In partnership with [Roots of Impact](http://www.roots-of-impact.org/) and the [Center for Sustainable Finance and Private Wealth (CSP)](https://www.csp.uzh.ch/en.html) at the University of Zurich this is an actionable, practice-driven executive program.

The program aims at empowering public, philanthropic and private sector funders to collaborate effectively to achieve the Sustainable Development Goals. A special ingredient are solutions that demonstrate how to enable high-impact enterprises with market-based solutions to scale and deliver positive impact in a sustainable way – a bottom-up approach. Our more than 160 IIBF alumni to date come from major organisations across the globe, e.g. UNDP, USAID, SDC/DEZA, GIZ, Global Affairs Canada, IFC, SECO, FAO as well as renowned foundations or NGOs such as UNICEF, Shell Foundation, Aqua for All, SOS Children’s Villages, and Refugee Investment Network.

IIBF runs as an open program (based upon application) at its home base at the University of Zurich, Switzerland. It builds on the extensive academic and practical expertise of Roots of Impact, Convergence and the Center for Sustainable Finance and Private Wealth (CSP).

Impact Investment & Blended Finance Executive Program 2023

This actionable, practice-driven executive program aims at empowering public, philanthropic and private sector funders to collaborate effectively to achieve the Sustainable Development Goals.

Executive program for impact investment and blended finance

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__Wednesday, June 28th, 2023, from 9:00 am-10:00am SGT__

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We invite you to join us virtually for the launch of the [Asia Climate Solutions (ACS) Design Grant](https://www.convergence.finance/design-funding/open-window/Asia-climate-solutions-design-grant). The ACS Grant will award feasibility study and proof of concept grants for the design and launch of innovative blended finance solutions that mobilize private capital to sectors critical for climate transition and resilience in developing markets in Asia including nature-based solutions (NbS), clean energy transition, and sustainable cities and infrastructure. 

Register for the webinar to:
- Learn about Convergence’s Design Funding Program and the ACS Design Grant
- Find out more about the ACS Design Grant anchor donors
- Gain insight into how to apply, grant eligibility, and evaluation criteria
- Get your questions answered, and more

The anchor donors of the ACS Design Grant are the Monetary Authority of Singapore, the Department of Foreign Affairs and Trade Australia, Olayan Group, and UBS Optimus Foundation.

*The ACS Design Grant is now open and the first deadline to submit concept notes is coming up on July 16, 2023. Visit the [ACS Design Grant page](https://www.convergence.finance/design-funding/open-window/Asia-climate-solutions-design-grant) to learn more and apply.*

Asia Climate Solutions Design Grant: Info Session (Asia/West Coast)

Join us virtually for the launch of the new Asia Climate Solutions Design Grant

Learn about the new Asia Climate Solutions Design Grant

__Tuesday, June 27th, 2023, from 9:00 am-10:00am EST__

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We invite you to join us virtually for the launch of the [Asia Climate Solutions (ACS) Design Grant](https://www.convergence.finance/design-funding/open-window/Asia-climate-solutions-design-grant). The ACS Grant will award feasibility study and proof of concept grants for the design and launch of innovative blended finance solutions that mobilize private capital to sectors critical for climate transition and resilience in developing markets in Asia including nature-based solutions (NbS), clean energy transition, and sustainable cities and infrastructure. 

Register for the webinar to:
- Learn about Convergence’s Design Funding Program and the ACS Design Grant
- Find out more about the ACS Design Grant anchor donors
- Gain insight into how to apply, grant eligibility, and evaluation criteria
- Get your questions answered, and more

The anchor donors of the ACS Design Grant are the Monetary Authority of Singapore, the Department of Foreign Affairs and Trade Australia, Olayan Group, and UBS Optimus Foundation.

*The ACS Design Grant is now open and the first deadline to submit concept notes is coming up on July 16, 2023. Visit the [ACS Design Grant page](https://www.convergence.finance/design-funding/open-window/Asia-climate-solutions-design-grant) to learn more and apply.*

Asia Climate Solutions Design Grant: Info Session (Europe/East Coast)

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Join the virtual launch and panel discussion of Convergence's recent report, Best Practices for Donor Governments Engaging in Blended Finance. 

This report, produced in partnership with [Global Affairs Canada](https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng), explores how select donor countries (member countries of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC)) have designed and operated their blended finance programs. It considers the factors that have guided their decision-making and explores the best practices underpinning efficient resource allocation, optimal development, and climate impact outcomes. 

This report was constructed through direct engagement with nine donor countries, who provided insights on the varied institutional configurations covering a variety of blended instruments and approaches. 

Stay tuned for more information.

__AGENDA__

8:00-8:05: Opening remarks

8:05-8:20: Report highlights

8:20-8:40: Panel Discussion 

8:40-9:25: Q & A

9:25-9:30: Closing Remarks

Virtual Report Launch: Best Practices for Donor Governments Engaging in Blended Finance

Join the virtual launch and panel discussion of Convergence's recent report, Best Practices for Donor Governments Engaging in Blended Finance.

Blended Finance Best Practices for Donor Governments

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Convergence's "Inside the Deal" webinar series provides a unique opportunity for members to gain insight into the intricate workings of real blended finance transactions. In each quarterly webinar, we showcase a deal that has achieved at least one financial close and invite the deal sponsor and other relevant stakeholders to candidly share their experiences in structuring the transaction.

In the upcoming webinar, we will focus on the AGRI3 Fund, a collaboration between UNEP, Rabobank, FMO, and IDH. The fund aims to mobilize capital by providing credit enhancement tools and technical assistance to promote sustainable practices in agricultural value chains and prevent deforestation. The fund’s model works through partner-banks, to mobilise financing by de-risking and catalysing transactions.

During the hour-long webinar, the AGRI3 team will provide an overview of the fund's design and fundraising experience. Additionally, Convergence will conduct an in-depth interview with key stakeholders involved in the transaction, highlighting valuable lessons learned. The webinar will conclude with an open Q&A session.

*This webinar is open to Convergence members only.*

Inside the Deal: AGRI3 Fund

Join us for this webinar exploring the AGRI3 Fund, a collaboration between UNEP, Rabobank, FMO, and IDH.

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__Convergence Member Networking in Singapore, Thursday, June 8th, 6:00pm - 8:00pm SGT__

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Join us for drinks and snacks with Convergence members and partners in Singapore on June 8th. Chat with impact investors, institutional investors, philanthropic donors, government agencies, development banks, and sponsors of blended finance deals. This event will be an opportunity to connect with fellow members, make new contacts, exchange ideas, and more.

Please find details of the event below. Registration is open on a first come first served basis, with a maximum of two representatives per organization. Kindly RSVP by __June 5th__ to secure your spot.  

Convergence Member Drinks (Singapore)

Join us for drinks and networking in Singapore.

Networking Drinks in Singapore

Convergence Eventbrite

You're invited on June 7th for a virtual presentation of Convergence's recent report, [Evaluating the Impact of Blended Finance: Convergence's Case Study Portfolio Revisited](https://www.convergence.finance/resource/evaluating-the-impact-of-blended-finance-convergences-case-study-portfolio/view).

Since 2015, Convergence has written 28 case studies on blended finance transactions, detailing the journey of blended finance practitioners when structuring, fundraising, and launching blended finance deals.

Evaluating the Impact of Blended explores the ex-post financial and impact performance of blended finance deals, by revisiting our case study portfolio to document achieved returns, target beneficiaries, and reporting practices, amongst other key issues. 

The presentation will include a panel discussion with past case study sponsors where they will share their perspectives on what they have achieved through blended finance as well as their thoughts on the trajectory of the market going forward.

Stay tuned for more information. 

__AGENDA__

10:00-10:10AM - Opening Remarks

10:10-10:25AM - Report highlights, Convergence Content Team

10:25-10:30AM - Q&A

10:30-11:00AM - Panel discussion with Case Study Partners

11:00- 11:15AM - Q&A

11:15AM - Closing remarks

Virtual Presentation: Evaluating the Impact of Blended Finance Report

Join us for a virtual presentation of Convergence's recent report, Evaluating the Impact of Blended Finance: Convergence's Case Study Portfolio Revisited.

Evaluating the Impact of Blended Finance Report

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__Convergence Member Networking in London, Wednesday, May 31st, 5:30pm - 7:30pm BST__

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Join us for drinks and snacks with Convergence members and partners at Dalberg Advisor’s offices. Chat with impact investors, institutional investors, donors, development banks, and sponsors of blended finance deals. This event will be an opportunity to connect with fellow members, make new contacts, exchange ideas, and more.

Registration is open on a first come first served basis, with a maximum of two representatives per organization.

Convergence Member Drinks (London)

Join us for drinks and networking at Dalberg Advisor’s offices in London.

Networking Drinks in London

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__Member Training: Leverage Ratios Across Fund Structures, May 31st, 9am – 10:15am EDT (GMT-4)__

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This seminar is the second instalment in a new series of online trainings aimed at providing practical knowledge on blended finance based on our members' most frequent questions. Over 1.25 hours (75 minutes), this interactive seminar will look at the critical question of how to determine the right leverage ratio based on various factors including fund structure, sector and geographic focus. Convergence along with expert practitioners will weigh in on this important topic and share examples of calculations and considerations that helped determine the appropriate leverage ratio for their blended investment vehicle. 

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training. To claim these seats select 'Register' above and you will be directed to Eventbrite. Once there, choose 'Tickets' and enter the __promo code__ you received by email __above__ 'General Admission' for free access. Non-members can register for a fee of USD100.*

Member Training: Leverage Ratios Across Fund Structures

Convergence along with expert practitioners will weigh in on this important topic and share examples of calculations and considerations that helped determine the appropriate leverage ratio for their blended investment vehicle.

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__Tuesday, May 30th, 2023, from 10:00 am-11:00am EST__

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We invite you to join us virtually for the launch of [the new Catalytic Climate Finance Facility (CC Facility)](https://www.convergence.finance/design-funding/open-window/ccfacility),  which is focused on scaling sustainable climate finance by providing market acceleration services to early-stage and market-ready blended financial vehicles in under-financed areas and sectors in developing countries. 
The CC Facility is a partnership between Convergence and Climate Policy Initiative (CPI), two global leaders in blended and climate finance. 

