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To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC at the Fairmont Georgetown Hotel from November 3-5, 2025.

This first of its kind gathering will bring together a wide spectrum of blended finance practitioners to share insights, discuss market trends, and break down silos, with an aim towards defining the next decade of blended finance.

The Forum will offer a variety of programming focused on the most urgent blended finance issues including private sector and local capital mobilization, data transparency, and standardization. Attendees will also have the opportunity to participate in multiple networking opportunities designed to foster collaboration and inspire and galvanize them to shape the future of blended finance.

Convergence members get access to preferred pricing. Early bird member tickets are $500 (compared to $750 for non-members). To get the discounted rate, reach out to your relationship manager.

*Early bird registration is currently open. Follow the [event LinkedIn page](https://www.linkedin.com/showcase/global-blended-finance-forum/) for up to date information, including newly announced speakers, agenda items, and themes.*

Global Blended Finance Forum

To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC from November 3-5, 2025.

Convergence Global Blended Finance Forum

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__Friday, February 28, 2025, 9:00AM - 5:00PM EAT, Nairobi, Kenya__

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Join Nairobi's public, private, and philanthropic actors for an in-person interactive and practice-driven training on blended finance. This intermediate-level session will combine insights from Convergence experts and blended finance practitioners in the field. This training is an opportunity for Convergence members and partners to gather to share insights and experiences and tackle difficult questions around innovative approaches to mobilize private capital for the Sustainable Development Goals.

Speaker details and agenda to follow.

This training is complimentary for members (one seat for Standard Membership, two seats for Market Builder Membership), USD 150 for additional member seats, and USD 250 for non-members. Please contact your relationship manager for more details or questions about your membership type.

*Registration is on a first come, first served basis and capacity is limited. We encourage registering early to reserve your seat.*

In-Person Convergence Blended Finance Training in Nairobi

Join us in Nairobi, Kenya for a full-day training combining insights from Convergence experts and blended finance practitioners in the field.

Blended Finance Training in Nairobi, Kenya

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__Thursday, February 27th, 6:00pm – 8:30pm EAT__

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CrossBoundary and Convergence are hosting an invite-only networking reception during the Sankalp Africa Summit. 

The event will bring together Convergence's members, partners, and other innovative finance stakeholders comprising of impact investors, institutional investors, donor agencies, development banks, and sponsors of blended finance deals. Attendees will have the opportunity to connect with like-minded individuals and institutions engaged in blended finance, make new contacts, exchange ideas, and more.

*Registration is open on a first come, first served basis.*

Member Networking Reception in Nairobi

Join us for a member networking reception in Nairobi, Kenya

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__Thursday, February 20, 2025 at 2:30PM CET__

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Join Convergence alongside the World Association of PPP Units & Professionals (WAPPP) as they launch their 2025 theme: “Mobilizing Blended Finance for PPPs.” The webinar will start with a technical approach, in partnership with Convergence Blended Finance, delving into the fundamentals of blended finance and its strategic role in delivering Public-Private Partnerships (PPPs). The session will explore how blended finance, which involves the strategic deployment of concessional capital alongside commercial investment, enhances the financial viability of projects focused on public infrastructure and services. The goal is to promote the adoption and understanding of blended finance as a key approach for achieving successful PPPs, particularly in developing countries where these projects are often underserved.

Following the technical presentation, representatives from the United Nations Economic Commission for Africa (UNECA), the European Bank for Reconstruction and Development (EBRD), and the African Development Bank (AfDB) will offer insightful comments on the use of blended finance in PPPs. This webinar will serve as a platform for knowledge exchange, showcasing case studies and global experiences in leveraging blended finance for PPPs. Attendees will gain valuable insights into building capacity, structuring blended finance projects, and fostering collaborations among stakeholders to create more environmentally and socially responsible projects. This is a unique opportunity to deepen understanding and expand the use of blended finance as an essential tool in mobilizing private investment for sustainable development.

WAPPP 2025 Theme Launch: Mobilizing Blended Finance for PPPs

Join Convergence alongside the World Association of PPP Units & Professionals (WAPPP) as they launch their 2025 theme: “Mobilizing Blended Finance for PPPs.”

Africa's Green Economy Summit

Deal Connect

Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets. During this interactive session, Convergence members will share details about their investment opportunities that are listed on our live deals database. This is a great opportunity to explore new and unique transactions and learn from developments in the broader blended finance ecosystem. 

Whether you're a seasoned investor or just starting, this webinar is tailored to everyone interested in discovering promising new ventures in emerging markets.

Save the date: __February 19, 2024, from 9:00 -9:45 AM ET__. During the session, we will present two compelling deals from our live deals database:

__Total Impact Notes__ will provide debt capital to several high-impact funds addressing the Sustainable Development Goals (SDGs) in the developing world. The cash flow from this pool of loans will fund debt service payments to the investors in the Notes, offering them a diversified, impact-first product with a fixed coupon payment and medium-term liquidity.

__Organic Development Finance (ODF)__ provides working capital financing to organic agricultural SME's in emerging countries to increase organic production and achieve sustainable impact for environment and people. ODF works closely with Buyer Partners (international traders) to support their suppliers with flexible working capital financing and expertise.

*This webinar series is exclusive to investors registered on the Convergence platform.*

Deal Connect: February 2025

Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets.

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__February 19-21, 2025, Cape Town, South Africa__

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Don’t miss [Africa's Green Economy Summit](https://wearevuka.com/green-economy/ages/) in Cape Town from February 19-21, 2025, where global capital meets African opportunities. This investor-focused event will spotlight key themes including green reforms, nature and biodiversity, climate finance, resilient cities, and green industrialization. 

Convergence is a supporting partner of the Summit.

Don’t miss Africa's Green Economy Summit in Cape Town!

Member Networking in Singapore: Scaling Blended Finance in Asia for Climate Action

__Thursday, February 13, 2025 at 5:30pm – 8:00pm SGT__

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Convergence invites you to a networking event with members and partners in Singapore. The event will feature:
- Panel discussion on Scaling Blended Finance in Asia for Climate Action
- Networking Drinks
 

Jointly organized by Convergence and MUFG Bank, this event will bring together Convergence's members, partners, and other innovative finance stakeholders comprising impact investors, institutional investors, donor agencies, development banks, and sponsors of blended finance deals. It will be an opportunity to connect with like-minded individuals engaged in blended finance, make new contacts, exchange ideas, and more.

Due to limited capacity, this is an invite-only event. If you are interested in attending, please reach out to: asia@convergence.finance

Scaling Blended Finance in Asia for Climate Action

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__Wednesday, February 5th, 6:30pm – 8pm CET__

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Convergence invites you to our member networking reception on the sidelines of the OECD Private Finance for Sustainable Development Conference in Paris. Chat with other Convergence members, including impact investors, institutional investors, donors, development banks, and sponsors of blended finance deals. Convergence will present the latest trends in blended finance, and members will have ample time to exchange ideas and discuss blended finance initiatives. Snacks and drinks will be served.

*You do not need to be registered for the OECD Conference to attend our reception. Registration is on a first come, first served basis, with a limit of 1 person per organization.*

Member Networking Reception in Paris

Join us for a member networking reception in Paris, France.

Inside the Deal: I&P Développement (IPDEV)

__Tuesday February 4, 2025, from 9AM-10AM ET__

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Explore the inner workings of real blended finance transactions through Convergence's "Inside the Deal" webinar series. Each quarter, we delve into a successful deal, inviting the deal sponsor and key stakeholders to offer candid insights on structuring these intricate transactions.

In our upcoming webinar, we will feature I&P Development Fund (IPDEV). IPDEV is the first evergreen sponsor fund dedicated to jumpstarting, developing and supporting pioneer African Funds Managers.

During the hour-long webinar, the I&P team will provide an overview of the fund's structure and their fundraising journey. We will also conduct in-depth interviews with key stakeholders involved in the fund, uncovering invaluable lessons learned along the way. The webinar will conclude with an open Q&A session.

*This webinar is open to Convergence members only.*


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__Monday, February 3, 2025, 9:30AM - 4:30PM GMT, London U.K.__

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As an intermediate-level programme, this full-day training will combine blended finance and mobilization data, case studies, insights from Convergence experts, notable speakers from major organizations, and technical experts in the field. Convergence members will participate in an inspiring, interactive, and practice-driven day of learning and knowledge sharing around blended finance as an approach to mobilize more private capital for the United Nations Sustainable Development Goals and Paris Agreement.

This training is complimentary for members (one seat for Standard Membership, two seats for Market Builder Membership), USD 500 for additional member seats, and USD 750 for non-members. Please contact your relationship manager for more details or questions on your membership type.

