ResponsAbility is an impact asset manager. Since 2003, they have invested over $15 billion in impactful projects and currently manage $5 billion in assets divided into three investment themes: climate finance, financial inclusion, and sustainable food. Beyond these three core themes they also offer tailor-made and Fund of Funds investment solutions, totaling at $1 billion.
Blended finance makes up a significant portion of their portfolio. Structured blended finance debt strategies account for over $1.3 billion of responsAbility's assets under management, a figure that’s expected to grow rapidly, especially in climate finance. Two new structured blended finance debt strategies have been launched recently: the Climate Smart Agriculture and Food Systems strategy in March 2023 and the Asia Climate Strategy in November 2023.
We spoke with Henk Nijland, Head Business Development, DFIs & Public Investors, at responsAbility, about their blended finance strategies, how they measure impact, their acquisition by M&G plc., and more.
Can you tell me about your background and experience in blended finance?
Blended finance has been a central theme throughout my career. I began my professional journey at the Dutch Ministry of Economic Affairs, where I worked on promoting investments from Dutch companies in Eastern Europe. These investments often required de-risking through subsidies and political risk insurance – what we now recognize as blended finance, even though the term wasn’t in use at the time.
I later spent 20 years at FMO, the Dutch Development Bank, where I held roles as a banker and head of investment teams focused on financial inclusion, infrastructure, and renewable energy. FMO is well-known in the blended finance arena. I was involved in 2014 with a Climate strategy, which provides green lines to financial institutions and direct lending for smaller project finance transactions. This strategy is managed by responsAbility. FMO’s $20 million investment in the strategy, alongside other notable investors like KfW and IFC1, was a key milestone. Today, the strategy has grown to around $613 million, demonstrating the long-term impact and scalability of blended finance.
Can you tell me more about the Asia Climate Strategy and responsAbility’s role?
In November 2023, we launched the Asia Climate Strategy, which targets corporates in Asia that operate in sectors with high CO2 reduction potential, including renewable energy, energy efficiency, e-mobility, and circular economy. A cornerstone of this strategy is our innovative "Climate Impact Assessment and Monitoring Framework", which ensures transparency and aims to achieve direct CO2 savings of an estimated 16 million tons2 over the lifetime of the investments.
KfW, the anchor investor in the junior tranche3, and FMO, in the senior tranche4, play critical roles in this strategy. Additionally, a German family office invested in the senior tranche. In the strategy’s second closing in August 2024, M&G plc’s Life business invested $100 million5, bringing the strategy’s size to over $200 million. This example highlights how blended finance can effectively mobilize private sector capital at scale.
- Calculations based on USD 500 million strategy
- Boost for the transformation in Asia: KfW supports mobilisation of private capital with the responsAbility Asia Climate
- Project detail - ResponsAbility Asia Climate
- responsAbility Asia Climate strategy surpassed USD 200 million at second closing
How do you measure the impact of responsAbility's blended finance deals?
We take a rigorous approach to impact measurement, which we call the “4 eyes” principle. It involves two key teams: our in-house impact team and our Climate Advisory Specialist team. The latter comprises local technical experts who work hand in hand with an Investment Officer to estimate the impact of portfolio companies’ projects before and after investment. These specialists gather and analyze climate impact data, which is then validated and reported by our impact team - the two pairs of eyes.
We’ve also developed a carbon measurement tool that tracks and reports climate impact, ensuring our data is accurate and transparent. Typically, we engage reputable external partners to review the fund’s portfolio carbon impact at the end of its life, further ensuring the veracity of our impact reporting.
Last year responsAbility was acquired by M&G plc, can you talk a bit about this and what the acquisition might signal for the impact investing and blended finance space?
In May 2022, M&G plc., a leading international savings and investment company, acquired responsAbility. This acquisition underscores the growing interest among mainstream investors in impact investing and blended finance, as well as the increasing importance of sustainability in investment decision-making. What makes this acquisition particularly noteworthy is M&G’s active involvement in our recent initiatives. For example, in January 2023, M&G committed $274 million to two sustainable food strategies6 in Latin America and Asia, and in August, M&G’s Life business invested $100 million in the Asia Climate Strategy7.
These large private investments highlight M&G’s strong commitment to impact investing and serve as a positive signal to other large institutional investors to engage more actively in this space, particularly in our pioneering structured blended finance strategies.
- responsAbility announces first closings of two Sustainable Food strategies totaling USD 274 million
- responsAbility Asia Climate strategy surpassed USD 200 million at second closing
How do you see responsAbility's blended finance activities evolving in the future?
Since our inception in 2023, we’ve raised over $2 billion in blended finance across various strategies, including the Global Climate Partnership strategy, the Access to Clean Power strategy, and the Social Bond focussed on financial inclusion, health, water, and sanitation. The Asia Climate Strategy, our newest flagship blended finance strategy, has a target size of $500 million and has already raised over $200 million, we expect to secure the remaining $300 million within the next year.
Looking ahead, we’re committed to developing more high impact blended finance strategies, particularly in financial inclusion and climate finance, covering both mitigation and adaptation. We’re excited about the future and look forward to collaborating with Convergence and its members to further promote blended finance as a tool to mobilize private investments at scale to reach the SDGs.