Register for the webinar to:
- Learn about the CC Facility and what makes it unique
- Hear from Convergence and CPI on why we decided to partner on the CC Facility
- Gain insights into how to apply and eligibility and evaluation criteria
- Get your questions about the CC Facility answered

With funding from three anchor donors, Bill & Melinda Gates Foundation, Global Affairs Canada, and Australia's Department of Foreign Affairs and Trade, the CC Facility targets one of the main barriers  in the development process of a climate blended finance idea: the acceleration stage, when solutions face critical barriers and stagnation due to a lack of support. 

*The CC Facility is now open and the first deadline to submit concept notes is coming up on June 9, 2023. Visit [the CC Facility page](https://www.convergence.finance/design-funding/open-window/ccfacility) to learn more and apply.*

__Agenda__
- 10:00-10:10 AM ET - Opening remarks and introduction to the CC Facility
- 10:10-10:20 AM ET - Why Convergence and CPI have partnered to launch the CC Facility - including brief introductions to Convergence’s Design Funding Program and CPI’s Global Innovation Lab for Blended Finance 
- 10:20-10:40 AM ET - How to apply to the CC Facility and eligibility and evaluation criteria
- 10:40-11:00 AM ET - Q&A and conclusion 


The Catalytic Climate Finance Facility: Info Session

Join us virtually for the launch of the new Catalytic Climate Finance Facility

Learn about the new Catalytic Climate Finance Facility

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__Financing Nature-based Solutions in Southeast Asia, Friday, May 26th, 8:30am - 2:00pm SST__

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There is a growing need for a new generation of products and systems to accelerate and enhance the scale of NbS investments that will serve Southeast Asia’s green commodity and Nature-based Solutions (NbS) markets. [Palladium](https://thepalladiumgroup.com/) and [Convergence](https://www.convergence.finance/) are organizing a half-day knowledge-sharing and networking event in Singapore on May 26, 2023 to build relationships among project developers, investors, and donors with an interest in scaling financing for NbS.

This knowledge exchange and networking event will increase the visibility of project financing needs, investor requirements and viewpoints, and showcase solutions for effectively deploying capital for nature-based solutions (NbS) in SEA leading to new collaboration opportunities and innovation for scaling up NbS models.

The event will take place in the central business district of Singapore from 9 AM to 2 PM and include a light breakfast and lunch. The draft agenda is available on the registration page.

Please contact Steve Bosak, partner at DTG, at steve@designthinkersgroup.us with any questions.

Financing Nature-based Solutions in Southeast Asia

Join Palladium and Convergence for a half-day knowledge-sharing and networking event in Singapore.

Join us for this informative webinar where we will be connecting you to investment opportunities in the climate space in emerging markets. In the webinar, Convergence members who have a deal posted on our live deal database, will be sharing details of their investment opportunity. This is a great opportunity to learn about new and unique climate transactions and learn from practitioners in the field.

Whether you are an experienced investor or just starting out, this webinar is tailored to anyone looking to learn more about promising new ventures in the climate space.

The webinar will take place on May 24, 2023, from 9-10am EST and will feature three deals from our live deals database:
- Eco Business Fund by Finance in Motion,
- Climate Finance Blending Facility by Infracredit Nigeria,
- Asia Climate Strategy by responsAbility.

*This webinar series is exclusive to investors registered on the Convergence platform.*

Deal Connect

Join us for an exciting and informative webinar where we will be connecting you to investment opportunities in the climate space focused on the global south.

Singapore, June 2, 2023 - Today Convergence launched the Asia Climate Solutions (ACS) Design Grant on the sidelines of the 8th Singapore-Australia Annual Leaders’ Meeting, held in Singapore, and under the auspices of the Singapore-Australia Green Economy Agreement. 

The ACS Design Grant will award grants for the design and launch of innovative blended finance solutions that mobilize private capital to sectors critical for climate transition and resilience in developing markets in Asia. Another key objective of the ACS Design Grant is to introduce family offices and foundations to the practice of using their philanthropic capital catalytically. 

The S$5 million (USD 3.7m) ACS Design Grant has secured its first round of funding commitments from the Monetary Authority of Singapore, Australian Department of Foreign Affairs and Trade, The Olayan Group, and UBS Optimus Foundation, with ambitions to grow the grant funding program beyond S$5 million. 

Asia is a critical geography in the fight against climate change. The region accounted for around [half of global carbon emissions in 2020](https://www.aigcc.net/wp-content/uploads/2021/03/March-2021_-Asias-Net-Zero-Energy-Investment-Potential-English.pdf), with its reliance on coal contributing significantly to total emissions (48% of energy consumption in 2020). At the same time, it's one of the regions most exposed to physical climate risk, due to its dense coastal populations and reliance on natural resources. Finally, there is an urgent need for investments in nature-based solutions (NbS) as the escalating loss of biodiversity in the region is expected to have a devastating effect on economies, risking as much as [63%, or $19 trillion](https://www.adb.org/news/features/short-and-long-term-actions-needed-help-asia-and-pacific-beat-global-food-crisis), of Asia-Pacific’s GDP. 

The ACS Design Grant will target critical climate mitigation and adaptation sectors in Asia including NbS, clean energy transition, and sustainable cities and infrastructure. It will provide feasibility study (USD 50,000 to 200,000) and proof of concept (USD 200,000 to 400,000) grants for innovative solutions using blended capital structures to crowd-in more climate-smart investment in the region. 

One key factor limiting climate investments is the lack of high-impact, investable solutions. The ACS Design Grant will deliver the kind of solutions the market is seeking by coming in at a critical juncture and supporting their design and launch. 

__Applications to the ACS Design Grant are now open. To apply, you can follow the instructions on the Convergence website and submit the concept note before July 16th, 2023.__

"We are thrilled to be launching this new Window in Asia, with such an impressive line-up of committed anchor funders," says Joan Larrea, CEO at Convergence. "Asia has the building blocks for hosting a strong blended finance ecosystem, including local funders and investors, and well-developed capital markets. This Window has the potential to really accelerate the market by identifying key players and generating new investable blended climate finance transactions in the region."

Convergence has over seven years of experience managing several Design Funding Windows that have delivered strong results. To date, through its [Design Funding](https://www.convergence.finance/design-funding) program, Convergence has supported 36 solutions and awarded $11 million in design and proof of concept funding. These solutions have already catalyzed over $1.9 billion in additional capital for critical development sectors globally. 

__QUOTES FROM ANCHOR DONORS:__

*“An effective climate transition will require close partnership among public, private and philanthropic actors. With appropriate de-risking mechanisms and the apportionment of risks across these actors, blended finance can reduce the cost of capital and spur transition investments. The ACS Design Grant, co-developed by Convergence and the Monetary Authority of Singapore, serves as a springboard for innovative blended finance solutions to be developed and scaled, and it has been heartening to see strong support from public and philanthropic partners.”* 

— Gillian Tan, Chief Sustainability Officer and Assistant Managing Director (Development and International) of the Monetary Authority of Singapore

*“DFAT has worked closely with Convergence for several years to generate a pipeline of blended finance investments in the region and we are truly excited with this opportunity to join forces with Singapore to develop scale and opportunity for public and private investors in Asia looking to tackle climate change.”* 

— Kristin Tilley, Australian Ambassador for Climate Change Department of Foreign Affairs and Trade

*“At UBS Optimus Foundation, the blended finance approach is core to how we use philanthropic funds to attract public and commercial capital to scale the work of social and environmental initiatives on the ground. We are delighted to contribute to the Asia Climate Solutions Design Grant which is a great example of how we deploy blended finance and our focus on nature-based solutions.”*

— Maya Ziswiler, CEO of UBS Optimus Foundation

*“The Olayan Group has long been committed to philanthropy and good corporate citizenship in the communities where we do business. As a multinational enterprise, we know that climate change knows no boundaries. We have worked to offset our own carbon footprint around the world, including in Singapore. It's also why The Olayan Group is proud to support the ACS Design Grant. We hope the grants will incubate ideas and companies, increasing climate resiliency in the Asia-Pacific region and beyond.”*

— Sung Chul Whang, General Counsel, Asia, of The Olayan Group

__About Convergence__

[Convergence](https://www.convergence.finance/) is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 160 public, private, and philanthropic investors as well as sponsors of transactions and funds.

Convergence’s [Design Funding Program](https://www.convergence.finance/design-funding) operates as a market acceleration tool providing early-stage capital to support blended finance solutions in frontier markets and nascent sectors to accelerate the number of investible transactions in market targeting SDGs.

__About the Monetary Authority of Singapore__

The [Monetary Authority of Singapore](https://www.mas.gov.sg/) (MAS) is Singapore’s central bank and integrated financial regulator. As a central bank, MAS promotes sustained, non-inflationary economic growth through the conduct of monetary policy and close macroeconomic surveillance and analysis. As an integrated financial supervisor, MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore and financial market infrastructures. It is responsible for well-functioning financial markets, sound conduct, and investor education. MAS also works with the financial industry to promote Singapore as a dynamic international financial centre. 

MAS launched its [Finance for Net Zero Action Plan](https://www.mas.gov.sg/news/speeches/2023/official-launch-of-sgfin) in April to catalyse Asia’s net zero transition, expanding its focus from pure green finance to include transition finance. It covers outcomes in data, definitions & disclosures, a climate resilient financial sector and credible transition plans for FIs. MAS will continue to grow and scale Green FinTech solutions and develop the skills and capabilities for Singaporeans and our financial sector. 

__About the Australian Department of Foreign Affairs and Trade__

The [Australian Department of Foreign Affairs and Trade](https://www.dfat.gov.au/) promotes and protects Australia’s international interests to support our security and prosperity. We work with international partners and other countries to tackle global challenges, increase trade and investment opportunities, protect international rules, keep our region stable and help Australians overseas.

