Join us for this webinar on __Wednesday, January 19 from 9:30-10:30 AM SGT__, where Convergence will provide an overview of our [Design Funding ](https://www.convergence.finance/design-funding)program and an in-depth look at the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), including insights on types of solutions supported, target geography, how to apply, eligibility and evaluation criteria, and much more. We will also be bringing together grantees from the Asia Natural Capital Window to discuss challenges and lessons learned from designing blended finance solutions focused on natural capital and conservation, and how Convergence’s funding has supported their work.

The Asia Natural Capital Window provides grants for the design and launch of blended finance solutions focused on natural capital in Asia and is currently open for applications. In addition to this window, Convergence runs two other Design Funding windows: the [Indo Pacific Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window) and the [Gender-Responsive Climate Finance Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window), which are also open for applications.

__Agenda__

09:30-09:40am SGT: Introduction to Blended Finance & Asia Natural Capital Design Funding Window

09:40-10.20am SGT: Panel Discussion

*Panelists*:*

- TBD, ADM Capital Group/IDH/Alune (Asia Aquaculture Facility)

- Additional panellists to be determined

- Robert van Zwieten, Senior Advisor, Convergence (Moderator)

10.20-10.30am SGT: Panel Q&A & Closing

*The final panelists will be confirmed closer to the date

Blended Finance for Nature-based Solutions: Experiences from the Asia Natural Capital Design Funding Window (Asia & West Coast)

Webinar: Blended Finance for Nature-based Solutions

Join us for this webinar on __Tuesday, January 18 from 9:00-10:00 AM EST__, where Convergence will provide an overview of our [Design Funding ](https://www.convergence.finance/design-funding)program and an in-depth look at the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), including insights on types of solutions supported, target geography, how to apply, eligibility and evaluation criteria, and much more. We will also be bringing together grantees from the Asia Natural Capital Window to discuss challenges and lessons learned from designing blended finance solutions focused on natural capital and conservation, and how Convergence’s funding has supported their work.

The Asia Natural Capital Window provides grants for the design and launch of blended finance solutions focused on natural capital in Asia and is currently open for applications. In addition to this window, Convergence runs two other Design Funding windows: the [Indo Pacific Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window) and the [Gender-Responsive Climate Finance Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window), which are also open for applications.

__Agenda__

9:00-9:10am ET: Introduction to Blended Finance & Asia Natural Capital Design Funding Window

10-9:50am ET: Panel Discussion

*Panelists*:*

- Leonie Lawrence, Technical Advisor, Wildlife Conservation Society (Bukit Barisan Selatan (BBS) Landscape Fund)
- Jose Luis Sanches, Director-Business Development, Blue Finance
- Additional panellist to be determined
- Adhiti Gupta, Associate Director, Convergence (Moderator)

9.50-10.00am ET: Panel Q&A & Closing

*The final panelists will be confirmed closer to the date

Blended Finance for Nature-based Solutions: Experiences from the Asia Natural Capital Design Funding Window (Europe & East Coast)

Convergence Eventbrite

__Wednesday, December 15 2021, 9am – 11:30am Singapore time (GMT +8):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of impact investors in the blended finance ecosystem
- The rationale and considerations for impact investors to participate in blended finance transactions 
- Case studies on blended finance transactions with impact investor  participation
- Recommendations on how best to actively engage and mobilize impact investors into blended finance transactions  

Impact investors represent a small but growing investor group in blended finance transactions, tending to participate on commercial terms, but also distribute grants for preparation-stage funding, provide guarantees and first-loss capital, or support pipeline development and capacity-building of investees. Impact investors have also helped bring blended finance into the mainstream by combining their impressive track record and ability to attract private capital, with blended finance’s ability to accommodate private capital in deals that were previously not investable. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which impact investors have participated. 

This is the final training in our five-part series “How Investor Types Blend”.

*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, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How Impact Investors Blend (Asia/West Coast)

'How Impact Investors Blend' is the final training in Convergence's series "How Investor Types Blend".