*Registration for this training is now closed. Please contact regina.rossmann@convergence.finance with any questions.*

In-Person Convergence Training for Blended Finance Practitioners in Europe

Join us in London U.K. for a full-day training combining blended finance and mobilization data, information and cases, insights from Convergence experts, notable speakers from major organizations, and technical experts in the field.

Blended Finance Training in London U.K.

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__Info Session: Scale Private Investment Mobilization Standardization Project, Wednesday, January 15, 2025, 10:00AM ET__

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Convergence invites you to an Information Session and Member Consultation on the Scale Private Investment Mobilization Standardization Project.

The main objective of the project is to identify, in consultation with developing countries, developed countries, MDBs and DFIs, philanthropic foundations, and private sector investor groups, proven blended finance models that will lead to private investment mobilization at scale to low and middle-income countries to fund the SDGs. Once identified, the goal is to standardize and replicate these models and demonstrate how concessional funding can be awarded optimally to the best cases aligned to the models.

The 60-minute session will include a presentation on the project, gathering initial feedback from members. Your participation will help shape this transformative effort to mobilize private investment at scale.

Register now to join us.

Info Session: Scale Private Investment Mobilization Standardization Project

Convergence recently hosted an Information Session and Member Consultation on the Scale Private Investment Mobilization Standardization Project.

The main objective of the project is to identify, in consultation with developing countries, developed countries, MDBs and DFIs, philanthropic foundations, and private sector investor groups, proven blended finance models that will lead to private investment mobilization at scale to low and middle-income countries to fund the SDGs. Once identified, the goal is to standardize and replicate these models and demonstrate how concessional funding can be awarded optimally to the best cases aligned to the models.

The 60-minute session included a presentation on the project, gathering initial feedback from members.

Join Convergence for an Information Session and Consultation on the Scale Private Investment Mobilization Standardization Project

Private Investment Mobilization Standardization Project

Member Training: How Foundations Blend

__Member Training: How Foundations Blend, January 9, 2025, 10:00AM ET__

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Following the release of Convergence's [Blending with Foundations Data Brief](https://www.convergence.finance/resource/blending-with-foundations/view), this member training will present on the major findings of our research and invite speakers from international foundations who are actively involved in blended finance.

The session will cover:
- How foundations engage in blended finance on both a concessional and commercial basis.
- What barriers and opportunities exist for foundations looking for catalytic investments using blended finance.
- How foundations are uniquely placed to support transactions across social sectors and current initiatives looking to increase capital flows from these capital providers.

__Member Training: How Foundations Blend, January 9, 2025, 10:00AM ET__

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Following the release of Convergence's [Blending with Foundations Data Brief](https://www.convergence.finance/resource/blending-with-foundations/view), this member training presented on the major findings of our research and invited speakers from international foundations who are actively involved in blended finance.

The session covered:
- How foundations engage in blended finance on both a concessional and commercial basis.
- What barriers and opportunities exist for foundations looking for catalytic investments using blended finance.
- How foundations are uniquely placed to support transactions across social sectors and current initiatives looking to increase capital flows from these capital providers.

Join us as we explore how foundations blend

How Philanthropic Organizations Blend

*This op-ed was originally published in [Environmental Finance](https://www.environmental-finance.com/content/analysis/to-support-climate-adaptation-experienced-fund-managers-must-take-the-lead.html).*

The consensus coming out of COP29 is that achieving global climate goals will require increased participation from the private sector. Convergence's recent report on the State of Blended Finance (Climate Edition) found that private sector investment into blended transactions targeting climate goals surged from $1.8 billion in 2022 to $6.2 billion in 2023.

Yet, the bulk of this money flows to climate mitigation rather than adaptation. In the global climate adaptation market, only 1.6% of financing comes from the private sector.

Private investors can be more hesitant to consider investments in blended funds that target adaptation.

Mitigation transactions often have direct revenue streams, such as through the sale of renewable energy, or cost savings from energy efficiency. Conversely, adaptation transactions, which aim to reduce vulnerability to climate impacts and increase resiliency, often do not have an obvious or immediate revenue stream.

Blended finance can be used as a structuring approach to mitigate risk for private sector investors, making it more likely for them to invest in deals aimed at climate adaptation.

Adding a concessional debt or equity tranche in the capital structure, for example, can provide a risk cushion to senior tranche investors. It thereby allows pension funds, insurance companies, or commercial banks to invest in line with their fiduciary responsibilities.

Experienced fund managers play a critical role in structuring such funds. They act as market builders for blended climate adaptation, supplying investors with investment opportunities in line with their (minimum) investment size and their risk-return expectations.

Two examples highlight how fund managers can use blended finance to attract private investment at scale into adaptation.

First, let's look at Climate Investor Two, a blended facility targeting adaptation, specifically water, sanitation, waste, and ocean infrastructure projects in emerging markets.

It is managed by Climate Fund Managers, a Dutch-based joint venture between the Dutch development bank FMO and Sanlam Infraworks. Established in 2019, the fund reached its third close in 2023 with $875 million in commitments, including from institutional investors, such as a Nordic pension fund, a prominent US investment firm, the IMAS Foundation (under the IKEA umbrella), and a commercial bank.

Climate Investor Two is a great example of how a fund manager was able to build on its track record to venture into a more nascent sector. Many investors that took part in Climate Investor Two had already been investors in its predecessor, Climate Investor One, which focused on mitigation (renewable energy infrastructure) in emerging markets.

Climate Investor One was conceptualized in 2015 and reached a final close at $850 million in 2019. By participating in Climate Investor One, commercial investors had already gained an in-depth understanding of the firm's fund architecture and unique full investment cycle approach.

This helped them build strong arguments internally for investing in an adaptation-focused product, despite it being a first for many of them.

Another example is Incofin Investment Management's Water Access Acceleration Fund.

Incofin, a Belgium-based impact fund manager, launched this private equity fund in 2023 to invest in safe drinking water enterprises, primarily in Africa and Asia.

Incofin has a strong track record in using blended finance to catalyze investments in emerging markets: the firm has managed several blended funds focused on the microfinance and agriculture sectors (e.g. Incofin Fairtrade Access Fund).

Now turning to the water sector, the $55 million fund brings together diverse investors such as Danone, BNP Paribas, US International Development Finance Corporation, the Danish development finance institution IFU, Norfund, European Investment Bank, Aqua for All, and the US Agency for International Development.

Here as well, investors trusted the captains that had done it before.

To be sure, first-time fund managers also play an important role in launching adaptation-focused vehicles. In fact, the first adaptation-focused blended fund, the Climate Resilience and Adaptation Finance and Technology-transfer facility, was launched in 2019 by a first-time fund manager (the Lightsmith Group).

However, we need to see more money flowing towards adaptation, urgently. The time to market (from incubation to first financial close) will arguably be shorter when experienced managers steer the ship to new waters.

To all established fund managers: this is the time to use your experience and track record to bring along private investors into adaptation focused financial vehicles.

We need to see more money flowing towards climate adaptation, to support this experienced fund managers must take the lead

To support climate adaptation, fund managers must lead

To support climate adaptation, experienced fund managers must take the lead

I recently read Mariana Mazzucato’s [blog and UN policy brief](https://desapublications.un.org/un-desa-voice/sdg-blog/january-2025/blended-finance-not-working-it-time-new-approach-mobilizing) commenting on blended finance falling short of expectations and the need for a new approach to mobilising private finance. Her piece brought forth issues plaguing blended finance that should be addressed, such as the need for alignment of donors’ goals with those of developing countries themselves and the need for donor transparency.

As the global network for blended finance, [Convergence](https://www.convergence.finance/) exists to mobilise private investment into sustainable development through blended finance, and we’ve been doing it for nearly a decade. So, we wanted to respond to Dr Mazzucato’s piece and offer our own real world perspective on where blended finance is and how we think it needs to evolve.

While Dr Mazzucato states that blended finance has stagnated, the Convergence data she cites actually shows a notable rise in 2023. And the climate portion of the blended finance market in particular saw its highest ever annual financing total, growing by 120% to US$18.3bn in aggregate investment from $8bn the year prior – the entire market currently sits at around $23bn. Recently, we’ve also seen a small number of very large blended transactions come on the market that have the potential to be replicated and are providing much needed momentum (read more in the first story in [this edition of The Impact World This Week](https://www.pioneerspost.com/news-views/20241107/the-impact-world-week-7-november-2024)).

