Public and philanthropic investments can only address a small portion of the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. To meet these global goals, impact investors must play a crucial role in mobilizing additional capital from private investors.
Blended finance combines public, philanthropic, and private capital into a single investment structure. Each type of capital has a distinct role and bears different levels of risk and return. When designed effectively, these structures allow private investors to access opportunities that may have been previously outside their risk tolerance. This creates new markets, diversifies investment portfolios, and generates measurable impact. For public and philanthropic investors, blended finance serves as a powerful tool. It allows limited concessional resources to unlock much larger volumes of commercial capital.
Despite its potential, blended finance remains underused. Concessional capital is scarce and increasingly difficult to secure in today’s environment. Many blended finance structures are complex, customized, and costly to implement. These challenges are well-known, but now practical solutions are needed to overcome them.
To address this, British International Investment (BII) and Boston Consulting Group (BCG) have collaborated to create practical tools designed to improve the design, assessment, and mobilization of blended finance funds. These tools are based on BII’s experience with blended investments and BCG’s expertise advising a wide range of capital providers and organizations seeking to raise funds. They also incorporate valuable insights from trusted partners and industry peers. The hope is that these tools will help bring more blended finance funds to market, advancing progress toward shared global goals.
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