The Sustainability Finance Real Economies fund (SFRE) was initiated by the Global Alliance for Banking on Values (GABV), a network of 25 of the world’s leading sustainable and social financial institutions, in response to the need for growth capital for values-based banks to expand their impact and reach.
“SFRE is a concrete example of positive financial innovation focused on meeting human needs in the real economy.” said Peter Blom, Triodos CEO and GABV Chair of the Board of Directors. “Our research identified approximately 2,000 banks with this focus having assets of USD 600 billion and equity of USD 65 billion. They represent a significant, growing, positive-money movement that requires and deserves new sources of growth capital.”
One of the challenges for the world’s leading sustainable banks is finding capital to support their growth. Banks are required to hold a minimum capital requirement as a proportion of their overall lending. This capital represents the portion of a bank’s liabilities which do not have to be repaid, effectively acting as a buffer against losses, so that deposits are not at risk. While some, including Triodos Bank, have been successful in raising capital, this is not the case for all values-based banks. The new fund is designed to help meet this demand.
SFRE successfully achieved its initial close with investors committing more than $40 million. The fund has an ambition of mobilising long term capital of up to $1 billion over the next 10 years to meet the needs of its target banks. Investors in the SFRE include 15 GABV member banks, with a total commitment of $17.5 million, as well as foundations, institutional investors, family offices and private investors. While SFRE was initiated by the GABV, they are separate entities with shared ambition to grow values-led banking services which deliver economic resiliency, environmental regeneration and social empowerment.
The fund aims to support the growth and mission integrity of small and mid-sized financial institutions, with assets of between $50 million – $20 billion. Crucially potential investees’ banking models have to align with GABV’s Principles of Sustainable Banking and deploy their resources in the real economy, supporting economic activities that generate tangible goods and services as opposed to a financial economy that is concerned exclusively with activities in the financial markets.
The Global Alliance for Banking on Values (GABV) is an independent network of banks and banking cooperatives with a shared mission to put people’s needs first. It promotes a positive, viable alternative to the current financial system. Together its members are leveraging $100 billion in assets to make clients, customers and members great returns by putting money to good through programs, products and projects with an economic, social and environmental impact.
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