*To read the rest please visit [Pioneers Post](https://www.pioneerspost.com/news-views/20250205/opinion-blended-finance-isn-t-perfect-it-s-essential).*

Blended finance's real promise is not as a gap-filler, but a market enabler. 

Blended finance isn’t perfect, but it’s essential

BPL is a broker specializing exclusively in credit and political risk insurance (CPRI) for financial institutions, development finance agencies, multinational corporations, and investors around the world. They work closely with their clients to structure insurance programs for those engaged in international trade, investment, and lending, primarily to protect against the risk of non-payment by borrowers but also in-country political risks. Since their founding in 1983, they have settled over 600 CPRI claims, collecting over $4 billion on behalf of their clients. 

Investing in emerging markets often comes with high real or perceived risks. In development finance, risk-mitigating instruments such as non-payment insurance and political risk insurance are crucial to help increase origination capacity and adjust the risk-return profile of transactions so that private investors can enter developing countries. In addition to private investors, more development finance institutions (DFIs) and multilateral development banks (MDBs) are benefiting from these insurance products, bolstering their balance sheets and increasing their lending appetite. 

We spoke with Harry McIndoe, Director at BPL, about how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

__Can you tell us what products you focus on and the scope of the CPRI market?__

Our core focus is Comprehensive Non-Payment Insurance. This product is similar to a silent risk participation from an A-rated or double A-rated insurer that sits behind the policyholder, thus protecting them from losses on their funded or unfunded exposures. It covers non-payment for any reason so has a very simple trigger. There are roughly 60 active insurers in this space, all of whom are rated S&P A- or higher, with a large proportion now rated AA-. By swapping the counterparty rating with that of the insurer, institutions can recognise huge benefits in terms of balance sheet management and increasing their syndication capacity. 

BPL has been at the forefront of developing the market’s capabilities in recent years, and appetite has expanded to include a wide range of underlying debt instruments and structures. Another focus area is Political Risk Insurance, whereby our clients seek to cover certain specified cross-border country risks, such as expropriation, currency inconvertibility/non-transfer, and war.

__Why did BPL decide to become involved in development finance?__

Helping mobilize finance to where it is needed most has always been a cornerstone of our work. We have been active in development finance since our inception, helping both commercial and non-commercial institutions mitigate credit and country risk exposures, enable larger ticket sizes, and manage capital/balance sheets. Increasingly, we are seeing the power of insurance in derisking development finance. It has been applied across a wide spectrum of underlying exposures and stretched tenors, in the midst of long-term and disruptive trends.

We are keenly aware that CPRI has an important, and sometimes underestimated, role to play in enabling and accelerating the flow of funds to support sustainable objectives – including the transition to a low carbon economy and the mobilization of sustainable finance to developing markets. As an insurance broker we recognize that our ability to directly influence client investments and lending decisions is limited, nevertheless our clients value our support in helping them accelerate towards sustainable objectives. Additionally, our leading market position enables us to offer incisive market intelligence and drive product innovations that support the proliferation of sustainable finance, infrastructure, investments, and ambitions.

__The use of non-payment insurance in blended finance is still niche and often provided by DFIs/MDBs themselves. How has BPL participated in the blended finance space?__

Our work with DFIs/MDBs has primarily been on projects supporting the United Nations Sustainable Development Goals (SDGs), such as financial inclusion, infrastructure, healthcare, sanitation, and utilities. While some of these institutions do issue guarantees/risk covers themselves, many work with the private insurance market to increase origination capacity and syndicate a portion of their own balance sheet exposures.

When it comes to MDBs, non-payment insurance is increasingly relevant in helping to action the recent G20 Capital Adequacy Framework recommendations, which underscores the importance of insurance for enhancing lending capacity and enabling MDBs to leverage their balance sheets. 

In addition, we are often asked to secure non-payment insurance on projects for commercial lenders where there is DFI/MDB involvement, such as project finance transactions where a DFI might be a co-insurer or lender, A/B loans, and more recently, on “repack” transactions whereby private institutional capital can be crowded in with the benefit of A/AA rated insurance coverage. 

Another area where we see engagement is on portfolio and securitization solutions, where the insurance market has considerable appetite to support DFIs/MDBs through a more programmatic approach to risk-sharing and capital management, providing significant benefits at scale.

Our insured portfolio currently stands at approximately $87 billion, with nearly 60% in developing countries. This scale gives us an accurate finger on the pulse of the market and equips us with a real-time view of market appetite across global markets and underlying project types.

__What have you learned about the role of the insurance brokers in blended finance transactions?__

MDBs/DFIs are not too different from commercial financial institution clients in terms of gleaning the best results out of the CPRI market. 

One of the challenges facing insurers in the development finance space is the risk profile of their transactions. DFIs/MDBs have a development mandate, while CPRI insurers active in the market must answer to commercial capital providers. The role of a broker is to navigate this occasional disconnect, underlining the MDB’s preferred creditor status and securing the optimal coverage at the right price, all while keeping in mind that there is a finite amount of credit risk that insurers are willing to take in certain countries.

__What advice would you give to participants in the blended finance market interested in partnering with the insurance industry?__

A potential risk factor for less experienced DFIs/MDBs when it comes to using CPRI can be a lack of understanding of the product or the insurance market. This emphasizes the importance of using a broker who understands the market and can guide them through the process – ideally one with extensive emerging market experience and a good claims track record. These factors help indicate the strength of the broker in building goodwill and relationships with the insurance market on behalf of its client. 

Another critical element when engaging with the insurance market is partnership. If participants embrace that partnership approach and transparency with the market, they can count on a long and fruitful collaboration. Indeed, we find insurers see a lot of value in projects and expertise from DFIs/MDBs and in their origination strategy. Further, insurers tend to appreciate the portfolio and market diversification that such partnerships offer them.

__How do you see BPL’s blended finance activities evolving in the future?__

The SDG funding gap is a huge area of concern that CPRI can play a vital role in bridging. According to the 2024 Financing for Sustainable Development Report, SDG financing and investment gaps are estimated at between $2.5 trillion and $4 trillion annually. At BPL, we are keen to continue building on our 40-year commitment to the development finance space and advocating for the huge value for development financiers that comes from working with the CPRI market. We expect to see much more involvement for BPL as the role of insurance in helping DFIs/MDBs meet their objectives becomes more visible and as insurer appetite becomes increasingly supportive.

Learn how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

BPL Member Spotlight

BPL Member Spotlight with Harry McIndoe

*This op-ed was originally published in [Environmental Finance](https://www.environmental-finance.com/content/analysis/to-mobilize-private-capital-for-sustainable-development-we-need-standardization-at-scale.html).*

The world is at a critical juncture in the race to finance sustainable development. The United Nations estimates that achieving the Sustainable Development Goals (SDGs) will require annual capital investments of approximately $5 trillion, including $1.5 trillion for climate; but actual investment happens at only 15-20% of the level required. The total annual private investment mobilization is equal to only 1% of the $5 trillion, as estimated by UNCTAD. There is consensus that the SDG and climate investment gaps cannot be narrowed significantly without private investment mobilization at scale, which cannot happen without standardization of investment models.

We need to move away from bespoke mobilization activities and instead identify what has worked to date to mobilize private capital at scale and with impact, aligned to better debt sustainability, and double down on the most effective and efficient solutions. This need is directly addressed in the recently published [UN Financing for Development Outcome Document – Zero Draft](https://financing.desa.un.org/document/ffd4-outcome-document-zero-draft): "We support efforts towards the standardization of blended finance instruments to create effective and replicable structures."

In response to public sector initiatives and private sector calls to action, Convergence has launched the Scale Private Investment Mobilization Project to standardize and scale up effective and proven Private Investment Mobilization Models (PIMMs), creating a framework that makes it easier for private capital to flow into developing countries for sustainable development.

A limited number of PIMMs would address the three most important challenges to mobilize private investment: (i) creating a larger universe of viable projects, (ii) increasing project-level investability, and (iii) increasing portfolio-level investability. By addressing key barriers and clarifying how they differ depending on the context and the type of problem addressed, like perceived risk and regulatory constraints, a focused, limited number of PIMMs will make it possible for private investors to consider sustainable development projects in regions they otherwise eschew.

What does a set of effective PIMMs look like? Based on Convergence and partners' research, we have identified a set of 12 PIMMs to address the three challenges above.

One investment model involves public sector funding to part-fund private sector development companies to develop pipelines of viable projects, particularly in sectors like renewable energy.

Another model is public funding to organizations that issue Investment Grade (BBB) guarantees to reduce credit risk for projects with underlying weaker ratings, enabling private lenders to finance high-impact projects.