__About UBS Optimus Foundation__

[UBS Optimus Foundation](http://www.ubs.com/optimus) is an independent philanthropy associated with a global wealth manager, pioneering innovative ways to tackle some of the world’s most pressing social- and environmental problems. It is a leader in social finance, testing and proving new tools in support of education, health, the environment, and child protection. It applies an investment-based philosophy and specializes in scalable, evidence-based approaches like outcomes-based finance and blended finance. UBS Optimus Foundation operates in a worldwide network of partners and philanthropists who seek to drive systemic change on a global scale. 

__About Olayan Group__

The [Olayan Group](https://olayan.com/) is a multinational enterprise with an actively managed portfolio of global investments. The Group has international offices in Vaduz, New York, London, Luxembourg, Athens, Riyadh and Singapore. The Group’s in-house professionals manage a multi-billion-dollar investment portfolio.

__MEDIA CONTACT__

__Karolyn Xie__ 
+44 7723 360244 
Interim Head of Communications 
Convergence Blended Finance 
karolyn.xie@convergence.finance

Convergence has launched the Asia Climate Solutions (ACS) Design Grant to award grants for the design and launch of innovative blended finance solutions for climate transition and resilience in developing markets in Asia.

Convergence launches Asia Climate Solutions Design Grant

Convergence launches multi-donor funding window for climate blended finance solutions in Asia

*This op-ed was originally published on [Capital Ethiopia](https://www.capitalethiopia.com/2023/05/29/how-blended-finance-can-enable-ethiopia-to-regain-its-place-as-africas-growth-engine/) and [Addis Fortune](https://addisfortune.news/how-blended-finance-can-enable-ethiopia-to-regain-its-place-as-africas-growth-engine/).*

Ethiopia is an attractive destination for private capital due to its large population, abundant natural resources, and strategic location in East Africa. From 2004-2015, real economic growth in Ethiopia accelerated to 10.2% per annum, thanks in large part to a public investment-led growth model implemented since the mid-1990’s. However, from 2016-2021 the country saw growth decelerate to 7.8% per annum due to a series of macroeconomic challenges including foreign currency scarcity, mounting debt, and inflation, in addition to structural bottlenecks. To address these challenges and regain the growth momentum, the Government of Ethiopia is rightly transitioning towards a private sector-led growth model, by stimulating private sector investment and participation in the economy.

For several years, Ethiopia has been a recipient of development aid and concessional loans from international donors and financial institutions, which have helped finance critical infrastructure and social programs. However, the current leadership recognizes that traditional development assistance alone is not sufficient to achieve sustained economic growth and development. The country’s balance sheet is stretched due to exogenous factors including those stemming from the Russian invasion of Ukraine, and endogenous factors such as conflict and instability. Therefore, instead of a state-led model of development, Ethiopia should mobilize private capital to finance critical infrastructure, generate tax revenues, promote exports, create jobs and improve living standards.

Blended finance offers a viable pathway to this end. Blended finance is a financial structuring approach that combines public, philanthropic, and private capital to finance pro-poor investments that support sustainable development. It has gained traction in recent years as a means to leverage different types of funding to achieve development objectives, particularly in countries where traditional sources of financing may be limited or insufficient.

The Ethiopian Government’s Ten Year (2021-2030) Development Plan, ‘A Pathway to Prosperity,’ prioritizes agriculture, energy and financial services as a means to double per capita income by 2030. This represents as opportunity- according to Convergence, the global network for blended finance, these three sectors account for the largest share of blended finance transactions (>70%) to date, making the country’s priorities especially well aligned with the existing blended finance market.

In fact, Ethiopia has already seen the successful implementation of blended finance initiatives and transactions such as the Assela Wind Power Project, the financing of the Vision Fund Microfinance Institution (VFMI) and the acquisition of aircraft for Ethiopian Airlines.

The investment into Ethiopian Airlines is particularly noteworthy because it demonstrates how blended finance can combine public and private sector resources to support the growth of a strategic industry. The debt financing package, which involved the Export-Import Bank of the United States (Ex-Im Bank), JP Morgan, the Emerging Africa Infrastructure Fund (part of the Private Infrastructure Development Group) and ING Group amongst others, provided Ethiopian Airlines with the necessary funds to purchase 10 new Boeing 787-8 Dreamliner aircraft and support its expansion plans. A loan guarantee, longer tenor (scarce in the aircraft financing industry in Africa), and subordinate debt enabled commercially oriented investors to participate in this transaction which has helped to promote sustainable development in Ethiopia by creating jobs and supporting the country’s aviation industry.

Another example of a successful Ethiopian blended finance transaction is the risk sharing guarantee the Netherlands Development Finance Company (FMO) provided the Commercial Ban of Ethiopia (CBE) on a loan to VFMI, Ethiopia’s largest privately owned microfinance institution. Thanks to FMO’s guarantee, VFMI received access to a credit facility from CBE to help facilitate the expansion of its operations in rural and remote areas. FMO’s guarantee, part of the Micro and Small Enterprises Fund (MASSF), covered 65% of CBE’s loan, biting down significant risk from CBE. Without FMO’s guarantee, CBE would not have provided VFMI with this loan, which is now a major source of liquidity for on-lending to underserved rural and women clients.

Private sector investors are often hesitant to invest in developing countries due to real and perceived risks such as political instability, foreign exchange fluctuations, and credit risk amongst others. By leveraging development funding to reduce the absolute level of risk and/or alter the risk-return ratio, blended finance can help overcome some of the risks (real or perceived) faced by private investors when looking to finance transactions in Ethiopia.

However, increasing blended finance flows into a country requires a permissive policy regulatory environment: pro-investment government policies that prioritize macro stability, sensible tax policy and administration, and repatriation of profits (among others) are vital to unlocking financing flows into Ethiopia. This is why progress on the Home-Grown Economic Reform Agenda is followed with great interest by investors, and the next iteration of these reforms will be critical to facilitating the ease of doing business and investment attraction in the country.

The Government of Ethiopia would like to assess the potential of blended finance in terms of financing its development agenda. Since blended finance requires multistakeholder engagement and collaboration, the Embassy of Canada in Addis Ababa, in partnership with Convergence and the Federal Democratic Republic of Ethiopia – Ministry of Finance will host a high-level blended finance forum in Addis Ababa on June 5th, 2023. This event will bring together senior government officials, private investors, the donor community, and UN Agencies amongst others to discuss the potential of and create awareness around blended finance as a non-traditional source of development finance.

A visit to this dynamic country makes it clear that Ethiopia’s true economic potential is waiting to be unleashed. With a concerted effort from public, private, and philanthropic actors, Ethiopia can once again regain its rightful place as Africa’s growth engine.

How Blended Finance Can Enable Ethiopia To Regain Its Place As Africa’s Growth Engine

When protracted crises cause complex humanitarian challenges, long term donors and host governments often face financial strain as they struggle to find permanent solutions. Blended finance is one answer to the appeal for a new paradigm in the humanitarian sector.

For this approach, first, immediate needs must have been met by traditional aid and a level of stabilization must have been achieved. Under these conditions, blended finance can shift attitudes in the humanitarian and development sectors from regarding aid recipients as *victims of circumstance* to *active economic actors*. As a structuring approach, blended finance can facilitate long-term solutions through tri-sector partnerships that support the resiliency, resourcefulness and entrepreneurial ambitions of vulnerable beneficiaries and communities.  

__Local Financial Market Development__

In fragile contexts, blended finance approaches can bolster financial inclusion and strengthen local capital markets. Concessional capital providers can deploy funds to de-risk local financial institutions and unlock lending to the unbanked, traditionally deemed too risky. An example of this approach is __Nasira__, a risk-sharing facility managed by the Dutch Development Bank (FMO) and the European Union Commission supporting local financial institutions to increase their lending to underserved segments such as women, youth and migrant business-owners. Nasira enters into revolving guarantee agreements with local financial institutions and takes on 95% of the default risk of an entire loan portfolio. By limiting the risk exposure of the domestic banks, this facility narrows the financing gap for the underserved market and stimulates market activity through their support of local entrepreneurs. 

Another example of a blended finance mechanism in support of credit access for vulnerable populations is the __Revolving Credit Fund__ being set up by the Near East Foundation, a non-profit organization with operations based across the Middle East/North Africa (MENA) region. The Fund will supply microloans and larger development loans to Syrian refugees in Jordan to support business growth, job creation, and local economy recovery. The Revolving Credit Fund includes a first-loss tranche, with a variety of impact-first investors supplying the senior tranche. The structure also includes sleeves for grant capital dedicated to technical assistance, impact measurement and capital and operational expenditures to support the borrowers’ capacity-building in financial literacy and business development. Further, the __KOIS Refugee Development Impact Bond__, supported at its conceptual stages by a design grant funding from Convergence and later implemented by the Near East Foundation, is a 4-year microenterprise training and grants program focused on businesses for refugees in Jordan and Lebanon tied to tangible impact outcomes-based returns. 

Beyond credit access, Developing World Markets, a New York-based emerging markets fund manager, manages the __Displaced Communities Fund__ which deploys private equity investments into inclusive financial institutions and businesses serving displaced communities and vulnerable populations across Africa. 

__Sustainable Infrastructure__

Implicit in the blended approach are strong and impactful partnerships amongst the public, private and philanthropic sectors. Aid agencies and non-governmental organizations, with deep knowledge of the local context, contribute to building local capacity and creating the enabling environment for a critical infrastructure project. Development bank capital can then be leveraged alongside local government commitment to adjust the risk/return profile of the projects to attract private sector interest. Investments into significant infrastructure such as energy, telecom or water and sanitation benefit from the efficiency and expertise of the private sector, creating important economic impact. For example, the [World Health Organization](https://apps.who.int/iris/bitstream/handle/10665/143953/WHO_FWC_WSH_14.01_eng.pdf;jsessionid=94E1F3529F49920B2205602DDFE0D24A?sequence=2) (WHO) estimates that investments in water supply and sanitation generate up to USD4.30 for every USD1.00 spent. 