How Impact Investors Blend, Asia/West Coast

__Wednesday, December 8 2021, 9am – 10am Eastern time (GMT -5):__

---

Convergence is launching a new quarterly webinar series called “Inside the deal” where we delve into the inner workings of real blended finance transactions. Each quarter, Convergence will feature a transaction from our [case study portfolio](https://www.convergence.finance/resource?filters=eyJyZXNvdXJjZUZvbGRlciI6IlJlc291cmNlcyIsImtleXdvcmQiOiIiLCJpbnN0cnVtZW50Rm9jdXMiOltdLCJzZWN0b3JzQW5kU3ViU2VjdG9ycyI6e30sInJlZ2lvbkZvY3VzIjpbXSwidGhlbWVGb2N1cyI6W10sInJlc291cmNlVHlwZSI6WyJDYXNlIFN0dWRpZXMiXSwidGFncyI6W119) and give members an opportunity to candidly engage with the deal sponsor on their experience structuring the transaction.  

Convergence’s inaugural session will focus on CrossBoundary’s fund, CrossBoundary Energy 1 (CBE). Launched in 2015, the fund has a two-tier equity capital structure with first-loss financing provided by USAID to catalyze private investors. Over the last five years, CBE has pioneered the creation of the commercial and industrial solar sector in Africa. In 2020, CrossBoundary announced the exit of its first fund at a 15% net IRR to investors, including returning a profit to USAID, and raising $40 million from new investors to continue to scale financing for solar businesses in Africa.

This hour-long workshop will include:

- Overview of the transaction design, structuring, and fundraising experience from CrossBoundary
- Convergence-led interview with key stakeholders involved in the transaction to discuss key lessons learned
- Open Q&A with audience 

*This member-only, in-depth case-study series  has limited space to ensure a personal, intensive, and practice-driven learning experience. Each Convergence member organization has two complimentary seats to this session.*

Inside the Deal: CrossBoundary Energy Fund

Case study inside the deal crossboundary energy fund blended finance

We invite you to join us virtually for the launch of Convergence's new [Gender-Responsive Climate Finance ](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window)Design Funding Window

The new CAD 5 million Gender-Responsive Climate Finance Design Funding Window will award early-stage grant funding for the design and launch of innovative blended finance vehicles focused on the nexus of climate change and gender equality in emerging markets worldwide. This Window is funded by the Government of Canada.

Register for the webinar today to:

- Gain insights on how blended finance can help address the gendered impacts of climate change
- Get your Design Funding questions answered
- Gain insights into how to apply and our decision-making process

__Agenda__

Opening Remarks – 9:30-9:35am ET

Introduction to Convergence & Blended Finance – 9:35-9:40am ET

Launch of the Gender-Responsive Climate Finance Window – 9:40-9:45am ET

Blended Finance and the Climate-Gender Nexus – 9:45-9:50am ET

Panel Discussion – 9:50-10:25am ET
Panelists:
- Cam Do, Executive Director, Global Affairs Canada
- Rachna Saxena, Partner, Dalberg Advisors (Convergence Board Member)
- Kaylene Alvarez, Co-Founder, BIDUK Indonesia; Founder & CEO, Athena Global Alliance (Convergence Funding Committee Member)
- Joan Larrea, CEO, Convergence (Moderator)

Panel Q&A – 10:25-10:35am ET

Design Funding 101: How to Apply – 10:35-10:45am ET

Q&A and Closing – 10:45-11:00am ET

Convergence is currently accepting applications for this Window on a rolling basis until __January 28, 2022__. Visit our [Design Funding](https://www.convergence.finance/design-funding) page to apply and see our other open windows. 


Design Funding Window Launch: Gender-Responsive Climate Finance

The new CAD 5M Gender-Responsive Climate Finance Design Funding Window will award early-stage grant funding for the design and launch of innovative blended finance vehicles focused on the nexus of climate change and gender equality 

Gender and climate funding window launch

__Wednesday, November 10 2021, 9am – 11:30am Eastern time (GMT -4):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of commercial investors in the blended finance ecosystem
- The rationale and considerations for commercial investors to 1) leverage blended finance as a structuring approach and 2) participate in blended finance transactions 
- Case studies on blended finance transactions with commercial investor participation
- Recommendations on how best to actively engage and mobilize commercial capital into transactions  

To date a majority of commercial investment in blended finance has been on an opportunistic basis, with little sustained movement towards strategic and scaleable capital. Current stable blended finance flows will mobilize “billions to billions” rather than “billions to trillions” largely due to the under-participation of commercial investors in blended finance. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which commercial investors have participated. 