A third model is a three-tier blended finance fund that uses public funding in the junior tier and non-concessional public and private funding in the mezzanine tier to create a senior tier of capital for private investors – the diversification and subordination creates attractive investment assets (e.g., Investment Grade notes and bonds) that mobilize private investors at the portfolio level.

The impact of standardized PIMMs could be transformative. Preliminary models suggest that they could (i) increase private investment mobilized from current $50 annually to significantly larger amounts (hopefully multiples), (ii) increase investment aligned to debt sustainability (e.g., more equity and local currency debt), and (iii) materially decrease interest rates for developing country governments in one PIMM. Such an influx of sustainable investment would catalyze growth in critical sectors like infrastructure, healthcare, and agriculture, driving job creation, economic stability, and improved quality of life for millions.

Standardized investment models have the potential to provide a timely and practical roadmap to increase sustainable investment by mobilizing private investment at scale. However, realizing this vision requires a collaborative and consultative effort from developing countries (including Least Developed Countries and Low-Income Countries), governments, development finance institutions, private investors, and others that Convergence will facilitate in the first half of 2025, and ensure it aligns with other partners advancing on the standardization agenda. It is most critical that the international development community adopts the proposed standardized models and aligns their mobilization funding commitments accordingly.

The time to act is now. By standardizing and funding the best proposals / cases aligned to standardized investment models, we have a powerful tool to overcome the limitations of traditional private investment and development finance and unlock a new era of sustainable and inclusive growth. We believe we have identified a clear and direct path forward—one that bridges the gap between ambition and action, making a sustainable future possible for all.

To mobilize private capital for sustainable development, we need standardization at scale

The impact of standardized PIMMs could be transformative

*This op-ed was originally published in [Impact Alpha](https://impactalpha.com/if-foreign-aid-and-climate-action-is-out-blended-finance-must-step-in/).*

As President Trump begins his second term, uncertainty pervades climate, development, and sustainable finance communities. His first few days in office have already seen an order to withdraw from the Paris Agreement and a 90 day pause on foreign assistance. If history is any guide, we can expect further rollback in climate action and a retreat from the multilateralism critical to advancing the Sustainable Development Goals.

At the same time, we have already seen unprecedented cuts this year in development aid in other countries such as [the Netherlands](https://www.devex.com/news/unprecedented-cuts-leave-dutch-civil-society-organizations-reeling-108763) and [Germany](https://www.devex.com/news/germany-plans-billions-in-cuts-to-development-humanitarian-aid-108259).

Amidst this uncertainty, one tool stands out as uniquely resilient: blended finance. Designed to mobilize private capital by de-risking investments in sustainable development in emerging markets, blended finance has proven itself in recent years to be an adaptable and resilient approach, particularly in challenging political and economic climates.

The blended finance market has witnessed unprecedented growth in recent years, signaling a maturing ecosystem that is increasingly capable of mobilizing private capital at scale. In 2023, private sector capital flows to climate blended finance deals [grew by almost 200%](https://www.convergence.finance/resource/state-of-blended-finance-2024-climate-edition/view). That same year witnessed the emergence of multiple “whale deals”—transactions exceeding $1 billion—demonstrating that the sector can consistently blend billions and attract private investment. This marks a watershed moment for blended finance, showcasing its ability to operate at a scale and sophistication necessary to meet today’s global challenges.

__New players__

Recent landmark transactions highlight this evolution, demonstrating how innovative financial structures are unlocking billions in private capital for critical development needs. For example, The SDG Loan Fund, closing at $1.11 billion, [leveraged catalytic capital](https://impactalpha.com/allianz-sdg-loan-fund-leverages-a-25-million-guarantee-to-catalyze-1-1-billion/) from FMO and the MacArthur Foundation to unlock private investment for energy and agriculture in emerging markets, while ALTÉRRA, a $30 billion global investment fund focused on climate solutions, was launched with $5 billion in catalytic capital specifically allocated to support the global south.

Meanwhile, Singapore’s FAST-P initiative aims to raise $5 billion for green and transition projects in Asia. This trend marks a significant evolution and indicates that blended finance has reached a level of scale and utility where it can weather political, social, and economic storms. Even as COP29 concluded in late 2024 without significant consensus, delegates appeared to agree on one point: achieving global climate goals will require increased participation from the private sector.

Multilateral development banks (MDBs), development finance institutions (DFIs), and foundations remain central players. But the entry of new actors such as insurance companies play an enabling role in driving the creation of larger scale innovative structures that make blended finance more versatile and resilient. For instance, Respira utilized a Voluntary Carbon Credit Insurance product developed with Howden Group to mitigate risks like fraud and regulatory non-compliance, enabling the scaling of reforestation projects and securing $510 million in investments.

Institutional investors, including pension funds, are also beginning to incorporate blended finance as a tool to meet sustainable investment mandates, enabling greater participation in high-impact projects. PensionDanmark, with over €40 billion in assets under management, has invested in blended finance funds across agriculture, energy, and financial services sectors to support sustainable development. Similarly, Swedish pension provider Skandia has committed $100 million to the SDG Loan Fund, targeting key sectors for climate transition in developing countries. The result is an ecosystem that not only continues to grow but becomes increasingly adaptive to changing circumstances.

__Filling the void__ 

Historical precedent highlights why blended finance is likely to maintain its momentum. In the wake of a global pandemic, escalating geopolitical conflicts, natural disasters, inflationary pressures, and mounting debt burdens – a period when global climate and development finance came under pressure – blended finance mechanisms stepped into the void. While public budgets shrank, blended finance vehicles were able to mitigate investment risks in critical sectors like renewable energy and infrastructure.

We anticipate that as development aid constricts, the need for blended finance will only grow. More restrictive policy environments will only amplify the need for tools that can overcome barriers to investment in developing markets. Blended finance is specifically designed to counteract prohibitive conditions, using public and philanthropic funds to reduce risks and incentivize private sector participation. This de-risking function makes blended finance particularly well-suited to ensuring that critical investments in climate resilience and sustainable development continue even in the face of political headwinds.

This pivotal juncture demands immediate action. The international community must seize this moment to double down on blended finance as a critical tool for global development. Governments, DFIs, and philanthropic organizations should enhance their support for blended finance mechanisms, prioritizing the standardization and scaling of successful models. Private investors, too, have a vital role to play, leveraging these mechanisms to align their portfolios with sustainable outcomes while achieving attractive returns.

While political uncertainty may test the resilience of global development efforts, it also highlights the enduring value of innovative financing models. By embracing blended finance as a cornerstone of climate finance and sustainable development, we can ensure that progress continues—regardless of the political landscape.

If foreign aid and climate action is out, blended finance must step in. This is a watershed moment for blended finance, showcasing its ability to operate at a scale and sophistication necessary to meet today’s global challenges. 

Amidst uncertainty, blended finance is uniquely resilient

If foreign aid and climate action is out, blended finance must step in

*Toronto, January 28, 2025* - To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington DC, from November 3-5, 2025. 

This first of its kind gathering will bring together a wide spectrum of blended finance practitioners to share insights, discuss market trends, and break down silos, with an aim towards defining the next decade of blended finance.

The Forum will take place as the Sustainable Development Goals also reach their decade mark. With five years to go, the world is at a critical juncture in the race to finance sustainable development, even as we saw unprecedented cuts in development aid in 2024 in countries such as [the Netherlands](https://www.devex.com/news/unprecedented-cuts-leave-dutch-civil-society-organizations-reeling-108763) and [Germany](https://www.devex.com/news/germany-plans-billions-in-cuts-to-development-humanitarian-aid-108259). Private sector buy-in will be more critical than ever to mainstream investing in emerging markets for sustainable development.

“What’s unique about this Forum is the diversity of the participants. We want Convergence’s inaugural Forum to give voice to the different institutions active in blended finance, from across the public, private, and philanthropic sectors and emerging and developed markets,” says Joan Larrea, CEO at Convergence. “This Forum will crystallize what we’ve been doing for the last decade, bringing all these different players together in one room and having them speak to each other to accelerate action.”

To meet the diverse interests of attendees, the Forum will offer a variety of programming. Pre-forum events include an optional half day blended finance primer course as well as a special in-person launch of our flagship report, the [State of Blended Finance](https://www.convergence.finance/resource/state-of-blended-finance-2024-climate-edition/view). Following the pre-forum events, there will be  a full day conference agenda with high-level panels, presentations, and interactive sessions focused on the most urgent blended finance issues including private sector and local capital mobilization, data transparency, and standardization. Finally, in the morning on the last day, participants will have the opportunity to select between several thematic roundtable sessions, where they will share their expertise and learn from their peers to develop forward-thinking approaches to achieving blended finance at scale. The Forum will also include multiple networking opportunities designed to foster collaboration and inspire and galvanize attendees to shape the future of blended finance.