The International Committee of the Red Cross (ICRC) is designing innovative approaches in fragile states in the water sector with the __Goma West Water Resilience Project__ in the Democratic Republic of the Congo. For this project, the ICRC is partnering across sectors and blending grants with development finance and private sector intervention. The first stage of the multi-year project completed long-term feasibility and shorter-term emergency work, and prepared the groundwork for the design-build-operate phase to be financed by Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) active in the region, alongside private sector operators. The goal is to implement a fee-for-service model to be managed by private water companies. Half a million people, amongst the most vulnerable in Goma, stand to benefit. The ICRC has been investing to replicate this Goma model in other fragile contexts in Africa and the Middle East. 

Another example in the water sector is __Incofin’s Water Access Acceleration Fund__, an impact-first equity fund that will invest in small and medium-sized enterprises (SMEs) contributing to safe drinking water for last-mile customers across Africa, Asia and Latin America. Incofin’s aim is to invest in decentralizing water access and scaling local businesses for financial sustainability. 

We can also look to the __Urban Resilience Fund__, a private equity fund targeting public and private infrastructure in urban areas across Sub-Saharan Africa and the MENA region. Set up by the United Nations Capital Development Fund (UNCDF) and managed by Meridiam, the fund structure contains a first-loss equity tranche supplied by donors to protect senior investors including several DFIs and private sector entities. In addition, the structure includes a technical assistance grant and leveraged a design-stage grant to set up the fund. As climate change-induced mass migration stretches urban centers to their limits, this fund targets sustainable urban mobility, renewable energy, microgrids and improved waste management systems, amongst other critical infrastructure.

In frontier and fragile markets, any significant or permanent resolution to mounting challenges is far too complex, nuanced and financially burdensome for any one organisation, government body or sector. As the call for new partnering and financing models for humanitarian assistance becomes louder, a blended financial structuring approach, enabled and enhanced by humanitarian capacity on the ground, applies sustainable, market-based solutions with local context to mobilize public and private capital and reduce the risk for investors seeking commercial returns. While blended finance is not a panacea, this approach can support the development and strengthening of viable local financial markets and critical infrastructure, which supplements and enhances finite donor resources to scale up much needed capital into fragile states and refugee populations.

Blended finance is one answer to the appeal for a new paradigm in the humanitarian sector.

Blended Finance for the humanitarian sector

Can Blended Finance work in fragile contexts?

Convergence and Asian Venture Philanthropy Network (AVPN) have deepened their partnership through a strategic framework to expand the use of blended finance as a tool for accelerating the flow of capital towards impact in Asia and advance the Sustainable Development Goals (SDGs) in the region.

This deepened partnership is part of Convergence’s strategy to grow its influence in Asia, with the recent appointment of Ritesh Thakkar as Convergence’s new Asia Senior Advisor and the establishment of our presence in Singapore. 

As the leading ecosystem builder and social investor membership network in Asia, AVPN and its 600+ members from 33 countries move capital towards impact in Asia. AVPN’s team of 92 staff across Asia provide learning programmes and innovative approaches to social investment to foster collaborations among social investors and ensure that resources are effectively deployed. AVPN is a registered charity based in Singapore. 

This partnership framework will expand on an existing MoU between Convergence and AVPN and includes activities such as: 
- Collaborating on mobilization of philanthropic capital towards the upcoming Asia Climate Solutions Design Grant, which will provide early-stage grants for high-impact climate financing solutions in emerging markets in Asia.

- Learning and knowledge building, with concrete plans to develop and manage a blended finance learning and development program, in addition to closer collaboration on generating blended finance content with a regional focus and expanding thought leadership in Asia. 

- Leveraging each other's networks and mutual expertise to convene key actors in the region at conferences, roundtables, and workshops, with the aim of strengthening the blended finance ecosystem in Asia.  

“To help grow our influence in the region, AVPN’s vast network and deep expertise in social investment made them an obvious partner,” says Joan Larrea, Convergence CEO. “There’s huge untapped potential for blended finance in Asia and I’m excited that Convergence will have a role in helping to unlock this potential.”

“The majority of AVPN members engage in philanthropy and impact investing, and this partnership with Convergence will help us bridge the AVPN community into blended finance opportunities in Asia,” says Naina Subberwal Batra, AVPN CEO. “We see these as key conduits to implementing the large-scale projects that will move us closer to attaining the SDG and Net Zero targets in Asia.”

“Asia is an increasingly prominent destination for blended finance,” said Ritesh Thakkar, Senior Advisor, Asia Pacific, at Convergence. “This deeper partnership will enable Convergence and AVPN to more effectively grow awareness of the potential of blended finance and ultimately mobilize private capital at scale towards sustainable development in the region.”

Convergence and Asian Venture Philanthropy Network (AVPN) deepen partnership  

*San Francisco and Toronto, May 9, 2023* – The Catalytic Climate Finance Facility (CC Facility) launched today an open call for early-stage and market-ready blended climate finance vehicles seeking grant funding and technical support for scaling up. With an initial size of USD 12 million, the CC Facility has plans to increase its funding up to USD 100 million. The CC Facility is a partnership between Convergence and Climate Policy Initiative (CPI), two global leaders in blended and climate finance. 

The CC Facility will select promising solutions to launch and scale through grant funding and dedicated acceleration services to sectors that are severely under-financed in developing countries. There is a special call for ideas targeting climate adaptation for agriculture in Sub-Saharan Africa and South Asia.

“Given the urgency of the latest IPCC report, it is clear that we must develop quality climate solutions that can be launched to market quickly and ensure money is flowing into these projects,” said CPI Global Managing Director Dr Barbara Buchner. “Our approach to the CC Facility draws on over two decades of combined experience from Convergence and CPI, continuing our efforts to bridge the acceleration gap and help scale up solutions faster.”

With funding from three anchor donors, Bill & Melinda Gates Foundation, Global Affairs Canada, and Australia's Department of Foreign Affairs and Trade, the CC Facility targets one of the main barriers in the development process of a climate blended finance idea: the acceleration stage, when solutions face a critical valley of death, taking longer to resume operations due to a lack of support. 

“The CC Facility intends to create investible deal pipeline for mainstream investors by supporting concepts at the acceleration stage,” said Convergence CEO Joan Larrea. “We will leverage the expertise of our two organizations to help early-stage, market-ready solutions scale up quickly, navigate potential pitfalls, and maximize their impact in a changing economic landscape.” 

Convergence and CPI have been working on the investment pipeline issue for years through their respective innovative finance programs, [Design Funding](https://www.convergence.finance/design-funding) and the [Global Innovation Lab for Climate Finance](https://www.climatepolicyinitiative.org/the-programs/the-global-innovation-lab-for-climate-finance/) (the Lab), pushing investible, scaled structures into the market. However, these initiatives are more focused on the earlier stages of the development process, addressing the design and incubation side of the spectrum. The CC Facility is a continuation of this work and a critical next step for solutions to achieve scalability. It aims to be an ecosystem builder and play a key role in mainstreaming climate action, with an emphasis on gender responsiveness and local capacity. 

“Helping developing countries fight climate change and adapt to its effects is critical. This will need both public and private sectors to work together and invest. This initiative will focus on innovative, high impact actions in the areas of clean energy, climate-smart agriculture, and nature-based solutions. Canada is proud to support this initiative and help mobilize the investments needed to urgently fight climate change and build resilience to its effects,” said Cam Do, Director General of Innovative and Climate Finance, Global Affairs Canada.

Concept notes must be submitted on Convergence’s website by June 9 and will be reviewed on a rolling basis.

__About Convergence__

Convergence is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 160 public, private, and philanthropic investors as well as sponsors of transactions and funds.

Convergence’s Design Funding Program operates as a market acceleration tool providing early-stage capital to support blended finance solutions in frontier markets and nascent sectors to accelerate the number of investible transactions in market targeting SDGs.

__About Climate Policy Initiative__

CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has six offices around the world in Brazil, India, Indonesia, the United Kingdom, and the United States.

CPI serves as the Secretariat for the Global Innovation Lab for Climate Finance (the Lab), an incubator program that develops innovative financial mechanisms to drive private investments into climate change mitigation and adaptation in developing economies. 

__MEDIA CONTACTS__

__Sijia Yi__ 
Head of Communications 
Convergence Blended Finance 
sijia.yi@convergence.finance 
+1(647) 573-5993

__Júlio Lubianco__ 
Communications Manager 
Climate Policy Initiative 
julio.lubianco@cpiglobal.org 
+55 21 96463-7061

__Sam Goodman__ 
Communications Associate 
Climate Policy Initiative 
sam.goodman@cpiglobal.org 
+506 8833 7435

The Catalytic Climate Finance Facility (CC Facility) launched today an open call for early-stage and market-ready blended climate finance vehicles seeking grant funding and technical support for scaling up. 

Convergence & CPI launch Catalytic Climate Finance Facility

Convergence and CPI launch USD 12 million Catalytic Climate Finance Facility to accelerate the implementation of climate finance solutions

*This [op-ed](https://nextbillion.net/blueprint-closing-sdg-financing-gap-developing-countries/) was originally published on [NextBillion](https://nextbillion.net/).*

In 2009, developed countries committed to mobilizing US [$100 billion](https://www.oecd.org/climate-change/finance-usd-100-billion-goal/) per year for climate action in developing countries by 2020.

They failed.

Today, a massive climate and Sustainable Development Goal (SDG) financing gap still persists — and even after the SDGs and Paris Agreement laid out a critical role for the private sector in 2016, the subsequent years have brought only modest increases in private investment mobilization. As of 2020, the annual SDG financing gap for developing countries stood at [$4.2 trillion](https://www.oecd.org/dev/OECD-UNDP-Scoping-Note-Closing-SDG-Financing-Gap-COVID-19-era.pdf) — up from $2.5 trillion pre-pandemic. Private capital is crucial to closing this gap, but only [4% of the $410 trillion](https://www.convergence.finance/resource/the-action-plan-for-climate-and-sdg-investment-mobilization/view) in global private assets is invested in developing countries (excluding China). And the $240 billion invested by public development finance annually only mobilizes an average of [$44 billion](https://www.convergence.finance/resource/the-action-plan-for-climate-and-sdg-investment-mobilization/view) in private investment each year, which amounts to just 1% of the climate and SDG investment needs in these countries. Yet while there have been many calls to action among both public and private stakeholders to increase investment into the SDGs, they have lacked a strategy and blueprint for getting there.

