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The latest report of the Intergovernmental Panel on Climate Change has made it clear once again: it is getting uncomfortable in the next few years. At the moment, we are falling well short of the targets we set ourselves in the Paris Agreement and are heading for irreversible damage to the climate. Global warming of 1.5 degrees Celsius is threatening as early as 2030. Irreversible damage is already inevitable by then. As a reminder, the complete phase-out of coal in Germany is currently planned for 2038.
However, it is not only politics and corporates that are called upon to act. Every individual can contribute directly to climate protection. By acting more consciously in everyday life – but also by investing own assets more consciously. That is why Frankfurt School has launched frankly.green. frankly.green is a new crowd investing platform for sustainable investment that enables private investors to support innovative, green companies in emerging and developing countries.
frankly.green combines the expertise of the FS-UNEP Collaborating Centres and FS Impact Finance and works together with GLS Bank as well as strategic local partners. This allows us to offer private investors a unique combination of impact investing and sustainable finance.
Only green investment opportunities are offered on frankly.green. We define green investments in terms of sustainability and environmental protection. A green investment must, directly or indirectly, have a sustainable positive impact. At the same time, it must be ensured that no (possibly unintended) negative impacts are generated (Do-No-Significant-Harm principle).
With frankly.green, we have made a conscious decision to facilitate financing for green businesses in emerging markets. Already back in 2004, the President of Rwanda, Paul Kagame, stated: “In Africa today, we recognise that trade and investment, and not aid, are pillars of development.” We strongly believe that investors can make a big and very direct impact here.
To this end, we do not use complicated structures or special purpose vehicles. frankly.green finances local companies directly and places a high value on transparency. We see ourselves as an interface between local green companies and small investors who value returns as well as sustainability and environmental protection.
Unlike donation-based crowdfunding, crowd investing is generally about returns. On the crowd investing platform, providers, i.e. issuers, offer their projects for investment. Investors can choose their projects there and thus co-finance them. In return, investors “either participates in the future profits of the financed project or receives shares or debt instruments.” At frankly.green, this takes the form of a mezzanine instrument, the qualified subordinated loan. This is also being referred to as ‘equity-based crowdfunding’.
The crowd investing market has been experiencing rapid growth for years – but it is still a niche product.
This type of investment is certainly associated with risks: different jurisdictions, exchange rate, unsecured subordinated loan – to name just a few. Investors should be aware of these risks and assess them accordingly. However, the investments facilitated by frankly.green also offer great opportunities – both financially and in terms of the impact to be achieved.
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