*Early bird registration is currently open. For more information or to register, visit [globalforum2025.convergence.finance](https://globalforum2025.convergence.finance/). Follow the [event LinkedIn page](https://www.linkedin.com/showcase/global-blended-finance-forum/) for up to date information, including newly announced speakers, agenda items, and themes.*

To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington DC, from November 3-5, 2025.

Convergence Launches Global Blended Finance Forum

Convergence and Global Asia Insurance Partnership (GAIP) have signed a memorandum of understanding (MoU) to promote the role of the insurance sector in supporting climate-resilient health outcomes in developing countries through blended finance. 

In blended finance, risk-mitigating instruments such as insurance are crucial to adjusting the risk-return profile of transactions such that private investors can enter developing countries, however to date insurance sector participation in blended finance has been limited. 

This partnership aims to encourage the mobilization of insurers into blended structures addressing the climate and health risks faced by marginalized and vulnerable communities in developing countries. A key deliverable of this partnership will be a playbook for leveraging insurance and blended finance for climate action. In addition to the playbook, the partnership will support capacity building as well as knowledge dissemination on the critical role that the insurance sector can play in blended finance.

“The challenges posed by climate change require collaborative efforts with different stakeholders in the ecosystem,” said Ritesh Thakkar, Senior Advisor, Asia Pacific, at Convergence. “This partnership between Convergence and GAIP aims to outline how the insurance sector can more efficiently and effectively engage in blended finance, with the ultimate goal of mobilizing more private financing towards climate action in developing countries.”

"The insurance sector, with its expansive risk management expertise, is well placed to support resilience development, especially in the face of the challenges posed by climate change. Through this partnership, we aim to unlock the full potential of the sector in blended finance and the different ways in which the sector can support vulnerable communities, creating opportunities for growth and impact,” said Min Hung Cheng, Deputy CEO, GAIP. 

__About Global Asia Insurance Partnership (GAIP)__ 
GAIP is a tripartite partnership between the global insurance industry, regulators, policymakers, and academia. Our vision is to build a risk-resilient and sustainable world through insurance, closing protection gaps. We are dedicated to bridging Asia’s protection gaps with innovative, long-term solutions in insurance and risk resilience. Through in-depth research, policy development, and talent building, we collaborate across sectors to shape a more secure future for businesses, individuals, and governments across the region. 

__About Convergence__ 
[Convergence](http://www.convergence.finance/) is the global network for blended finance. We exist to increase private investment in emerging markets and developing economies to advance the UN Sustainable Development Goals and Paris Agreement. Our members include private investors looking to diversify their portfolios, businesses seeking capital, as well as public agencies and philanthropic foundations looking to make their funds go further. We offer this community exclusive access to original market intelligence and knowledge products (such as case studies, data analyses, and online and in-person training), networking events, and more. To accelerate advances in the field, Convergence also provides grants for the design of vehicles that could attract private capital to global development at scale.

Convergence and Global Asia Insurance Partnership (GAIP) have signed a memorandum of understanding (MoU) to promote the role of the insurance sector in supporting climate-resilient health outcomes in developing countries through blended finance. 

Convergence and GAIP sign MoU

Convergence and Global Asia Insurance Partnership (GAIP) announce partnership to advance the role of insurance in blended finance

UBS Optimus Foundation (UBS OF) is an independent philanthropic foundation associated with UBS, the world’s largest wealth manager. UBS OF uses a range of grant making and investment tools, and approaches such as blended finance and outcomes-based finance, to fund scalable, evidence-based approaches.

UBS OF’s approach is based on a recognition that in order to achieve the Sustainable Development Goals (SDGs) we need a combination of more financing and better results. To raise more financing, UBS OF follows a dual approach of engaging more UBS clients to donate philanthropically, while at the same time making use of investments, through blended finance structures, to engage more commercial capital into social and environmental development. To achieve better results, UBS OF has strongly engaged in promoting outcomes-based finance, which at its core is simply a shift to paying for results, rather than paying for action. This approach puts the emphasis and ownership on the partners implementing programs, giving them flexibility to innovate, change, and focus on continuous improvement.

We spoke to Dhun Davar, Global Head of Social Finance at UBS OF about how they engage in blended finance as a foundation, how they measure impact, their focus on outcomes-based finance, and much more.

__In your own words, can you tell me about UBS OF and how it engages in blended finance?__

By being closely associated with UBS AG, a major wealth and asset manager managing over USD 5 trillion in assets, UBS Optimus Foundation is in a unique position to draw commercial capital into social and environmental programs that otherwise would not receive funding. This is made possible by approaches such as blended finance and the unique collaboration opportunities with various parts of UBS. Why is that? Because many UBS clients are seeking exposure to impact, and while UBS already has a significant offering, UBS OF engagement expands this offering to further opportunities that would have previously been impossible. These opportunities are of interest to philanthropists that are supporting UBS Optimus Foundation and keen to leverage their impact -  while also offering UBS clients - investment opportunities that did not exist previously or that they would not have had access to.

__Can you describe one or two blended finance transactions that UBS OF has been involved in? In what capacity did the foundation participate?__

UBS OF started making impact investments in 2015 and we launched the first blended finance fund in 2022. Two examples are:

The SDG Outcomes Fund, which is a Luxembourg domiciled fund that invests in outcomes contracts (outcomes-based funding program). UBS OF provides 20% first-loss capital to unlock additional capital from investors in the fund, the UBS OF investment is in turn supported by donations from over 30 UBS clients.

Investors will receive returns linked directly to verified social and environmental outcomes. As the junior/philanthropic share class investor, the Foundation takes the highest risk and lowest return, but if the fund overperforms the foundation can even catch-up to the highest return share class. This is attractive for UBS OF as a fund like this builds on our successful track record in outcomes-based financing, but at the same time raises five times more capital than would have been possible if the Foundation had done it alone.

Other investors include the United States International Development Finance Corporation, British International Investment, as well as four family offices that are leading the private investment component. The fund is being managed by Bridges Outcomes Partnerships, who have a strong track record in outcomes-based finance in the UK, and who have partnered with UBS OF to apply this experience globally in lower and middle income countries. The fund focuses on education, employment, health and the environment.

Another example is the Future of Work fund (FWF), run by Chancen International, a fund that provides financing for students in the form of income share agreements. Given the early nature of this initiative, to date we’ve supported the FWF fund with a grant and with an investment. Student financing is an area we are doubling down on. With global demographic changes currently underway, a large part of the future youth and working age population will live in Africa, the Middle East, South Asia, and Southeast Asia. Ensuring people in these regions are well educated and productive will be key for their personal growth and outcomes, the health of the communities they live in, as well as global prosperity.

__How do you measure the impact of your blended finance activities? What does that impact look like?__

We measure impact in blended finance transactions the same way we measure impact in any of the foundation’s other grants and investments. In 2023, we developed and rolled out our own industry-aligned impact rating tool that aims to assess programs against three impact categories: intentionality, additionality, and measurability. What we add or emphasize in blended transactions is the financial leverage and scale that the transaction can achieve. It is important to achieve scale, but also to leverage commercial capital, which is the main point for considering a blended finance transaction.

__What advice do you have for foundations who may be interested in entering the blended finance space?__

We see opportunities for corporate and philanthropic foundations to play a bigger role in de-risking blended finance transactions, catalyzing innovation and enterprise and achieving a much greater multiple in terms of scale than they would otherwise be able to do. Our advice would be to get experience and develop your team and knowledge on approaches, actors, and get access to opportunities. A great way to get started is partnering on a deal or transaction. Perhaps consider partnering with other experienced foundations as a route for engagement and building your capabilities. In short, get engaged!

__UBS OF has been a big supporter of outcomes-based finance transactions, especially in the education and health sectors. What have been some key learnings for supporting these transactions? What are you doing in order to scale up this approach and ensure that such transactions are more efficient/have larger deal sizes.__

The SDG Outcomes Fund is our answer to scale. It is the biggest investment fund in this space so far. In order to develop the market, we are working closely with stakeholders to continue shifting the social development and environmental space to focus on results.

The SDG Outcomes fund is also a way in which we are seeking to transition from investments with concessional capital to pure commercial investments. In early programs, UBS OF acted as the sole investor, however with the SDG Outcomes Fund, we’ve reduced this exposure to 20%, with an aim of such structures being fully funded by commercial investors in the long run.