This lack of progress reveals a key challenge in development finance: Public and private investments in emerging markets and developing economies (EMDEs) are too often fragmented, crowding each other out instead of reinforcing each other. A deeper collaboration is needed — one that recognizes the limits of public investment and the increasing appetite among private investors to engage in fast-growing EMDEs, especially in [impact investing](https://www.forbes.com/sites/benjaminlaker/2022/11/17/demand-for-impact-investing-is-rising-heres-why/?sh=2068e268285f), [ESG](https://www.pwc.com/gx/en/news-room/press-releases/2022/awm-revolution-2022-report.html) and other purpose-driven investing sectors.

Over the last year, [Convergence](https://www.convergence.finance/about) and [USAID](https://www.usaid.gov/invest) worked with over 100 stakeholders — including private investor groups managing a combined $130 trillion in assets under management, as well as donor governments and philanthropic foundations — to find a solution to significantly increase sustainable investment. Through extensive workshops and knowledge exchanges, plus Convergence’s more than 15 years of evidence and our [databank of 750+ blended finance transactions](https://www.convergence.finance/blended-finance) that have demonstrated the most effective approaches and structures, we collectively agreed on an action plan to increase investment from $240 billion to $530 billion annually. In one year. With no additional public sector resources needed.

The [Action Plan for Climate and SDG Investment Mobilization](https://www.convergence.finance/resource/the-action-plan-for-climate-and-sdg-investment-mobilization-high-level/view) lays out how a small amount of public and philanthropic funding can become a catalyst for system-wide change by increasing the number of investable climate and SDG projects in EMDEs, while boosting the supply of capital invested in those projects. Through five integrated pillars, it provides a blueprint for how current development finance and assistance resources can be redeployed more effectively, more than doubling total climate and SDG investment into developing economies. The key elements of this blueprint are outlined below.

### Increase the supply of flexible catalytic funding by crowding in a larger universe of resources and innovation.
Catalytic funding is the most important ingredient in efforts to significantly increase climate and SDG investment, due to its ability to de-risk investment opportunities and create assets that meet the risk and return requirements of investors with fiduciary duties, like large pension funds. Private investors may be interested in investments with SDG and climate impact, but the real or perceived risks in EMDEs often prevent them from investing. Redirecting $13-15 billion per year from donor governments and philanthropic foundations into catalytic funding could ultimately lead to the mobilization of $286 billion in private capital — equivalent to seven times the current annual amounts mobilized by the entire development and climate finance systems. There is clear interest in this option among private investors: Some have organized themselves into groups, such as the [Global Investors for Sustainable Development](https://www.gisdalliance.org/sites/default/files/2021-10/GISD%20Position%20Paper%20-%20DC%20Recommendations%20Private%20Finance%20Mobilization_18%20Oct_0.pdf) Alliance, and made calls to action stating that they have the funds to invest, so long as the development finance community and others create investment assets that meet their fiduciary obligations.

### Make multilateral development banks (MDBs) and development finance institutions (DFIs) catalysts of mobilization.
MDBs and DFIs have been investing in development for more than half a century, yet their commitments only constitute around 3.5% of the annual climate and SDG investment needs in EMDEs. Plus, their business models have remained largely unchanged since their inception — even though global and EMDE financial systems have changed considerably. Despite having a valuable set of relationships, capacities and comparative advantages, MDBs and DFIs too often operate within their own silos, reflecting the central role public capital has traditionally played in the development finance landscape. We need to move away from the past era of public sector dominance towards a modern model that reflects the much broader universe of investment actors working today. To that end, MDBs and DFIs should adjust their priorities and their Key Performance Indicators related to governance, to prioritize deeper integration with private investors and help mitigate the risks that are preventing the private sector from investing in the first place.

### Maximize the investable pipeline through more integrated development and climate finance systems.
Providers of catalytic capital, like donors and philanthropic foundations, should prioritize creating investment assets that are standardized, publicly listed and traded. This would open up EMDE investment opportunities to virtually all investors — and over time, it would boost the transparency and supply of capital, thereby decreasing the cost of capital through increased competition among funders.

### Provide investors with access to the best investment data and mobilization resources.
Greater availability, transparency and credibility in investment data is needed, so investors can better analyze investment opportunities and benchmark their risk in less familiar markets. While some centralized databases do exist, data sharing has not been systematic or reliable. To address this, the Action Plan recommends the establishment of a centralized, curated online investment mobilization hub, to increase investor knowledge and access to data on investing in EMDEs.

### Empower local capital markets and financial intermediaries in EMDEs.
Global private assets invested in EMDEs are a growing source of capital, currently estimated at $17 trillion (not including China). However, many climate and SDG projects seek investments of less than $5 million, making them too small for global investors, but just right for local investors. Sourcing more capital from EMDEs into both local development projects and the broader global economy will require a targeted campaign to improve and expand local capital markets, along with efforts to empower financial intermediaries by increasing their available risk capital and providing significantly higher amounts of financing in local currencies.

Ultimately, this Action Plan aims to harness new resources, actors and innovations to change the status quo in development finance. By adopting a more catalytic approach, grounded in blended finance principles already practiced by donor governments and philanthropic foundations, public and philanthropic resources can mobilize significantly greater sums of private investment focused on the world’s most pressing challenges. This strategy would not eliminate all of the risk (real or perceived) of investing in EMDEs, but it would help manage that risk and scale investment flows more effectively. And whatever the extent of these risks, the risk of inaction is far greater.


A Blueprint for Closing the SDG Financing Gap: How to Raise $290 Billion in 12 Months to Tackle the World’s Biggest Problems

Convergence and la Red de Instituciones Financieras de Desarrollo (RFD) signed a memorandum of understanding (MOU) to advance the adoption of blended finance as a tool for sustainable development in Ecuador.

RFD is a non-profit, civil corporation created in 2000, which brings together 53 institutions including banks, cooperatives, and NGOs, oriented towards microfinance and solidarity finance in the country. Its main objective is the promotion of financial inclusion in Ecuador, as an effective mechanism to combat poverty and promote social and economic development.

Through the MoU, Convergence and RFD aim to advance blended finance awareness and deal flow in Ecuador as a tool for accelerating investments in climate, social, and economic development. 

To achieve Ecuador’s climate and sustainable development objectives, collaboration between the public, private, and philanthropic sectors will be critical. Blended finance can be a useful tool in mobilizing private sector resources and bridging the financing gap for sustainable development projects in Ecuador.

This partnership between Convergence and RFD will include activities such as knowledge sharing and capacity building sessions between the two organizations. As the partnership progresses, the organizations also intend to engage with representatives from public and private entities in Ecuador, such as relevant Ministries, private banks, project developers, and asset managers, to promote blended finance solutions.

Convergence and la Red de Instituciones Financieras de Desarrollo (RFD) signed a memorandum of understanding (MOU) to advance the adoption of blended finance as a tool for sustainable development in Ecuador.

Convergence and the RDF sign MoU

Convergence and la Red de Instituciones Financieras de Desarrollo sign MoU

[https://prod-convergence-public.s3.amazonaws.com/webinars//fsf_video_v5.mp4](https://prod-convergence-public.s3.amazonaws.com/webinars//fsf_video_v5.mp4)
*Video profiling Fairventures Social Forestry (FSF), with interviews with local FSF stakeholders.*

Indonesia occupies less than 1% of land on earth but is home to the world’s third-largest expanse of tropical forest. These forests are home to around [10-15%](https://www.un-redd.org/news/indonesias-investment-social-forestry-conserves-forests-and-fights-climate-change) of all animal and plant species on the planet and also act as a massive carbon sink, absorbing CO2 from the atmosphere as they grow. Despite the value these forests provide to the environment and local communities, Indonesia’s forests are under threat from deforestation, with key drivers being extensive mining, logging, and the conversion of forest land to agricultural plantations. Since the 1960s, Indonesia has lost half of its forest cover to [deforestation](https://www.theguardian.com/world/2021/nov/05/indonesia-says-cop26-zero-deforestation-pledge-it-signed-unfair) and has been among the world's top five countries for forest loss for the past two decades. 

There is huge climate change mitigation potential in protecting existing Indonesian forests and restoring degraded areas, which also has the potential to provide livelihoods for close to 40 million rural and indigenous people. 

As a result, the Indonesian Government has implemented a program to grant forest-dependent communities’ access to forest land through long-term social forestry permits. However, the concrete economic benefits for households and communities remain largely absent, as many of them lack the technical skills and have limited access to capital for sustainable forestry or agriculture practices. Therefore, there is a need for project developers to support local communities by utilizing the social forestry program to create attractive economic benefits for these communities alongside natural resource protection.

__How Fairventures Social Forestry is helping to address these challenges__

Convergence grantee Fairventures Social Forestry (FSF) is a project developer and investment manager looking to showcase a viable model for forest landscape restoration and conservation in emerging markets by partnering with local communities on lands issued through these social forestry permits. 

Convergence awarded FSF a [feasibility study grant ](https://www.convergence.finance/design-funding/grant-portfolio/1ebYnaL8Mpi5lwy31tTYcl/view) through the Asia Natural Capital Window, funded by [RS Group](https://www.rsgroup.asia/), to help them design a blended finance vehicle, which invests in projects focused on restoring degraded land for sustainable agroforestry and conservation of existing forests in Indonesia.

