Efficient consumer appliances remain difficult for financial institutions to finance at scale because eligibility is rarely defined in a way that links product performance, national labelling systems and climate finance criteria. May’s Cool Talk on Taxonomies for Financing Efficient Consumer Appliances examined how classification frameworks can translate product efficiency standards into practical financing criteria, helping banks identify eligible appliances, structure use-of-proceeds lending, and track climate impact. This is an important step to close the gap between the current business-as-usual and the potential $600 billion annual market for sustainable cooling. 

Moderator Rusmir Musić, Global Cooling Lead at the World Bank Group, framed the discussion around a persistent visibility gap in cooling finance. Many financial institutions may already be financing cooling assets, but cannot identify or track them because they are bundled into agriculture, green buildings, or wider energy efficiency portfolios. “Practical tools such as positive lists can help institutions compare existing portfolios, isolate eligible assets, and expand dedicated lending for efficient cooling,” offered Musić.

Building on that link between identification and investment, Patrick Blake, Programme Manager at UNEP’s United for Efficiency initiative, outlined the role of standards in giving finance a credible technical basis. In his opening remarks, Blake explained that Minimum Energy Performance Standards (MEPs) set the market floor by removing the least efficient products, while labels and financial incentives can push demand toward higher-performing appliances. “MEPS eliminate the least efficient products from the market, but financial incentives and taxonomies can help advance products further in terms of efficiency and environmental impacts,” he said. For cooling products, he stressed, these frameworks must address both energy efficiency and refrigerants.

Applying taxonomies in emerging markets

The panel discussion focused on market application, with the International Finance Corporation (IFC), a member of the World Bank Group, presenting its work on use-of-proceeds taxonomies for efficient consumer appliances in India, alongside emerging lessons from Viet Nam and Sri Lanka. 

Ashutosh Tandon, Advisory Services, Financial Institutions Group, set out the market logic behind the approach, noting that India’s household appliance market is expected to reach nearly USD 100 billion by 2030–31, while only 31 percent of appliances under mandatory labels in 2023 were rated four or five stars, representing the highest possible efficiency in the market. IFC used India’s labelling system to develop a positive list of eligible appliances, assessing sales volumes, technical baselines and energy savings potential against a minimum 20 percent improvement threshold, consistent with long-standing guidelines for climate finance. “Having a positive list-based approach can work both in the context of consumer appliances and when we look at MSME equipment,” noted Tandon. The approach is already informing financing in India and Viet Nam, with potential application in Sri Lanka, and is supported by a toolkit that helps financial institutions estimate GHG savings and build dedicated efficient-appliance portfolios.

Senior Investment Officer Abhishek Sinha grounded the discussion in IFC’s work with Bajaj Finance Limited, a dominant provider of point-of-sale consumer finance, with around 55% of India's consumer durable financing market. He explained that Bajaj’s model had already helped expand access to appliances by making purchases affordable through small monthly instalments. IFC’s intervention focused on using that reach to influence the efficiency profile of what consumers buy. “We looked at specific underlying asset classes in their portfolio, identified a few that made sense, looked at what the potential growth was in that asset class, and nudged them to grow the four- and five-star portfolio rather than the three-star portfolio,” he elaborated. The case showed how existing consumer finance channels can be adjusted to favour higher-efficiency appliances without requiring a new lending architecture.

Building markets for efficient cooling

The Q&A broadened the discussion from consumer appliance finance to adjacent use cases and replication conditions, with regular references to insights drawn from the IFC-UNEP flagship report Cooler Finance. Participants raised the role of passive cooling and building envelope measures in reducing cooling loads before appliance demand arises, pointing to green building tools as a way to connect technical measures with utility savings and finance. The discussion also covered cold chain finance for agriculture, where cooling assets are already being financed but still face similar identification and tagging challenges. On product eligibility, speakers noted that country-level labels need to be assessed against efficiency improvement thresholds before they can be used by lenders, with further work underway in South Asia and knowledge support from organizations active in appliance efficiency.

The discussion concluded with the investment conditions needed to scale efficient cooling. Chau Tonnu, Senior Programme Manager at the UK Department for Energy Security and Net Zero, placed efficient cooling finance within the UK’s wider clean energy innovation agenda, including its support for the World Bank Group’s Sustainable Cooling Initiative, the Global Cooling Pledge, and the Africa Centre of Excellence for Sustainable Cooling and Cold Chain. She positioned efficient cooling finance as a market-building challenge, where public support, concessional capital and clearer investment criteria can help move efficient technologies from demonstration to deployment. “Financial innovation can drive technological innovation,” she said, noting that taxonomies and de-risking mechanisms can help create the conditions for capital to flow into efficient cooling markets.

The next Cool Talk will take place on 18 June, focusing on Extreme Heat Action in Cities and Communities.