At the same time, we are working with like-minded partners to build the market for outcomes-based finance by getting more programs into the design and scale stage. One of our key initiatives in this area is the Outcomes Accelerator, which we have launched together with the UK Foreign, Commonwealth and Development Office (FCDO) and the Swiss State Secretariat for Economic Affairs (SECO). The objective of the Outcomes Accelerator is to fund promising outcomes based programs to launch and scale. As part of this work, we support an annual conference of practitioners, the [Outcomes Finance Alliance](https://outcomesaccelerator.org/outcomes-finance-alliance/).

Finally, we work with partners such as FCDO, SECO, the Organisation for Economic Co-operation and Development, the World Economic Forum, and others to advocate for better effectiveness in development funding, with outcomes-based financing being a key lever for this. Next year’s [4th International Finance for Development conference](https://financing.desa.un.org/ffd4), in Seville, Spain, is an opportunity for the global development community to consider how the use of outcomes-based financing, with its focus on better results can help unlock better outcomes in our mission to achieve the SDGs.

__UBS OF has recently become more active in the climate finance space, especially in sectors like nature-based solutions. What has been the motivation for this and what role do you expect to play in this space?__

UBS OF has traditionally been focused on children and young peope, and as it is universally recognized that climate and climate change have a disproportionate effect on children, this is an area that is naturally of interest and importance to us. At the same time, we see significant interest from philanthropists to focus on climate and environments issues and would like to play a role in connecting the dots between well meaning funders and strong project opportunities on the ground. We have decided to focus on nature-based solutions (NbS) in particular as we see these as more sustainable in the long run with emphasis beyond carbon on biodiversity and communities.

In our first work in this space we have partnered with Mana Impact to study best practices in Monitoring, reporting and verification (MRV) in NbS and are now engaging with Terratai a “nature venture builder” that builds businesses to protect and restore some of Asia’s most at-risk land and seascapes.

As we engage more deeply we are now working on the design of a blended finance fund focused on carbon using NBS. We are developing this fund in collaboration with UBS Asset Management, with an aim of offering this to UBS clients globally.

__How do you see UBS OF’s blended finance activities evolving in the future?__

We're aiming to grow and scale the number of blended finance transactions in collaboration with UBS. Themes we are particularly interested in are employment and climate though we continue to build on healthcare and education as well. Drawing on our experience and track record we would also like to continue to innovate on the role of concessional funding and see if we can reduce the level needed in each transaction, because rather than volume it is the strategic use of this capital that is important.

Learn how UBS Optimus Foundation engages in blended finance, how they measure impact, their focus on outcomes-based finance, and more.

UBS Optimus Foundation Member Spotlight

UBS Optimus Foundation Member Spotlight with Dhun Davar

[The Sustainable Investing Research Initiative (SIRI)](https://siri.sipa.columbia.edu/) at Columbia University’s School of International and Public Affairs (SIPA) and [Convergence](https://www.convergence.finance/), the global network for blended finance, announced their academic partnership to advance their mutual goals of enhancing blended finance research, practice, and impact.

The mitigation of climate change, biodiversity loss, poverty, and other grand societal challenges has historically been primarily financed through public funding and private philanthropic giving. Yet, a large financing gap remains, especially in the Global South. Hence, the question is: how can more private capital be crowded in to finance innovative solutions in climate tech, renewable energy, nature-based solutions, social inclusion, and others, especially in the Global South where capital is most needed? Blended finance—the use of public and philanthropic funding to crowd in private capital—is a potential way to finance a more sustainable world. While blended finance holds the promise of being catalytic in mobilizing vast amounts of private capital, advancing academic scholarship and knowledge-sharing, transparency, and capacity building are critical to achieving this goal.

The partnership between Convergence and SIRI aims to do precisely that. Building on their respective existing efforts, the SIRI-Convergence Partnership aims to foster academic research, advance data collection and transparency, provide knowledge-sharing and research-informed educational training and capacity building, and engage and cultivate a global consortium of blended finance academics, particularly from the Global South. This partnership pursues multiple objectives to advance their mutual goals of enhancing blended finance research, practice, and impact:

1. Fostering rigorous academic research on blended finance to advance academic knowledge and, importantly, providing a research-informed foundation for developing a robust learning agenda that will provide guidance for practice.  Moreover, SIRI and Convergence aim to create an ecosystem that supports the growth of scholarly research in blended finance, particularly with regard to the Global South. This includes the fostering of blended finance scholarship on the Global South as well as the fostering of blended finance scholars from the Global South.
2. Complementing existing efforts aimed at improving data collection, transparency, and knowledge-sharing in blended finance, and contributing to the broader ecosystem of data and knowledge.
3. Developing and offering certification programs to blended finance professionals and hereby support capacity building among professionals. These programs will incorporate insights from academic research as well as draw from best practice in blended finance.

Both [Nnamdi Igbokwe](https://www.convergence.finance/about/team/5jC79jvyo64BN1bsT2LA9k) Ph.D. (Director of Knowledge and Thought Leadership at Convergence) and [Caroline Flammer](http://www.columbia.edu/~cf2870/) Ph.D. (Founding Director of SIRI, A. Barton Hepburn Professor of Economics, and SIPA’s Vice Dean for Research and Faculty Affairs) are thrilled about this partnership and highlight its significance to both Convergence and SIRI. They look forward to jointly driving these efforts forward.

__About the Sustainable Investing Research Initiative (SIRI):__

The mission of the [Sustainable Investing Research Initiative (SIRI)](https://siri.sipa.columbia.edu/) at [Columbia SIPA](https://www.sipa.columbia.edu/) is to foster scholarship, education, and dialogue on system-level investing. SIRI’s activities focus on the development of better measures to track progress toward the mitigation of system-level challenges; the fostering of rigorous academic scholarship on system-level investing; improving dialogue by convening and hosting leaders from academia, policy, the public and private sector; the development of new courses and extracurricular activities to educate the next generation of leaders in policy, investment, and business; and executive education to educate the current generation of leaders. These pillars aim to complement, inform, and mutually reinforce each other.

Blended Finance is one of SIRI’s core focus areas. With the support of sponsors Mirova and SIMFO, SIRI recently announced the launch of a major research and programming initiative at SIPA that will help develop and scale up the global marketplace for blended finance and catalytic capital. To learn more, read the announcement [here](https://siri.sipa.columbia.edu/news/siri-announces-sponsorship-develop-and-scale-global-marketplace-blended-finance) and visit [SIRI’s Blended Finance Website](https://siri.sipa.columbia.edu/content/blended-finance).

![sipalogo](//images.ctfassets.net/4cgqlwde6qy0/fssVrBrsoneMmiK3UL2Ho/e2df7d3eb9bbb4645b19cd880860394a/sipalogo.png)

__About Convergence:__

[Convergence](http://www.convergence.finance/) is the global network for blended finance. We exist to increase private investment in emerging markets and developing economies to advance the UN Sustainable Development Goals and Paris Agreement.

Our members include private investors looking to diversify their portfolios, businesses seeking capital, as well as public agencies and philanthropic foundations looking to make their funds go further. We offer this community exclusive access to original market intelligence and knowledge products (such as case studies, data analyses, and online and in-person training), networking events, and more. To accelerate advances in the field, Convergence also provides grants for the design of vehicles that could attract private capital to global development at scale.

![convergencelogo](//images.ctfassets.net/4cgqlwde6qy0/64EdwpPhgPD8UM63zRKgEZ/166d44ce64804a81159384cac22db00f/convergencelogo.png)

The Sustainable Investing Research Initiative (SIRI) and Convergence, the global network for blended finance, announced their academic partnership to advance their mutual goals of enhancing blended finance research, practice, and impact.

SIRI & Convergence Announce Partnership

Columbia University’s Sustainable Investing Research Initiative (SIRI) and Convergence Announce Academic Partnership to Advance Blended Finance

*This article was originally published in [Alliance Magazine](https://www.alliancemagazine.org/blog/climate-blended-finance-is-surging-maintaining-momentum-will-be-critical/).*

First, the good news: [last year was a landmark year for climate blended finance, as our latest report shows](https://www.convergence.finance/resource/state-of-blended-finance-2024-climate-edition/view). The slowdown in 2022 that saw financing volumes fall to a ten-year low was defied.

Instead, financing flows into climate-focused blended transactions surged by 120% in 2023, reaching its highest ever annual total of $18.3 billion. Large-scale transactions also surged, with six deals exceeding $1 billion in size. 

The amount of donor capital entering blended finance (blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development) has stayed constant year-on-year, indicating that the increase is coming from the private sector and commercial capital, who are primarily investing equity.

