Blended finance trends, activities, and actors – An interview with Convergence

07 Nov 2017 by Dean Segell, Manager at Convergence

UNDP: Could you tell us about the origins of the report (why now and why this topic?) and what is the most striking element that you uncovered while doing the research? Dean Segell (DS): Convergence is one of the leading institutions advocating for blended finance. Over the last 2 years, we have collected a wealth of institutional knowledge about who is doing what in the space, including compiling the most comprehensive database of closed blended finance transactions. While blended finance is gaining momentum, with activities being undertaken by a diverse set of actors across sectors and regions, no institution has codified and synthesized that activity in a way that could be easily absorbed and used by key stakeholders in the market. The purpose of ‘The State of Blended Finance’ report was to landscape current blended finance activities and identify key trends and lessons learned. The Blended Finance Taskforce (BFT), convened by the Business and Sustainable Development Commission, will leverage the report to inform a final set of recommendations. One of the key findings from the report is that the private sector is unfairly and inaccurately characterized as a homogenous group, but there is a real need to better understand the unique … Read more

More than measuring, we need to manage our impact

23 Oct 2017 by Stefanie Kneer & Amanda Feldman, the Impact Management Project

Business Call to Action at UNDP hosted a session on impact measurement at the Social Good Summit Geneva on October 13th 2017.
While the impact investing field has shown tremendous growth and innovation over the past few years, there are still far more asset owners sitting on the sidelines, interested in impact, but not yet investing. There are many reasons for why interest might outstrip activity.  One is the lack of scaled investment products.  Another reason is that we still haven’t defined what we mean by impact. While the field has progressed a lot over the last decade on the question of impact measurement, we would argue that the challenge going forward rather may be more a question of impact management. Why do we need to manage our impact? Everything we do has effects on people and the planet. To manage our effects, we rely on information about them flowing between different people who work together: from those experiencing the effects themselves, to those who run the businesses they engage with, to those providing capital, support and services to those businesses. We can only work together to improve our effects on people and the planet if all partners share information in a way that others can understand. Shared information informs the financial and impact goals we all set and deliver against, and allows … Read more

De-risking mechanisms can increase private capital to achieve the SDGs.

10 Oct 2017 by Marcos Athias Neto, Director, UNDP Istanbul International Center for Private Sector in Development and Alexandra Soezer, UNDP Climate Change Technical Advisor

Ahead of the Social Good Summit in Geneva on Friday, 13 October 2017, UNDP reflects on the potential results greater inclusion of the private sector can yield towards the Sustainable Development Goals.
The SDGs represent an unprecedented global consensus to align our efforts for the next 13 years on a comprehensive and ambitious development agenda for people and the planet. This level of ambition now needs to be matched with the necessary resources, innovation capacity and partnerships to drive implementation. The private sector, in this context, is an indispensable partner. In developing countries, private sector operations constitute 60 percent of GDP, while generating 90 percent of jobs and 80 percent of capital inflows. For private sector to fully embrace the SDGs, an enabling environment that encourages innovation, and better values inclusion and sustainability, is needed. This requires innovative public policy and legislative reforms, informed by multi-stakeholder policy dialogue. The good news is that there is a clear business case for the private sector to invest in SDG implementation. By developing new business models to meet the demands of the base of the pyramid (people with less than US$10 per day in purchasing power) and by investing in sustainable approaches in areas such as agriculture, cities, energy and health, new economic opportunities of up to US$12 trillion could be generated. Private sector opportunities and investments will be extremely important for SDG 9, resilient infrastructure. … Read more

Opinion: The pros and cons of ethical debt instruments

04 Sep 2017 by Gail Hurley, Policy Specialist on Development Finance

For low-income countries in particular, development aid will continue to play a critical role in supporting development efforts, and must be increased. Photo @UNDP
In May, the World Bank issued the world’s first bond linked explicitly to the U.N. Sustainable Development Goals. Labeled SDG bonds, the bank raised 163 million euros from institutional investors in France and Italy with the proceeds to be channeled into projects that aim to eliminate extreme poverty in line with Goal 1 of the SDGs. The initiative — which aims to capitalize on a rising number of investors interested in positive social and environmental impacts, in addition to financial returns — has been heralded an innovation in investment products and can be added to a growing list of innovative debt instruments that are marketed as “ethical” or socially and environmentally responsible. Other examples include: green bonds, a multibillion dollar market in which the proceeds of a bond issue are tied to environmentally friendly investments such as renewable energy and clean transportation; blue bonds, a newer debt instrument championed by the Seychelles to fund investments in sustainable ocean industries; vaccine bonds, where funds are raised from international capital markets for immunization programs in developing countries with bondholders repaid by future streams of donor development aid; and social and development impact bonds, where impact investors provide upfront financing for social or development interventions and are repaid by governments and/or donors when specified … Read more

What kind of blender do we need to finance the SDGs?

12 Jul 2017 by Mara Niculescu, Partnership Development Analyst, UNDP Europe and Central Asia

A look at the current state of development funding shows a stark contrast between the price tag to eliminate poverty and protect the planet by 2030, and the actual financial resources that are available. The United Nations Conference on Trade and Development (UNCTAD) says achieving the Sustainable Development Goals (SDGs) will take between US$5 to 7 trillion, with an investment gap in developing countries of about US$2.5 trillion. At the same time, the most recent OECD DAC report shows that in 2016 the total official development assistance reached a peak of US$142.6 billion, which is one order of magnitude smaller than the needs. Who is going to cover these gaps and how? The days of “funding” (out of a moral imperative) are over; instead, “financing” is seeing good investments for your money, while contributing to positive development. Under the new Development Agenda, it is the actual governments that hold a significant share of the resources needed to achieve the SDGs. The World Bank estimated that between 50 and 80 percent of what’s required will come from domestic resources. Private funding and private capital hold another great potential for growth – it is estimated that only about 10% of the current infrastructure … Read more

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