technical support to textile and garment producers, enabling them to shift towards energy-efficient equipment and advanced technologies. By adopting these measures, the program seeks to reduce 14.53 million tonnes of CO2 emissions, safeguard jobs, and promote growth in this crucial economic sector. Importantly, it will also play a pivotal role in encouraging private sector investment. The program will work towards motivating local financial institutions to develop scalable lending and investment models that promote climate mitigation and sustainable development within the sector. This integrated approach emphasizes the importance of aligning economic growth with environmental sustainability for a resilient and prosperous future. The approved programme comprises of five interrelated components.