Scaling Up Private Investment for the SDGs and Climate Action
The potential of blended finance through NDBs and Green Investment Banks is explored to address the infrastructure investment gap and mobilize private finance for sustainable development goals and climate action.
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Scaling up private investment for the SDGs and climate action: the potential of blended finance NDBs and Green Investment Banks 26-27 June 2017, Mexico City Naeeda Crishna Morgado Policy Analyst, Green Investment and Development, OECD
Why blend? Infrastructure investment and the 2 C goal Significant infrastructure investment gap Ongoing issues in mobilising private finance: lack of pipelines, real and perceived risks Source: OECD (2017), Investing in climate, Investing in Growth
What is blended finance? Strategic use of public or private finance (with a development mandate) to mobilise additional, commercial capital for the SDGs Non-Development mandate Non-concessional Public Private Blended finance transactions / approaches Mobilising Development Mandate Concessional / non- concessional Public Private FINANCING SOURCES FINANCING STRUCTURE USE OF FINANCE Source: OECD (2018 forthcoming), Blended finance for the SDGs
Example: Global Energy Efficiency and Renewable Energy Fund Non- Mobilising Development Mandate Private investment Mobilising Structured fund of funds Private investors Equity Equity Greenfield RE projects Specialist RE private equity funds Senior share Mobilising Development Mandate Junior share EU, Norway, Germany FINANCING SOURCES FINANCING STRUCTURE USE OF FINANCE Source: OECD (2018 forthcoming), Blended finance for the SDGs
Recent trends: increasing interest in blending Blended finance facilities established between 2000 and 2014 Source: Commons Consultants Analysis, WEF (2016)
Recent trends: blended finance is mobilising private investment Private finance mobilised as a result of development finance, in 2012-15 Both mitigation & adaptation, 4% Adaptation only, 1% Mitigation only, 21% Syndicated loans, 27% Shares in CIVs, 15% Credit lines, 8% Guarantees, 41% DIC, 8% Source: OECD DAC 2016 survey on amounts mobilised from the private sector by official development finance interventions
Blended finance: issues to address Blended finance has significant potential, but Blended finance and risk mitigation cannot replace strong enabling environments for green investment Standards are needed to ensure concessional climate finance crowds in, without crowding out More work is needed to mobilise private investment for adaptation, and across a range of countries Better monitoring, evaluation and reporting is needed to assess effectiveness of blended climate finance
Facilitating role of NDBs in climate action: Recommendations for governments NDBs a key player, but under considered in the international landscape Most NDBs are implementing climate finance (see new CPI / IDB work on NDBs in Chile, Mexico and Brazil) Difficult to assess level of mainstreaming across NDBs due to lack of data Governments should: Facilitate a stronger role for NDBs in the NDC process Encourage NDBs to put in place climate strategies & improve disclosure on financing Promote collaboration between MDBs, bilateral DFIs and National Development Banks
For more information: OECD work programme on blended finance, www.oecd.org/dac/financing-sustainable- development/development-finance-topics/blended-finance.htm OECD G20 project Growth, Investment and the Low-Carbon Transition, www.oecd.org/environment/cc/g20-climate/ OECD work on tracking amounts mobilized from the private sector for development, www.oecd.org/development/stats/mobilisation.htm Thank you.
