1. Scaling up private investment for the SDGs and climate action: the potential of blended finance
NDBs and Green Investment Banks • June 2017, Mexico City
Naeeda Crishna Morgado
Policy Analyst, Green Investment and Development, OECD

2. 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

3. 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
Blended finance transactions / approaches
Private
Mobilising
Development Mandate
Concessional / non-concessional
Public
Private
FINANCING SOURCES
FINANCING STRUCTURE
USE OF FINANCE
Source: OECD (2018 forthcoming), Blended finance for the SDGs

4. Example: Global Energy Efficiency and Renewable Energy Fund
Non-Development Mandate
Mobilising
Mobilising
Private investment
Structured fund of funds
Private investors
Senior share
Junior share
Equity
Specialist RE private equity funds
Equity
Greenfield RE projects
Mobilising
Development Mandate
EU, Norway, Germany
FINANCING SOURCES
FINANCING STRUCTURE
USE OF FINANCE
Source: OECD (2018 forthcoming), Blended finance for the SDGs

5. Recent trends: increasing interest in ‘blending’
Blended finance facilities established between 2000 and 2014
Source: Commons Consultants Analysis, WEF (2016)

6. Recent trends: blended finance is mobilising private investment
Private finance mobilised as a result of development finance, in
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

7. 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

8. 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
Most NDBs have introduced ‘green products’ targetting renewable energy and / or energy efficiency
In developing countries, NDBs increasingly work with multilateral and bilateral providers
Difficult to assess level of mainstreaming across NDBs due to lack of harmonised approaches to reporting
Self reported estimates vary widely
In addition, in order to scale up climate action, governments should encourage all the major development finance actors - MDBs, National Development Banks, and bilateral development finance providers - to work together to scale up support for countries. The three groups of actors - domestic, multilateral and bilateral, all bring complementary strengths which should be harnessed collectively.

9. For more information: OECD work programme on blended finance, OECD – G20 project ‘Growth, Investment and the Low-Carbon Transition, OECD work on tracking amounts mobilized from the private sector for development, Thank you.