It can be challenging for such long-term forestry projects in emerging markets to attract investment at scale due to long project development timelines and the higher perceived risk associated with developing countries. However, blended finance can be instrumental in making these projects investable. FSF intends to utilize grants to fund the initial development activities and de-risk projects, making it attractive for impact equity investors and lenders to invest at a later stage. 

Through this blended finance vehicle, FSF aims to sustainably manage 100,000+ hectares of forest land by financing projects involving sustainable agroforestry on restored degraded land through the intercropping of timber with cash crops and conservation of existing forests, resulting in improved local biodiversity and carbon sequestration.

![FSF Nursery 8-Ginger](//images.ctfassets.net/4cgqlwde6qy0/5ZJCmv7RndnEBKLAGM3fw1/7b73d67766a05b66261495b4206516cf/FSF_Nursery_8-Ginger.jpg)
*Nursery for crops like ginger and cocoa being considered by FSF to be planted along with timber*

Through this blended finance vehicle, FSF intends to also create a significant impact for local communities and views them as key partners in the implementation of projects supported by the vehicle. The vehicle will look to provide local communities with new employment opportunities generated by funded projects and in turn, the communities will also receive a share of the profits from these projects. In the long term, the vehicle has the potential to extend and sustainably manage 100,000 hectares of forest land, which could result in more than 6 million tons of carbon emissions avoided, sustainable income for around 4,000 households, livelihood impact for more than 20,000 residents, and development of over 100 local communities.

![Indonesian field worker](//images.ctfassets.net/4cgqlwde6qy0/rgpOCWltZMW2HQF06vqDy/81a2a8b80bef99ffe83187fa93780d44/20221008_130114.jpg)
*Sri Pornia, Field Work Team Leader, FSF*

__The progress to date__

FSF has launched a 3,000-hectare pilot project in Central Kalimantan, Indonesia, for agroforestry and conservation activities with the support of the local community. 

![Timber Nursery](//images.ctfassets.net/4cgqlwde6qy0/4SuxnwGNFhoneHyrgSp2BV/7203c03f7edbb85680cbed887a8d6e58/Timber_Nursery.jpg)
*Nursery where timber plants are grown until they are ready to be planted in the field.*

*“The social forestry program from the government, in cooperation with FSF, helped us support the community to manage the forest in a sustainable way. Previously, the mindset of the people [local community] was too focused on how to harvest the forest, not how to manage it… Through this social forestry permit, the community and the farmers can manage the forest by themselves and have access to long-term income, and with the help of FSF, make it sustainable.”* - Miko Luiter, Head of Forest Management Unit, Central Kalimantan.

![FSF Project Site Timber Plantation 2](//images.ctfassets.net/4cgqlwde6qy0/60FZcqvILclMy1bjsLbewc/91e1fcd9c46a72bfa7eaa15fa1aeb9a5/FSF_Project_Site_Timber_Plantation_2.jpg)
*Timber trees already planted at the pilot site in Central Kalimantan*

FSF is underway to reforest 450 hectares of degraded land and has identified around 550 hectares of forest area for conservation. One of the biggest challenges for the pilot has been gathering support from the local communities. FSF has a long-term cooperation agreement with the local community organization for the pilot site, HKm Batu Bulan. FSF, with support from HKm Batu Bulan, has spent time educating community members about the details of the project and its intended positive impact on the environment and their community. As a result, the pilot has already seen participation from 130 field workers (of which the majority are women) from the local community, in addition to the 50-member team that FSF has in Indonesia. 

*“Before the existence of FSF and this cooperation (with HKm Batu Bulan), the local people had unsustainable jobs, such as illegal mining/logging. It is hard to make a living out of these activities. After the partnership has been established, the local communities see the opportunity/difference and directly want to be part of the project, and as a result most of them are no longer working in the illegal logging/mining activities.”* - Suterman A. Djohan, Head of Hkm Batu Bulan, the local community organization for the pilot project site.

For this pilot, FSF has received technical assistance from IDH and funding support from Good Energies Foundation and UBS Optimus Foundation. FSF also recently won the [Liveability Challenge](https://www.theliveabilitychallenge.org/), which is organized by Temasek Foundation annually. As the winners of the challenge, FSF received SGD1 million in funding from Temasek Foundation, which will help them develop their next projects in Indonesia. 

__The way forward__

FSF’s goal is to launch the blended finance vehicle described above, which pools different types of capital like grants, equity, and impact loans, that can attract capital at scale to finance a portfolio of agroforestry projects. As the vehicle scales, it will also look to include other types of projects in the portfolio, like forestry concessions. The funding from Convergence is supporting FSF to build upon their existing stakeholder engagements and further develop a pipeline of investable projects for the vehicle. FSF is also using the feasibility study grant for creating a comprehensive financial model and identifying the appropriate legal structure of the vehicle.  


Convergence grantee Fairventures Social Forestry (FSF) is a project developer and investment manager looking to showcase a viable model for forest landscape restoration and conservation in emerging markets by partnering with local communities.

Forest restoration and conservation in Indonesia 

Grantee Profile: Fairventures Social Forestry -  Forest restoration and conservation with local communities in Indonesia

Convergence is pleased to welcome [Ritesh Thakkar](https://www.convergence.finance/about/team/HXQfo4B4EPmgLEotpYMuy) as our new Senior Advisor for the Asia Pacific region. With over 18 years of experience in financial services, development finance, and management consulting, with a focus on advancing public-private partnerships in the Asia and Eastern Europe and Central Asia (EECA) region, Ritesh is uniquely suited to this position. 

Ritesh will be based in Singapore and focused on developing and maintaining a robust network of public, private, and philanthropic Convergence members in the Asia Pacific region, and catering to the region's specific needs for blended finance data, deals, and intelligence, as well as capacity building and networking. 

“Asia is emerging as an increasingly prominent destination for blended capital,” says Ritesh Thakkar, Senior Advisor, Asia Pacific, at Convergence. “Working closely in partnership with the key actors and stakeholders in the ecosystem will be crucial in generating new transactions at scale to accelerate the blended finance market in the region.”

Previously, in his role at Alliance for Financial Inclusion (AFI), Ritesh worked to foster enabling ecosystems for a net-zero transition through the development of green finance policies, working closely with central banks, governments, the private sector, and multilateral development banks. He also was part of the core team for the Asia Asset Management practice at McKinsey & Co. He has assisted clients in a variety of key areas, including market entry, growth strategy, digital, and distribution strategy. Moreover, through his work at ING Investment Management and ICICI Prudential Asset Management, he has helped build institutional partnerships with central banks, pension funds, sovereign wealth funds, life insurance companies, and banks in the Asia region to deliver tailored ESG integrated investment management solutions. He also founded an NGO in India that gave youths an opportunity to serve the underprivileged.

Ritesh holds a Master of Business Administration from the Asian Institute of Management and completed a sustainable finance course from the University of Cambridge Institute for Sustainability Leadership.


Convergence is pleased to welcome Ritesh Thakkar as our first Senior Advisor for the Asia Pacific region

Ritesh Thakkar joins Convergence as new Asia Pacific lead

Ritesh Thakkar joins Convergence as new Asia Pacific regional lead

__By Simon Bessant, Director, Texel__

__Executive Summary__

UNCTAD estimates the investment gap in Emerging Markets and Development Economies (EMDEs) to achieve the Sustainable Development Goals and Paris Agreement objectives at $3.5 trillion per annum. To even get close to this number, we’ll need the private sector. However, they are often hesitant to invest in EMDEs due to higher real and perceived risk. At the same time, the global insurance sector has considerable risk bearing capacity, but is systemically under-invested in EMDEs. This article identifies the best ways for the insurance sector to participate in EMDEs, namely through blended finance transactions, to significantly increase investments towards the Sustainable Development Goals. 

__The benefit of the insurance sector for EMDEs__

Insurance has been a critical enabler towards achieving the SDGs across a broad range of areas, such as climate, natural catastrophe, health, longevity, gender, and inequality. Globally, there is a substantial insurance protection gap; the costs for natural disasters regularly range between [US$100-200bn](https://ourworldindata.org/grapher/damage-costs-from-natural-disasters) annually, but only a fraction of such losses are properly insured. These problems are most acute in EMDEs with lower insurance penetration, ranging from individual citizens up to central governments. 

When it comes to the specific area of cross-border trade and the need to scale investment in EMDEs to meet the SDGs, insurance is a critical enabler underpinning many large cross-border investments and trade flows. With high country risk and high project/borrower credit risk precluding most investors from putting capital into developing countries – whereby a full 88% of EMDEs are classified as sub-investment grade, including 76% rated “B” or lower – risk-mitigating instruments such as insurance are crucial to adjusting the risk-return profile of transactions such that private investors can enter developing countries. In addition to private investors, Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) are increasingly looking to benefit from insurance products to bolster their balance sheets, and increase their lending appetite. Despite these benefits, the role that insurance plays remains poorly understood.

__Providers of insurance and guarantees__

While guarantees have become commonplace as a development tool to catalyse private investment to EMDEs by improving the risk-return profile for private investors, insurance has been significantly underused in the blended finance market. Convergence’s Historical Deals Database (HDD) finds that around 27.5% of blended finance transactions have benefitted from guarantees or insurance  – but only 2.5% of those deals have benefitted from insurance. Guarantees have been provided predominantly by public sector organizations; development agencies account for 43% of guarantee issuance on concessional terms (e.g., development guarantees) and MDBs and DFIs account for 44%.  Insurance products have also been dominated by public sector organizations, such as Export Credit Agencies and specialized multilateral insurance agencies (notably the World Bank’s MIGA). Convergence’s data finds that a mere 7% of insurance and guarantee products have been provided by commercial private-sector insurers. These numbers are likely due to two factors:

Firstly, the high risk facing private commercial insurers, as indicated earlier, hinders the amount of insurance capacity they can offer; insurers are already providing significant amounts of insurance capacity to supporting development finance in EMDE’s with single transaction exposure to single B rated sovereigns often exceeding US$300m per transaction. Moreover, transaction-size poses an issue, whereby transactions are smaller, non-sovereign or at the earlier end of the project development cycle. A clear challenge is how the insurance market can expand its risk-taking capabilities both in size and in underlying risk profile. 

