Christian Aid has launched an investment vehicle aiming to build £20m of assets by 2030 to finance locally owned businesses helping communities adapt to climate change.
The Christian Aid Resilient Futures Fund, or CARFF, is a wholly owned subsidiary with its own board and investment committee. It will initially deploy capital through specialist impact-investment managers alongside a smaller portfolio of direct investments.
Christian Aid has finalised partnerships with impact investors Talanton and BlueOrchard as part of the first phase and is providing initial investment capital and operating support itself.
The fund will concentrate initially on climate-vulnerable emerging and frontier markets, particularly in sub-Saharan Africa, and support smaller businesses and financial intermediaries working in areas such as climate-smart agriculture, renewable energy, clean water, food systems, and local economic resilience.
Patrick Watt, chief executive of Christian Aid, said: “Private investment is a critical part of the funding mix.”
The charity is positioning the vehicle around what impact investors often describe as the “missing middle” in development finance: businesses that have viable commercial activity but are too large or mature for conventional grant programmes while remaining too small, risky, or unfamiliar for mainstream commercial lenders.
Those companies can face short repayment periods, high borrowing costs, limited collateral, and a lack of lenders prepared to assess business models operating in markets exposed to political, currency, infrastructure, or climate risk.
CARFF is intended to provide patient and affordable capital, with technical support where appropriate, allowing businesses to make longer-term investments without relying exclusively on grants or expensive short-duration debt.
Repayments and investment returns are intended to be recycled into future projects rather than distributed out of the vehicle, allowing the same pool of capital to support several investment cycles.
The first phase will rely mainly on specialist fund managers, giving Christian Aid exposure to established local or regional investment capability without building a complete direct-investment operation from the outset.
The fund also plans to maintain a smaller direct-lending portfolio. That can provide greater control over individual investments but requires more internal capability around due diligence, monitoring, risk management, and recovery.
Christian Aid said that, subject to securing sufficient funding, it aims to reach more than 4,200 small and medium-sized businesses over five years through a combination of direct finance and backing for local microfinance institutions, while supporting the creation of more than 1,800 jobs.
The targets depend on future fundraising and remain ambitions rather than committed outcomes.
The vehicle is currently supported by philanthropic capital. Christian Aid expects later phases to broaden participation to faith-based, social-impact, and other suitable investors, turning part of the model from charitable donation into repayable investment.
That creates a different financial discipline from grant funding. Enterprises receiving capital are expected to generate enough economic value to repay or provide a return, even where the investment terms are designed to be more patient than conventional commercial finance.
Climate adaptation has traditionally attracted less private investment than emissions reduction. Renewable generation and other mitigation projects can often produce identifiable revenue streams, while the financial returns from greater resilience to drought, flooding, heat, or food-system disruption can be more diffuse.
Locally owned businesses can turn some of those needs into investable models. A company selling drought-resistant seeds, providing solar-powered transport, improving agricultural storage, or expanding clean-water infrastructure can generate commercial income while reducing the vulnerability of communities to climate shocks.
The difficulty is often scale. Smaller projects can require almost as much due diligence as larger investments while producing lower absolute returns for institutional investors, making them comparatively expensive to finance.
Impact vehicles can address part of that problem by aggregating investments and accepting financial returns that reflect social or environmental objectives alongside conventional risk-adjusted performance.
Christian Aid is also drawing a boundary between investment and public development finance. CARFF is not intended to replace grant-making, humanitarian support, or government commitments to climate adaptation.
Private investment can increase the amount of capital available to commercially viable businesses, but it cannot finance every adaptation requirement. Public infrastructure, emergency relief, social protection, and projects without revenue streams continue to depend heavily on governments and grant providers.
CARFF therefore sits between charitable and commercial finance. Its longer-term test will be whether the fund can attract enough external capital to reach its £20m target and demonstrate that patient investment can support climate adaptation businesses at sufficient scale for repayments to be recycled into subsequent projects.
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