Indeed, while public sector spending continues to outpace private investment, private capital flows grew by almost 200% in 2023 to reach the highest annual aggregate total recorded by Convergence, at $6 billion.

__The rise of private equity in climate blended finance__

This growth was driven largely by increased financing from financial institutions and institutional investors, with the former investing more than $1 billion in 2023 alone. Financial institutions are increasingly tightening their lending criteria to align their portfolios with climate goals, which is expected to limit the availability of debt financing for fossil fuel projects, particularly in coal.

In the last three years, financial institutions invested $7.2 billion and $4.2 billion in renewable energy and energy efficiency/emissions reductions, respectively. 

Meanwhile, over the same period, 60% of all blended deals involving institutional investors have focused on climate initiatives. These investors have primarily committed capital to climate-focused funds, such as the [Emerging Market Climate Action Fund](https://emcaf.allianzgi.com/).

In 2023, financing from institutional investors rebounded sharply to $1 billion, following a significant decline in 2022 and several years of relative stagnation.

__Lack of clear taxonomy inhibits climate finance__

So, the market is finally getting smarter, more efficient, and bolder with how it uses limited amounts of catalytic capital. However, much more remains to be done. For example, the scalability of adaptation finance continues to lag mitigation, and private sector participation in these projects remains limited.

The lack of a clear taxonomy defining the parameters of climate adaptation remains a core challenge here. Adaptation and physical risk disclosures have not been widely integrated within robust regulatory bodies such as the Task Force on Climate-Related Financial Disclosures (TCFD), for example.

Going forward, establishing a common taxonomy that can better identify and qualify adaptive technologies and companies will be critical. 

__The importance of technical assistance__

How climate transactions are being structured is also shifting. We’ve seen more guarantees and risk insurance in recent years, with the number of transactions benefitting from guarantees rising by 185% in 2023, driven by increased evidence of guarantees’ mobilisation potential and capital efficiencies. However, we’ve also seen a decline in the use of technical assistance (TA) – non-financial support.

TA is critical in bolstering the capacity of local stakeholders to identify, assess, and manage risks effectively, and in helping governments formulate climate-friendly policies and regulatory frameworks.  It must be deployed to help developing countries create comprehensive, time-bound investment roadmaps detailing the climate sectors where private investment will be supported and incentivised. These roadmaps should also address and reform any policy disincentives to investing in climate-aligned sectors.

__The hurdle of sovereign risk ratings in developing countries__

Blended finance’s existential challenge, however, is that the sovereign risk ratings of most developing countries are beyond the mandate and criteria of many investors (their median risk rating is “B-”, which is sub-investment grade).

For key financial institutions considering investments in riskier assets, like the kind supported by blended finance, the capital requirements and investment caps mandated by international regulators presents an immediate hurdle.

For climate investors, high variation in the quality and detail of different countries’ nationally determined contributions (NDCs) presents a further challenge, with information on how policymakers might implement them in practice often lacking.

Within national-level climate policy planning, then, fostering greater collaboration and understanding between governments, regulators, and the private sector becomes key to progressing blended finance and also climate action.

Last year was a landmark year for climate blended finance. The slowdown in 2022 that saw financing volumes fall to a ten-year low was defied as financing flows into climate-focused blended transactions surged by 120% in 2023.

Climate blended finance is surging, how can we keep momentum

Climate blended finance is surging, maintaining momentum will be critical 

*Figure 1: Annual deal count and aggregate financing of transactions with foundation investors and all transactions within the HDD, 2014-2023* 

Within the past decade, foundations have played an important role in blended finance. Since 2014, an average of 18% of blended transactions annually recorded in Convergence’s historical deals database (HDD) have included capital from at least one foundation. Given their ability to provide flexible capital, their focus on achieving impact, and their mission to catalyze big solutions to global challenges, foundations have the potential to play a larger role in blended finance. In the HDD, there are examples of how foundations can be grant providers, catalytic concessional investors, and commercial senior investors. This article provides a snapshot of our latest members only data brief on blending with foundations, including opportunities and challenges related to incorporating capital from foundations in blended finance transactions. 

*Click [here](https://www.convergence.finance/resource/blending-with-foundations/view) for the Blending with Foundations data brief (paywall).* 

## Data highlights from the brief: 
 
Overall, Convergence has recorded 236 blended finance transactions that include at least one foundation as an investor, totaling $24.2 billion in aggregate financing. 
 

## Two-thirds of foundation investment commitments are concessional 
 

When looking at all foundation investment commitments to blended finance transactions within the HDD, 66% are provided on concessional terms and 34% on commercial terms. This indicates that foundations are largely using financial tools within the blended finance structure as a means of mobilizing commercial investors. 

Within the pool of concessional capital provided by foundations, grants account for 38% of the financing, while return-seeking investment instruments, including equity, debt, and guarantees account for 62%. Commercial investments, like concessional investments, see higher financing levels for equity (61%). Equity investments may allow foundations to have more influence over the strategic direction of a project or company, ensuring their values and mission align closely with the investment’s outcomes. 

![Percent of concessional financing (left) and commercial financing (right) used by foundations in blended finance transactions by investment instrument ](//images.ctfassets.net/4cgqlwde6qy0/aQnQDRZpmmkgjES4xniki/a367706aca0b5e9396f8d70cd9b6ae0d/Screenshot_2024-12-18_at_9.29.34_AM.png)
*Figure 2: Percent of concessional financing (left) and commercial financing (right) used by foundations in blended finance transactions by investment instrument*

## Funds are more than twice as frequently used in transactions with foundations than without 
 

Funds are the preferred blended vehicle for foundations, accounting for 51% of all foundation-investor blended transactions. Funds are likely a popular vehicle choice because foundations lack the operational or regulatory flexibility to make numerous, smaller direct investments, such as through projects. Foundations may have fewer staff, or lower capacity for administrative overhead, and managing a direct investment into a project can be resource intensive. This is clearly shown within the HDD, as projects account for only 5% of transactions funded in part by foundations, compared to 34% of those that are not. Meanwhile, funds offer a centralized investment vehicle, simplifying monitoring and due diligence. 

![Transactions with foundation funding vs. those without by blended vehicle type ](//images.ctfassets.net/4cgqlwde6qy0/3aaZIfU5gjwvZmJyupro9X/75bbdcf44ad5c66dccdc7a69c79cc78c/Screenshot_2024-12-18_at_9.31.32_AM.png)
*Figure 3: Transactions with foundation funding vs. those without by blended vehicle type*

## Challenges and opportunities for using capital from foundations in blended finance transactions 
 

__To address the challenge of balancing mission and financial returns, increase impact-based investments within endowments__

Foundations must continuously balance their fiduciary responsibilities of ensuring sustainability within their operations and investing in mission-related transactions. In the United States of America (U.S.), regulations governing foundation investments, especially program related investments (PRIs) can make the legalities around return-seeking concessional investments difficult to navigate. While PRIs can enable blended finance, because they allow foundations to invest while focusing on both generating returns and higher levels of impact, there are also opportunities to align more of a foundation’s endowment with other impactful investments, rather than committing financing to commercial investments with no impact. 

__To address the challenge of structural complexity, create standardized models and build confidence in strategic investment methods__ 

For many foundations, blended finance creates a layer of complexity that is difficult to overcome. There are currently no standardized models that are easily replicable and that also show high levels of impact and appropriate returns. The creation and execution of standardized, replicable models can therefore reduce the overall load on small foundation investment teams and minimize transaction costs. It may also encourage using concessional capital through PRIs, which can draw in higher levels of private capital mobilization. Another means of reducing complexity is through becoming familiar with a particular investment strategy. For example, some focus mainly on using guarantees or concessional debt. 

__To address the challenge of smaller investment ticket sizes, focus on high-impact areas__ 

Foundations typically have smaller investment ticket sizes, which can lead to limited additionality within a blended finance transaction. Through focusing investments on high-impact areas with low private mobilization, such as education or healthcare, and seeking out specific challenges, foundations can have an outsized impact. They can also focus on providing early-stage capital and partnering with development finance institutions to tackle larger issues. 

Foundations have already shown their ability to play a catalytic role in blended finance transactions using flexible capital and impact-driven investment strategies. Through grants, catalytic concessional investments, and commercial investments, foundations have contributed to blended finance transactions in a myriad of ways throughout the past decade. While there are barriers that impact foundations’ ability to participate at even higher levels, these challenges also present opportunities. If given the proper tools, foundations can become an even more powerful force for blended finance.

How can foundations act as catalyzers in blended finance transactions? 