Secondly, there is likely under-reporting in private sector participation, given the confidential undisclosed nature of insurance products which are used at scale by financial institutions to support their exposures to EMDEs but rarely disclosed. The [IACPM/ITFA Private Credit Risk Insurance Survey 2021](http://iacpm.org/wp-content/uploads/2022/03/IACPM-ITFA-Private-Credit-Risk-Insurance-2021-Select-High-Level-Results.pdf) noted that of the 52 respondents to the survey (including 48 commercial banks and 4 development banks/similar) a total of over $135bn of non-payment insurance was purchased in 2021, which facilitated $346.2bn of transactional lending, globally.

__Insurance and MDBs and DFIs__

One opportunity for the insurance sector to work more in developing markets is in collaboration with MDBs and DFIs. On the one-hand, MDBs and DFIs are looking for strategies to increase their lending capabilities and optimize their balance sheets, given their conservative risk profiles and capital adequacy limits. In this way, insurance products, including non-payment insurance (NPI), can enable MDBs and DFIs to manage their capital limits more effectively. NPI allows for credit substitution (with an insurer’s rating is substituted for that of the borrower) and is recognized under Basel III banking and Solvency II regulations. Non-payment insurance is increasingly critical – albeit generally non-disclosed and therefore unseen – ingredient underpinning cross-border loans. Non-payment insurance can be arranged on individual loans or on portfolios of obligations, whether on a quota share (pari passu risk sharing) basis or via synthetic risk transfer structures (utilising layers of insurance protection).

![TexelandTysers-Figure-1](//images.ctfassets.net/4cgqlwde6qy0/1brv19yLWFmlV3Lv5znlcY/22dd09c387f62e4345e9ee848f7e8b8c/TexelandTysers-Figure-1.png)
*Source: Texel, [Development Finance Institutions Report, April 2022](https://www.thetexelgroup.com/2022/05/03/development-finance-institutions-dfis-report-2022/)*

In turn, the commercial insurance market is increasingly interested in working with MDBs and DFIs given their low loss history. MDBs and DFIs are seen as having patient capital, and are long-term partners who have a better understanding of the challenges when operating in developing countries, which means insurance isn’t the first consideration should the underlying loan default. Data gathered by Texel demonstrates that the interest from the commercial insurance industry is high; 94% of surveyed insurers aim to increase their level of support for DFIs. 

![TexelandTysers-Figure-2](//images.ctfassets.net/4cgqlwde6qy0/1dFBo5dQAh5hoFKwrQWfTH/aaf63c445dfcf29769fd80bd2aac2d21/TexelandTysers-Figure-2.png)
*Source: Texel, Development Finance Institutions Report, April 2022*

A recent survey of the insurance market highlighted the high level of interest insurers have in collaborating with DFIs, with Ian Nunn, Axa XL’s Head of UK & Lloyd’s Political Risk, Credit & Bond stating:

*“Supporting DFIs and Multilaterals with the provision of political risk and credit insurance is integral to AXA’s Purpose: to act for human progress by protection what matters… DFIs and Multilaterals have a critical role to place in closing the infrastructure gap and driving the ESG agenda. AXA Xl is committed to assisting our partners in achieving their objectives, by leveraging their impact and deepening their reach.”*

The addition of blended finance, including first-loss capital provided by donor governments, can further enhance the risk-taking capabilities of MDBs and DFIs. Consider the following [Room2Run](https://www.afdb.org/en/news-and-events/african-development-bank-and-partners-innovative-room2run-securitization-will-be-a-model-for-global-lenders-18571) transaction, whereby the African Development Bank (AfDB) transferred the risk on a $2 billion portfolio of loans to a group of London-based insurers and the UK FCDO. The insurance market, namely AXA XL, Axis Specialty, and HDI Specialty is taking on a $400 million first loss tranche, while the UK FCDO is providing a further $1.6 billion of cover, on a second-loss basis, on the same subset portfolio of loans. The Room2Run transaction, brokered by Texel, is an example of the balance sheet optimization objectives of AfDB and how the insurance sector can support private sector mobilization through blended finance.

![TexelandTysers-Figure-3](//images.ctfassets.net/4cgqlwde6qy0/2ymeUNpefcQBI83e9vL8it/ee7e6ad82a7a53d8170f429c92594175/TexelandTysers-Figure-3.png)
*[Source: ODI 2022](https://odi.org/en/insights/afdbs-new-room2run-highlights-opportunities-and-questions-about-mdb-risk-transfer/)*

Insurers do not work in a vacuum. Ultimately the insurance market is a secondary market and insurers rarely originate risks. Therefore, they must work in conjunction with high quality originators of assets (in particular international lenders and DFIs) as well as larger corporates and private equity investors. 

__How to increase insurance sector coverage and investment in EMDEs, at scale__

Data is clearly an important part of any commercial insurance underwriting process. It is also notable that the data available to support credit, project, and political risk analysis in EMDE’s is often less than perfect. Many of the MDBs and DFIs contribute to the [GEMs Database](https://www.gemsriskdatabase.org/), which could provide the wider blended finance and commercial insurance industry with additional datasets that may increase their risk-taking capacities. If the private insurance market participants became members of the GEMs project, they have the potential to help to enrich the data further whilst also allowing a wider sharing of data to those entities tasked with contributing to the scaling of lending into EMDE’s.

Finally, there are also a number of large private insurers who don’t participate in underwriting the bespoke credit and political risk insurance that is so important to increasing the scale of investment in EMDEs. This is generally considered a highly-specialised and longer-tail class of insurance, and the headline risk of underwriting portfolios of risk in far-flung parts of the world is evidently not something that all boards or shareholders can stomach. Greater engagement and recognition in supporting this important area of the insurance market from regulators would certainly be beneficial in this respect, as well as the commercial insurers themselves elevating their own profile rather than tending to operate under the radar. Organisations such as the Berne Union, the global association for the export credit and investment insurance industry, have a role to play here in championing both their public and private members.

![Claims by RFIs 2021 Summary-29-](//images.ctfassets.net/4cgqlwde6qy0/3pAmfLTlRZiWac98gCcTaH/0bf8d595c85ae4fc9ee8ffd503f84450/Claims_by_RFIs_2021_Summary-29-.png)
*Source: A2Z Risk Services Ltd et al. “Claims Made by Regulated Financial Institutions where Insurer Contractual Liability are in Calendar year 2021”*

__How to scale up the issuance of insurance to increase SDG and Climate investment in EMDEs__

Two concrete actions should be taken by the official development finance sector to boost SDG and climate investment though insurance. First, shareholders of MDBs and DFIs should govern them to increase (i) the aggregate amount of debt and equity they arrange and underwrite and (ii) distribute this primary risk to private sector investors – both funded investors and the insurance sector. Insurance coverage to MDBs and DFIs is a huge benefit given their very low cost of capital. Second, donors should engage directly with the insurance sector to collaborate on blended finance structures that will boost the availability of insurance coverage to financial arrangers arranging debt in EMDEs, such as MDBs, DFIs and commercial banks – a smart insurance blended finance vehicle can materially boost risk capacity for arrangers to significantly increase debt investment in EMDEs. The insurance sector stands ready to contribute meaningfully to the SDGs and 2015 Paris Agreement objectives, and the development finance community should maximise their potential support.

Finally, insurers should also disclose their risk-taking capacities. Rather than having the product remaining confidential and undisclosed, better disclosure would enhance the market’s capacity to scale up its participation in these transactions as well as regulatory profile. Structural protections can be put in place to ensure that transactions which benefit from insurance protection are not negatively selected from a payment or risk perspective, but the disclosure of support from market participants such as Lloyd’s of London syndicates should help to scale financing to support SDG and climate investments in the EMDEs.

Learn about the best ways for the insurance sector to participate in Emerging Markets and Development Economies, through blended finance transactions, to increase investments towards the SDGs.

Insurance for Scaling SDG Investments in Emerging Markets

The Role of Insurance in Scaling Investments to the SDGs in Emerging Markets

Save the Children is one of the largest International Non-Governmental Organization (INGOs). It employs around 25,000 people across 117 countries and is focused on the health, education, and protection of children worldwide. While Save the Children had a number of innovative finance initiatives operating across its offices for many years, these were mostly small-scale and disconnected. In 2022, they launched Save the Children Global Ventures (Global Ventures), a Swiss-based foundation, to grow their innovative finance activities and take their use of new technologies to scale.

Save the Children’s technical expertise in health, education, and child protection as well as its established global networks, are leveraged by Global Ventures to guide and inform its investment decisions. They are currently in the process of launching a range of different products, with a focus on results-based finance, impact funds, and climate financing.

We spoke to Paul Ronalds, former CEO of Save the Children Australia and founder of Global Ventures, about what they're hoping to achieve with Global Ventures, how they measure impact, the challenges and opportunities they faced as an INGO breaking into the innovative finance/blended finance space, and much more. 

__Can you tell us a bit about how Save the Children and Global Ventures engages or plans to engage in blended finance?__ 

After a number of years of investing directly into various social enterprises, in 2019 Save the Children launched our first child-focused impact investment fund, based in Australia. The fund was capitalized with a significant investment from Save the Children itself, and ultimately went on to attract investments from QBE, the global insurance giant, and a range of other private investors, including donor advised funds. Since then, we’ve deployed 60% of the AUD 7.5 million raised into mostly technology-oriented start-ups aligned with Save the Children’s missions. 

Through Global Ventures, we are now developing a ‘family’ of impact funds. In November 2022, we launched the Children’s Impact Multiplier Fund. The multiplier fund is intended to fill the gap between the commercial funds and pure philanthropy. We have raised about USD 2 million in seed funding and are targeting at least USD 10 million within three years. Because this is an open-ended fund and the capital has been sourced through donations, it is much more flexible than the commercial fund. For example, for our results- based finance initiatives, if we need working capital, the Multiplier Fund could provide first-loss capital that would then allow us to ‘crowd-in’ private sector capital from investors that may have a lower risk appetite. 