This is the fourth training in our five-part series “How Investor Types Blend”. 

*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, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


How Commercial Investors Blend (Europe/East Coast)

'How Commercial Investors Blend' is the fourth training in Convergence's series "How Investor Types Blend".

How commercial investors blend (Europe/East Coast)

![Panellists-sobf-v](//images.contentful.com/4cgqlwde6qy0/1D77oVDRu2TYJ4DauLvC7J/54ad0559c33a0688da6add4f4b167f13/Panellists-sobf-v.jpg)

We invite you to join us virtually for the launch of the 5th edition of the State of Blended Finance on __Wednesday, October 27th at 9:00 - 10:00 am EST__. The State of Blended Finance is Convergence’s annual report on blended finance trends, opportunities, and challenges.

This year's report provides an updated analysis of the blended finance market, including blending approaches, sectors, regions and investor trends. For the first time, the report will also include a thematic focus on how to achieve scale in the blended finance market, highlighting key challenges and recommendations. The report will include guest op-eds from prominent stakeholders (e.g. BlackRock, USAID, IFC) in the blended finance market, including development agencies, MDBs and DFIs, think tanks, and private investors.

In the meantime, you can see the last edition of The State of Blended Finance [here](https://www.convergence.finance/blended-finance/2020). 

__Agenda__

9:00-9:05am: Welcome remarks - Joan Larrea, CEO, Convergence

9:05-9:25am: Presentation of key highlights of the report - Convergence Content Team

9:25-9:30am: Q&A

9:30-9:35am: Challenges facing blended finance - Joan Larrea, CEO, Convergence

9:35-10:15am: Panel discussion moderated by Joan Larrea

Panellists:

__Cameron Khosrowshashi__, Senior Investment Advisor, Prosper Africa

__Kruskaia Sierra-Escalante__, Senior Manager, International Finance Corporation (IFC)

__Chinua Azubike__, CEO, InfraCredit Nigeria

__Nancy Lee__, Senior Policy Fellow, Center for Global Development (CGDEV)

__Rael McNally__, Senior Portfolio Manager, Global Renewable Power, BlackRock

10:15-10:25am: Q&A

10:25-10:30am: Closing remarks - Joan Larrea, CEO, Convergence

State of Blended Finance 2021 report launch

5th edition of The State of Blended Finance on __Wednesday, October 27th at 9:00 am EST__. The State of Blended Finance is Convergence’s annual report on blended finance trends, opportunities, and challenges.

State of Blended Finance 2021 launch

__Wednesday, September 29 2021, 9am – 11:30am Singapore time (GMT +8):__

---

This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of donor agencies in the blended finance ecosystem
- The rationale and considerations for donor agencies to use blended finance as a structuring approach
- Case studies on blended finance transactions with donor agency participation
- Recommendations on how best to actively engage and mobilize donor capital into transactions  

Donor agencies are the most prominent actors in the blended finance ecosystem, accounting for over half of all transactions in the Convergence historical deals database. Over the last few years, donor governments have started to proactively organize themselves strategically and operationally to participate in blended finance transactions, refining key policies and approaches. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which donor agencies have participated. 

This is the third training in our five-part series “How Investor Types Blend”.

*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, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How Donor Agencies Blend (Asia/West Coast)

'How Donor Agencies Blend' is the third training in Convergence's series "How Investor Types Blend".

How Donor Agencies Blend, Asia/West Coast

In June The President of Ghana launched [The Country Financing Roadmap](https://www.weforum.org/reports/country-financing-roadmap-for-the-sdgs-ghana), a strategic guide to leveraging private capital to achieve the SDGs.