How foundations act as catalyzers in blended transactions

__By: Juliette Averseng, Associate Partner at KOIS, Charlotte Badenoch, Principal at KOIS, Clara Marköö, Senior Manager at KOIS__

*Network Voices is a series where Convergence amplifies blended finance opinions and activities from our network.*

In May 2024, the [UNHCR reported](https://hias.org/news/unhcr-number-displaced-worldwide-exceeds-120-million/) for the first time in history, more than 120 million people worldwide were displaced by conflict — a staggering 1.5% of the global population. This record number underscores an era of compounding crises, where protracted conflict, economic instability, and climate change drive millions from their homes, often leaving them in precarious conditions for decades. As these crises persist, the international community confronts a dual imperative: we must meet the urgent humanitarian needs of affected populations, while also creating pathways to long-term resilience and stability.

Traditional humanitarian aid models, while essential for immediate response, lack the scope and flexibility to address long-term needs in protracted crises.  Their focus on short-term relief and rigid funding structures often prevents the transition to sustainable, adaptive solutions that foster stability and self-reliance. The widening funding gap also highlights that public and philanthropic resources alone are insufficient. With the right incentives and standards in place, private investment can act as a crucial partner, not only by achieving scale, but also by driving innovation and delivering lasting impact – strengthening local economies, fostering self-reliance, and paving pathways to long-term stability.

However, fragile contexts pose significant challenges that deter traditional investment. Security threats, political volatility, legal uncertainties, and underdeveloped markets create a high-risk environment. Without effective mechanisms to manage these risks, traditional investors remain cautious, leaving fragile regions deprived of the capital essential to foster stability and resilience.

__The Potential of Blended Finance__

Blended finance realigns incentives by leveraging public and concessional funding to reduce risks and enhance returns for private investors. It also facilitates the creation of new revenue streams and innovative financing structures, enabling businesses in challenging contexts to access capital tailored to their specific needs.  Below, we illustrate three use cases that demonstrate how blended finance can solve some of the challenges that humanitarian and development players face in conflict-affected and fragile settings.

__Use Case #1: Investing in durable infrastructure__

In crisis contexts, emergency responses provide vital relief to affected populations, but as crises endure, what were meant to be temporary fixes often turn into expensive, long-term solutions. Typically operating on tight annual budget cycles, humanitarian organizations have a restricted ability to invest in the upfront capital required for durable infrastructure. They rely on stopgap measures (e.g. the transportation of water in trucks, running pumps on diesel generators) which not only incur high recurring costs and pose environmental challenges, but also jeopardize the continuity of services once the crisis ends and humanitarian organizations depart. 

The [WASH Blended Finance Facility](https://koisinvest.com/post/learnings-from-the-field-financing-climate-friendly-water-infrastructure-in-fragile-contexts/), designed by [KOIS](https://koisinvest.com/) and [UNICEF](https://www.unicef.org/) with support from [Proparco](https://www.proparco.fr/en), the [Conrad N. Hilton Foundation](https://www.hiltonfoundation.org/), and the [Global Financing Facility](https://www.globalfinancingfacility.org/) offers a solution to this problem. In this approach, investors finance a portfolio of long-term infrastructure projects, while donors provide guarantees to de-risk the investment. By enabling access to investment, the private sector takes over the provision of WASH services for NGO and UN off-takers, offering a more sustainable, affordable, and inclusive model owned by and providing jobs for local communities.

__Use case #2: Supporting longer-term development programming__

When transitioning from emergency assistance to long-term redevelopment of communities, efforts are directed towards service provision rebuilding as well as sustainable income generation for affected populations. Results-based financing has proven particularly effective to support longer-term development programming where public service is lacking and commercially viable models do not exist. This approach is also adapted to interventions deemed too risky due to the limited evidence on what works, complex causal relationship between activities and desired outcomes especially in unstable and rapidly evolving settings, as well as the time needed for results to materialize. 

The [Refugee Development Impact Bond (DIB)](https://www.refugeeimpactbond.org/) in Jordan structured by KOIS in collaboration with the [Near East Foundation](https://neareast.org/), the IKEA Foundation, the [Novo Nordisk Foundation](https://novonordiskfonden.dk/en/), [Norad](https://www.norad.no/en/), [Ferd](https://ferd.no/en/baerekraft/humanitarian-initiatives/), and US International Development Corporation ([DFC](https://www.dfc.gov/)) exemplifies an innovative approach to these challenges, with a results-based financing structure that shares risk across partners. The DIB directs funding toward Syrian refugees and members of their host communities to support them in the creation of home-based businesses. The DIB enables flexible resource allocation through multi-year funding provided as upfront financing by investors (e.g., impact investors, development finance institutions (DFIs), commercial investors), which is reimbursed with interest (i.e. 5.1% of maximum annualised rate of return in this case) by outcome payers (e.g. governments, foundations, development aid agencies) based on independently verified outcomes, such as enterprise creation and livelihoods improvement. This approach enables the service provider to adapt programming to changing conditions on the ground while ensuring accountability and maximizing impact. The Refugee DIB was supported by design funding from both Convergence and the IKEA Foundation to come to life. Design funding is a critical tool in the blended finance toolkit which supports innovative and complicated blended finance structures reach feasibility and proof of concept and plays a pivotal role in catalyzing more funding into these challenging settings.

__Use case #3: Supporting local businesses__

Another challenge that blended finance can address is the difficulty private businesses in fragile contexts face in accessing the capital they need to grow and scale. These businesses – particularly small and medium sized enterprises (SMEs) have significant potential to create jobs, enhance local services, innovate and drive long-term change by addressing humanitarian needs. Indeed, in fragile contexts where states are often absent or too weak to provide essential services, the role of the private sector becomes even more critical. The private sector can step in to fill the gaps left by underdeveloped or absent public service delivery, providing essential services such as healthcare, education, and access to clean water. 

However, investors face high real and perceived risks when considering these businesses, including macro risks such as economic volatility and weak regulatory environments, as well as operational risks like inadequate infrastructure, limited management capacity and lack of technical expertise within the businesses themselves. Blended impact investment funds, like the Refugee Investment Facility by [iGravity](https://www.igravity.net/) and the [Danish Refugee Council](https://drc.ngo/) and the [World Food Programme Innovation Bridge Fund](https://innovation.wfp.org/project/wfp-innovation-bridge), aim to address these challenges by using donor funded first-loss capital or guarantees alongside technical assistance. While the former de-risks investments by absorbing a portion of the financial risk, the latter enhances the operational capacity of SMEs, making them more investable. By improving both the financial and operational viability of businesses, blended finance funds can create conditions for investors to engage in markets they would otherwise avoid. 

__The Path Forward: Scaling Proven Models__

Blended finance can unlock significant investment in fragile contexts.  Blended finance has the potential to mobilize public and private capital in the world's most challenging environments. While several pioneering projects highlight the effectiveness of tailored, risk sharing models in driving impactful investments and supporting the emergence of the private sector in fragile contexts, these initiatives are only the beginning of what’s possible.

The critical next step is to transcend isolated success stories and focus on scaling these strategies to ensure they reach the communities most in need, and at a larger scale. Achieving this will require robust collaboration across public, private, and philanthropic sectors, as well as a concerted effort to unlock additional capital and strengthen local ownership to ensure solutions are both sustainable and contextually relevant. 

One such example is the [Refugee Humanitarian Development Peace Outcomes Fund](https://www.linkedin.com/posts/koisofficial_sdg16-stakeholders-refugeehdpoutcomesfund-activity-7265620053016911872-5QIC/) currently being designed by KOIS and Finance for Peace with the financial support of the SDG Impact Finance Initiative. The proposed USD$100 million Outcomes Fund aims to mobilize public and private capital at scale through innovative results-based financing to fund humanitarian, development, and peacebuilding projects as well as market-based organizations in displacement-affected areas in Sub-Saharan Africa. The Outcomes Fund builds on KOIS’s historical work in humanitarian and results-based financing, leveraging a larger scale vehicle to reduce transaction costs, centralize evidence and learnings, and facilitate a coordinated approach that both builds the enabling environment and provides the necessary financing for businesses in fragile contexts to thrive. It will also be used to test sustainable results-based financing models which go beyond grants and leverage more private capital.

Blended finance has the power to transform fragile contexts by unlocking capital, fostering collaboration, and driving sustainable solutions at scale; now, it is time to build on these successes, expanding proven models to reach more communities and creating lasting impact in the face of compounding global crises.


NETWORK VOICES: Blended Finance in Action - Unlocking Investment in Fragile Contexts	