We are also hoping to raise a second, larger Australian-based commercial fund in April 2023 and a European-based commercial fund in late 2023.

__As an INGO, can you tell us how it was getting these funds set up and approaching investors with your investment thesis? What challenges have you faced?__ 

It was difficult. The first challenge we faced was a degree of skepticism that Save the Children could operate a successful impact investment fund. The second challenge was that some of Australia’s most established philanthropic institutions, who we approached and who were initially very enthusiastic about the fund, have completely separate grant making and investment activities. They inhabited different worlds. So many of these institutions were happy to make six-figure grants to Save the Children but we could not convince their investment committees to make even a five-figure investment in our investment fund. 

Also, at least in Australia, there are very few truly impact-first investors. I can remember talking to one impact investor who essentially said we expect the same commercial returns as any other venture capital fund, but we want all of the deep social and environmental impact on top. These investors didn’t seem to appreciate that generating deep impact and doing robust impact measurement costs significant money and effort. In comparison, after fundraising in Europe, I have engaged with many more investors who appreciate the work that goes into generating deep impact and they are more open to conversations about slightly higher fees on the funds or some sort of modest trade off in relation to returns.

__Do you have any advice for other INGOs that might want to go into this space?__

They should start small and adopt a long-term strategy. Rather that raising your own impact fund, start by identifying investments, perhaps from internal initiatives, that you can make directly from your own balance sheet. From there you can build out your impact investing ‘muscle’ and develop an impact investing record. 

Don’t underestimate the capacity building that needs to happen in your own organization. The Global Ventures team spends a lot of time working with our country offices to help them think through what aspects of their operations could be financed through blended finance or an impact investment. Developing a sustainable business model, thinking through market-fit, competitive advantage, and pitching investment ideas are not traditional NGO skill sets. As a result, it has taken some time to build a solid pipeline of investable opportunities from our country offices. 

You need to bring specialist skills into the organizations to complement your natural strengths. You need to ensure that you bring your organizational leadership, especially boards, on the journey.

However, given the strategic challenges NGOs face, it’s critical that more NGOs consider how they can become more involved in blended finance, impact investing, and climate finance – these new ways of funding and supporting our missions. There is a USD 2.5 trillion annual funding gap to achieve the SDGs, and business as usual isn't going to be enough.

__How do you measure the impact of your blended and innovative finance activities?__

We are seeing increasing concerns globally about impact-washing. We share those concerns. Generally speaking, impact measurement is nowhere near as robust as it should be. As a result, we see robust impact measurement and management as a key competitive advantage for our innovative finance activities. We are seeking to bring Save the Children’s extensive global expertise around monitoring and evaluation together with the best international standards and frameworks to develop a comprehensive impact measurement and management approach. 

How Global Ventures measures and manages impact depends on which product we're talking about. For our results-based finance work, we were very focused about identifying those interventions that satisfied some key criteria: Is it aligned with Save the Children’s mission? Is it something that Save the Children has significant experience in when it comes to implementation? Does it have a really robust evidence-base for every metric we're looking at? Are the metrics for measurement clear and generally undisputed? Then finally, does it offer real value for money? We only want to scale those interventions that make our dollars go as far as possible. 

With our blended finance/impact funds, we use the SDGs as the way to characterize our impact; use the [IMP's five dimensions](https://impactfrontiers.org/norms/five-dimensions-of-impact/) as a starting point but added our own dimensions around serving underserved populations and ensuring additionality (“What’s the added contribution that Save the Children has?”); and also use the Operating Principles For Impact Measurement. So, we use a mix of well-accepted industry standards and frameworks that we then complement with a child-focused investing lens. 

Using the SDGs is really helpful because it allows Global Ventures to consolidate its impact across multiple initiatives and products to understand what the organizational impact is across each of those SDG areas.

__How do you see Global Ventures' blended finance activities evolving in the future?__

I'm excited about our current momentum. By the end of this year, we expect to have a family of impact funds that can be used to meet different capital needs. From a Save the Children perspective, diversifying our funding sources means we are giving our country offices a larger toolbox of options: from pure philanthropy or grants to blended finance and commercial funding. 

I'm also hopeful that the work we are doing will inspire other NGOs, particularly other large INGOs, to follow our lead and see innovative finance, blended finance, impact investment funds, as important complements to traditional funding sources. We really want to bring in other partners and players and help grow the innovative finance market.

Hear from Paul Ronalds, former CEO of Save the Children Australia and founder of Global Ventures, about the challenges and opportunities they've faced in the innovative finance/blended finance space, how they measure impact, and more.

Save the Children Global Ventures Member Spotlight

Save the Children Global Ventures Member Spotlight with Paul Ronalds

In late 2021, Global Affairs Canada and Convergence launched a new Design Funding window to award grants to design and launch blended finance solutions that target the climate-gender nexus in developing countries. Since its launch, the Window has completed two application cycles and attracted around 70 proposals from the blended finance ecosystem. These proposals came from a diverse set of institutions from around the world, including asset managers, commercial banks, non-governmental organizations (NGOs), advisory firms, project developers, and social enterprises based in both developed and developing markets. Some organizations were veterans of blended finance, while others were seeking a way to enter the space for the first time.

Beyond a direct link between climate and gender, the key things we looked for in proposals to this Window were scalability, replicability, additionality, likelihood to reach financial close or launch, demonstration effect, and institutional track record. We often get asked why certain vehicles are awarded funding while others aren’t, and how one can stand out from the crowd and put in more competitive applications. So we’ve put together a list of our top three takeaways, which we hope will help potential applicants interested in applying to the Window:

__1. Integrate gender firmly into a vehicle’s design and go beyond traditional KPIs__

New blended finance solutions commonly center on output-focused gender metrics or KPIs, such as counting the number of women in leadership roles, employed, or served as customers. Although important, we want the solutions we support to look beyond these metrics. What’s often lacking is intentionality when it comes to gender in a vehicle’s design, where gender isn’t just a “bolt-on feature” or afterthought. There are dimensions to gender that are often overlooked, such as integrating it throughout a transaction’s lifecycle, which includes deal sourcing, screening, due diligence, and investment decision-making. Additionally, other areas for consideration include creating an equitable workplace for female employees at both the firm and portfolio company levels and ensuring an active mandate to get more women into the supply chain.

Let’s take the clean energy sector as an example. There’s a lot of focus on investing in women-owned/led businesses, but the reality is, very few exist, especially in places like Sub-Saharan Africa. Thus, integrating gender into other dimensions becomes key. This is what Mirova SunFunder, our first grantee supported under the Window, has set out to do with the design of the [Gigaton Empowerment Fund](https://www.convergence.finance/news-and-events/news/75C62ZfHqwImJkRJVgQTqo/view), a $500 million blended fund targeting investments in distributed energy and off-grid projects in emerging markets. The Fund will adopt a gender lens across the firm (leadership, governance, staff), investment lifecycle, and its investees. For instance, gender will be built into deal screening and due diligence criteria, and a conscious effort will be made to ensure adequate women’s representation exists among staff and key investment decision-making bodies, such as the Investment Committee. To complement these efforts, the team will also support investees to adopt a gender-lens approach to their businesses through a technical assistance facility.

__2. Climate adaptation vehicles are emerging, but still lag behind climate mitigation vehicles in both volume and quality__

Mobilizing private capital toward climate adaptation is challenging. This is because blended finance is best suited for sectors that have a clear revenue line, such as clean energy. There are still many opportunities for blended finance in adaptation, however, the revenue pathways are less obvious in sectors and sub-sectors aligned with climate adaptation, such as sustainable agriculture, disaster resilience, and nature-based solutions. The Window aims to address this by supporting the design and launch of gender-responsive climate adaptation solutions, and in doing so, build the business case for them. Currently, over 40% of the solutions we see specify both climate mitigation and adaptation as focus areas, while only 19% specified climate adaptation as its primary focus.

Another observation is that these proposals are typically driven by NGOs, who lack the financial structuring expertise required to design commercially viable blended finance vehicles. As a result, these proposals are often not as advanced in their design and thinking, particularly when it comes to their path to scale and ability to attract private capital over the long-run, relative to proposals we see focused on climate mitigation.  A potential way to address this is by teaming up with a private sector partner, such as an experienced asset manager or financial advisory firm, to fill in any gaps in expertise or track record. Proposals from a group of complementary partners are typically more compelling because they build our confidence in the team’s ability to successfully design and execute new financial vehicles. 

__3. Fund vehicles are tried and true structures, so we’ve set the bar higher in our evaluations__

We’re not averse to funds and have supported them in our portfolio, but it can be harder to stand out. About 32% of blended finance solutions in the market are fund structures, according to Convergence’s historical database of over 800 blended finance transactions. Funds are the most common blended finance archetype. This is also reflected in the proposals received under the Window, where about 38% focus on the design and launch of new funds. We encourage other types of solutions to apply, such as bonds and notes, facilities, projects, platforms, and private companies.

Should an applicant decide to propose a fund, we will look for ways the fund offers additionality to the targeted market and what makes it innovative from a structuring perspective. For example, we’re supporting our grantee [Beyond Finance](https://www.convergence.finance/news-and-events/news/2OkQcxtcLa7xnMt2yA8vfK/view) to design the Beyond Finance Asia-Pacific Facility, an $80 million blended debt fund with a unique capital structure. The junior tranche is expected to be capitalized by micro-levy donations based on the sale of water bottles at large grocery retailers. Corporates and retailers are an untapped investor segment in the blended finance ecosystem. By supporting the Beyond Finance Asia-Pacific Facility, we hope the Facility will offer an opportunity for a new set of investors to participate in blended finance.

*The Window is currently accepting concept notes until March 31, 2023. For more information, visit our website [here](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window).  To see what Convergence has supported to date, review our Design Funding grantee portfolio [here](https://www.convergence.finance/design-funding/grant-portfolio).*


Our top three takeaways for potential applicants interested in applying to the Gender-Responsive Climate Finance Window