NRSP Removes Sarmayacar From UN-backed $40 Million Climate Fund

By Muazam Ali Tahir The National Rural Support Program (NRSP) has prematurely terminated its prospective partnership with Sarmayacar to manage a $40 million climate fund as a result of a final ‘due diligence’ which Sarmayacar felt blindsided by. An official from the National Rural Support Program has confirmed that Sarmayacar is no longer part of Climaventures, which includes an upcoming $40m Climate fund and $10 million venture accelerator that has been backed by the United Nations’ Green Climate Fund (GCF) following a final due diligence that Sarmayacar described as unexpected, in the pre-implementation stage of the project lifecycle. This decision leaves the role of fund manager vacant, creating urgency ahead of a September 2025 deadline for signing the Funded Activity Agreement (FAA) after a 6-month extension was granted by GCF after the March deadline, the NRSP official confirmed, without commenting further on the details of the third-party report which led to Sarmayacar’s removal. The official also confirmed that the report had triggered a “zero tolerance” at GCF. With Pakistan having recently served as Co-chair of the GCF Board in 2023, Pakistan had the opportunity to highlight its pressing climate challenges, including funding shortfalls and implementation delays. Leveraging this, NRSP, as an accredited entity, had been working on up to five proposals submitted to GCF, including Climaventures, in which Sarmayacar was initially selected as the executing entity. Rabeel Warraich, Founder and CEO at Sarmayacar, says, “We became involved in the project nearly two years before its approval by the GCF, after being approached by NRSP to serve as a potential Executing Entity.” He adds that following this the NRSP and GCF conducted a thorough due diligence process, which led to Sarmayacar being selected as the Executing Entity for the Climaventures project by both NRSP’s board and GCF, and that “this decision was based on our established track record, the success of our first fund, the extensive experience of both General Partners, our prior investments in a few climate-relevant startups, and our extensive networks in the startup and investor ecosystems.” While Sarmaycar’s prior involvement with climate ventures is not documented, NRSP officials confirmed that initial due diligence was conducted in the ‘minimum possible time’ after which Sarmayacar was selected as a ‘prospective partner’. It is also understood that Sarmayacar’s role went beyond that of a usual subcontractor in this project as an ‘executing entity’, which is responsible for delivering the main components of the project, under the oversight of the ‘accredited entity’, the NRSP. As the approved project is listed as a “private sector” project, the role of fund manager is crucial for this project’s delivery. With a mention of Sarmayacar at least 19 times in the approved proposal, Rabeel says that the entire fund component and all related elements were entirely dependent on Sarmayacar. “This included the development of a pipeline of investable opportunities for the fund, preparation of the fund structure paper, drafting of the term sheet and Limited Partnership Agreement (LPA), while taking on all associated expenses.” This project, involving the fund component alongside the venture accelerator, for which NRSP itself was an executing entity, also underwent an independent review by GCF’s independent Technical Advisory Panel (iTAP), which endorsed the proposal. More than a year after submitting the proposal, GCF’s funding commitment was approved in its October 2024 Board meeting, where it committed $25m of anchor funding, conditioned on another $25m being raised by the fund. Of the $25m anchor funding, $15m would have been structured for the Climaventures fund in addition to the $25 being raised by the general partner and fund manager, formerly Sarmayacar, with an additional $10m earmarked for a venture accelerator which Sarmayacar was also proposed to handle the operations of. Tensions reportedly arose after Sarmayacar launched PR campaigns coinciding with the GCF’s board approval in October 2024, actions that NRSP officials stated were premature and misleading. NRSP emphasized it had warned against such media efforts, which incorrectly attributed funding commitments directly to Sarmayacar. The NRSP official further added that these PR efforts should not have commenced until Sarmayacar was “officially declared as a partner”, until the signing of the FAA, and that they should have been done “in consultation with NRSP.” Sarmayacar’s press release on Newswire referred to Climaventures as their “Brainchild”, and a Reuters report mentioned that “funds have been committed by the GCF to Sarmayacar”, instead of NRSP, which was the accrediting entity of the project. According to an insider source, it is also believed that this media coverage, apart from the Reuters report, was not ‘earned media’ as more than $10,000 was spent on these PR efforts, which did not highlight NRSP’s role. Rabeel responded on the matter of misleading reports, stating that as “GCF’s contribution made up a minority share of the total $40 million fund, securing further investment commitments was essential for the overall success of the project. As such, these efforts were in the interest of project success and were not misleading in any way.” On this point, the NRSP official noted that there was no need to act in an urgency, without their consultation, as “GCF processes allowed for up to 18 months to raise half of the fund, and another 18 months to raise the other half.” Rabeel also added that “at no point did Sarmayacar issue public claims or statements inconsistent with GCF’s and NRSP’s publicly disclosed information at the time of approval. Any interpretations to the contrary have originated from third-party reporting or commentary.” Following the project’s approval and after these media reports, NRSP initiated a “new and additional” due diligence process, which Sarmayacar says they were not made aware of beforehand at any stage. “To the best of our knowledge, this process was entirely managed by NRSP, and we did not receive any communication from GCF regarding its initiation or progress,” says Rabeel. NRSP, however, maintains that it was a “third-party” report which was later approved by GCF’s Secretariat. When asked what had changed between the time of the initial screening, which Sarmayacar cleared, and the final due diligence, Rabeel responded that “other than improvements made to strengthen internal systems in support of the project’s success, no changes have been made at Sarmayacar.” The NRSP official’s response to this hinted at “contacts” changing. “The reasons for this decision have also not been shared with us,” said Rabeel, as he highlighted that prior to the initiation of this final due diligence “NRSP required Sarmayacar to sign a Non-Disclosure Agreement”, which limits their ability to communicate externally on the matter and also restricts their engagement with GCF regarding this topic. The NRSP official says that this has been a “setback” for them, as they will now need a new fund manager to sign the FAA by September 2025. This becomes another challenge, as there are already a select few funds that understand the domestic market of Pakistan, especially at the intersection of Climate Action. Whereas for the future of Sarmayacar, Rabeel says that they “will continue to include climate and sustainability as one of the focus areas of any new funds and initiatives.” Muazam Ali Tahir is a business journalist based in Karachi, reporting on the business realities of emerging economies. He previously served as an elected Sabbatical Officer at the University of Bristol Students’ Union while studying Economics and Politics. Prior to journalism, he held operational roles at a Karachi-based operator-investor and a Stanford-founded venture-backed edtech.