Blended Finance
Blended finance—strategically combining public and philanthropic capital to unlock private investment—has proven to be an effective tool to de-risk impact investments. Yet, the impact investing market in emerging markets and developing economies (EMDEs) continues to face significant hurdles, including misperceptions about risk and illiquidity.
CCSI is conducting research to delve into these systemic challenges and uncover sustainable solutions that can drive meaningful scale in the sector. In partnership with the SDG Impact Finance Initiative and Route 17, this project aims to address key barriers to scaling impact investing and sustainable finance in EMDEs. We explore the role of blended finance in improving investors' perception of risk and liquidity constraints, particularly in impact investment opportunities.
The collaboration will focus on three main areas:
- Perception of Risk: The research will critically assess how the perceived risk of impact investing in EMDEs diverges from actual performance. By analyzing historical data and real-world case studies of blended finance transactions, the research aims to bridge the gap between perceived and real risks and improve capital flows into high-impact investments.
- Credit Rating Methodologies: A key component of the research will involve evaluating current credit rating methodologies. CCSI will convene a roundtable of credit rating agencies, development finance institutions, multilateral development banks, and private asset managers to discuss how credit evaluations can better reflect the de-risking benefits of blended finance in sustainable development.
- Illiquidity in Impact Investing: The study will examine how liquidity constraints—often a deterrent for institutional investors—can be alleviated through blended finance structures, allowing for more flexible exit strategies and secondary market options.
About SIFI
The SDG Impact Finance Initiative (SIFI), established in 2021, is a public-private partnership that aims to mobilize CHF 1 billion in private capital by 2030 to support the achievement of the Sustainable Development Goals (SDGs) in emerging markets. By offering innovative financial solutions, including first-loss investments and grants, SIFI works to strengthen the ecosystem for impact investing and support sustainable development efforts.
About Route 17
Route 17’s vision is a world where we have the financial architecture needed to fund solutions to our most pressing problems from a combination of private, public, and philanthropic sources. Route 17 develops SDG-aligned investment strategies and allocations, identifies and creates investable options to implement them, and verifies investment outcomes. It was established by Robert van Zwieten and Harald Walkate who bring decades of experience in institutional investing, impact investing and development finance.