Giving Compass’ Take:
• Blended finance models incorporate philanthropic investment that encourages private sector growth aimed toward achieving the SDGs.
• Are international development experts looking toward blended finance models over government funding? Is this a more sustainable pool of funds?
Tackling climate change and achieving the world’s sustainable development goals will require publicly funded and private sector banks and institutions to be far more willing to join forces to provide “blended” finance to projects, according to a recent study. Blended finance is the term given to the use of public or philanthropic capital to spur private sector investment in projects aimed at achieving the sustainable development goals.
The Business and Sustainable Development Commission found that private sector investors could take advantage of blended finance to gain access to rapidly growing markets in the developing world. The commission has set up a taskforce specifically to consider blended finance and how to encourage growth in the sector. In its report, the taskforce found that there was great fragmentation across the market and called for public and private investors to pool their resources to create more giant funds, worth more than £1bn each, to take over from the smaller funds, of about $100m in size, which currently dominate the blended finance landscape.
Jeremy Oppenheim, founder of Systemiq, a financial institution focusing on sustainable development said, “There is a window of opportunity for institutional investors to increase their exposure to emerging markets infrastructure by taking advantage of the risk mitigation offered by blended finance. Momentum is growing – it is possible that the blended finance market could double again in the next three to four years.”
Read the source article about blended finance by Fiona Harvey at The Guardian.
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