Green Lend: Inclusive credit risk assessment across value chains | Climate Finance, South Africa 2019

SEED Practitioner Labs Climate Finance in South Africa engaged financial institutions, funders, intermediaries and other SME ecosystem stakeholders over a multi-step process to co-create innovative climate finance products and mechanisms that extend access to long-term financing opportunities for “missing middle” small and growing climate-smart enterprises that struggle to advance beyond the start-up stage and multiply their contributions to climate-smart and socially inclusive economies.

Green Lend is a credit risk assessment mechanism (risk scorecard) developed by FinMark Trust to increase lending to climate-smart SMEs through risk assessment catered to the needs and data available to these enterprises. This mechanism leverages data that traditionally are overlooked by commercial banks to build a credit risk framework responsive to climate-smart SMEs that embraces the reality of the diverse and often messy data availability of climate-smart SMEs across their complex value chains. Value chain analysis and the use of data across different nodes of the value chain can support both SMEs and financiers to overcome challenging and often hazy data collection and analyses within credit risk assessments. A value chain approach to credit risk that incorporates new data forms will look to which data are found along a specific value chain – collecting data from key actors at different stages from inputs to production, processing and distribution, marketing and consumption.