Stoa

Overview of climate mainstreaming approach and goals:

STOA was established in 2017 by the Agence Française de Développement (AFD) and the Caisse des Dépots et Consignation (CDC) to support sustainable infrastructure and energy projects in developing and emerging countries through equity investment.  STOA inherited from its two shareholders’ ambitious vision on mainstreaming climate change in their strategy and operations. STOA’s objective is to catalyze private investment in sustainable infrastructure, especially in Africa, with a specific focus on fighting climate change.

One of our main objectives is to allocate a specific part of our investments to projects with inherent climate benefits. The target was initially set at 30% of the funds invested, was raised to 50% since 2020 then to 65% in 2023 with an ambition to target 75% by 2028 as STOA is increasing its commitment towards fighting climate change. Our current portfolio is close to this target as we invested 78% of our funds in projects with inherent climate benefits by 2022 year-end, equivalent to 310 M€ on a gross commitment of 408M€, illustrating the leverage effect of STOA’s equity investment.

As part of the definition of our Raison d’Être (Our Purpose), following on from the Loi Pacte, STOA defined it as “Financing and supporting the development of sustainable and resilient infrastructures for future generations in Africa, Latin America and Asia”; this synthetic formula gives rise to a strategy and three flagship commitments that reinforce the intentionality of the impact fund. STOA also committed to build a “Paris Agreement aligned” portfolio. This goal is today achieved, notably thanks to the exclusion of high-emission projects incompatible with the Paris agreement, and of projects related to coal-based and oil and gas energy solutions. Thus, we promote low-carbon trajectories, by financing projects that contribute to a decarbonized development. Our climate strategy is based on three pillars: redirecting investments toward projects with a climate co-benefit, promoting low-carbon trajectories and financing projects that are resilient to climate change in emerging and developing countries.

All our projects area analysed using a proven climate procedure and consist of three stages:

1. Calculating the project’s carbon footprint by applying the Carbon Footprint method of Agence Française de Developpement
2. Selecting the project according to the country where it will be implemented and to CO2 emission thresholds, using a selectivity matrix based on its carbon footprint.
3. Detailed analysis of the climate context, with a particular focus on the computability of the project with the country’s low-carbon trajectory, as well as its vulnerability and resilience. Depending on the case, the risk of carbon lock-in is also analysed. This phenomenon refers to the self-perpetuating inertia of fossil fuel combustion as the main energy source, thereby promoting physical, economic, and social factors that are mutually reinforced. The result is that the introduction of low-carbon alternatives is inhibited.

Today, our portfolio climate performance (assessed with the % of inherent climate benefits projects) is essentially linked to mitigation, but we are also working on adaptation to climate change through vulnerability analysis of our infrastructure and the implementation of a specific strategy for these issues. Indeed in 2022, the investment fund developed its own climate change resilience and adaptation strategy. This strategy was supported by the development of an in-house tool that enables to weight the resilience of investments and modify their technical characteristics as necessary, through discussions with design teams. The objective of this strategy is to improve our understanding of the issues and needs and develop an operational toolbox to strengthen resilience of our projects.

Today, the renewable energy projects financed by STOA will avoid 3,135,000 tCO2 per year by 2024. Our ambition is to raise this target to 6 million tC02 per year avoided by 2028. These avoided emissions are calculated using AFD’s Bilan Carbone method, based on total installed capacity and projected estimates over the lifetime of the projects (ex-ante).

Operationally, these objectives are incorporated in our climate procedure, presented in the “Case study” section. The latter is subject to amendments, to ensure its evolution regarding scientific knowledge progress and institutional perspectives.

STOA’s Climate strategy is part of a larger framework of commitments, covering impact (Accessibility, Functionality, and Cleanness) and ESG risks.

Principal Strategic Documents:

• Presentation of the Climate Strategy
• Mission statement
• Impact Report 2023
• Disclosure Statement 2023

Principal Tools and Methodologies:

• AFD Carbon Footprint methodology
• STOA Impact Tool

Key reports and other materials published by the institution:

• Impact report 2021
• Impact Report 2022
• Impact Report 2023