Highlights from the report will be shared during this webinar organized by the SDGs Advisory Unit, Office of the President, in addition to a keynote by our Managing Director, Africa, [Ladé Araba](https://www.convergence.finance/about/team/5qoY2w7CUMeyE4wgAioiW2). The webinar will also feature a panel with:

- __Solomon Asamoah__, MD of Ghana Infrastructure Investment Fund (Infrastructure) 
- __Lina Osmond__, Regional Head of Sustainable Finance For MEA, Standard Chartered ( Sustainable Finance)
- __Gottfried Odamtten-Sowah__, Head of Programs- Agro-Processing & Agribusiness - Mastercard Foundation ( SME Development)
- __Yaw Asamoah__, Seasoned Managing Director, Global Financial Markets (Ghanaian with global presence) 

Achieving the SDGs through impact investing: The Critical role of FDI

CFR WEBINAR DRAFT PROGRAMME

Achieving the SDGs through impact investing

__Wednesday, September 8 - 10 2021, Zurich:__

---

To use public funds more effectively and mobilize private investment to achieve the Sustainable Development Goals (SDGs) has become a key concern of many development agencies and donor organizations. While the idea to create blended finance models is compelling, one specific approach holds particular promise: empowering high impact enterprises with market-based solutions to scale and deliver positive impact in a sustainable way – a bottom-up approach.

This actionable, practice-driven program is specifically designed for providers of public or philanthropic funding, who strive to maximize the impact of their grants or investments and want to be on top of the most innovative solutions and trends. It includes outstanding lecturers, features inspiring live cases and received exceptional feedbacks in several program runs since inception in 2018.

The three day program will provide valuable insights on strategies and instruments to “leverage” own resources by blending it with private investment for small and growing businesses in developing and emerging countries. It will also shed light on the whole spectrum of finance for impact and international development. A specific focus will be on catalytic financing tools that are able to attract additional capital for high impact enterprises.

The program is organized by the [Initiative for Blended Finance at the University of Zurich](https://ibf-uzh.ch/education/), with program partners [Roots of Impact](https://www.roots-of-impact.org/), [Center for Sustainable Finance and Private Wealth at the University of Zurich](https://www.csp.uzh.ch/en.html), and [Convergence](https://www.convergence.finance/).

*The program is booked out, but you can apply for our [waiting list](https://www.csp.uzh.ch/en/executive-education-training/professionals/impact-investing-blended-finance/iibf-2020-application-page0.html). If you have any questions, please reach out to Christina Moehrle (Education Lead): cmoehrle@roots-of-impact.org  
(We will closely oberserve COVID-related restrictions and inform about any changes on this site).*

Impact Investment & Blended Finance for Development Agencies and Foundations

IIBF Flyer

IIBF Agenda

Impact Investment Blended Finance 

__Wednesday, August 25 2021, 9am – 11:30am Eastern time (GMT -4):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of philanthropic organizations in the blended finance ecosystem
- The rationale and considerations for philanthropic organizations to use blended finance as a structuring approach
- Case studies on blended finance transactions with philanthropic organization participation
- Recommendations on how best to actively engage and mobilize philanthropic capital into transactions  

Foundations in the blended finance space have most commonly played a small but catalytic role, either providing small amounts of financing to seed large-scale and ground-breaking initiatives or providing smart forms of subsidy and risk mitigation (e.g., interest rate reductions and/or concessional capital) to crowd-in the private sector. In this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which philanthropic organizations have participated. 

This is the second training in our five-part series “How Investor Types Blend”. 

*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, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


How Philanthropic Organizations Blend (Europe/East Coast)

'How Philanthropic Organizations Blend' is the second training in Convergence's series "How Investor Types Blend".

__Wednesday, July 21 2021, 9am – 11:30am Singapore time (GMT +8):__

---

This 2.5-hour (150 minutes) interactive training will cover:

- Overview of the role and activity of MDBs/DFIs in the blended finance ecosystem
- The rationale and considerations for MDBs/DFIs to leverage blended finance as a structuring approach
- Case studies on blended finance transactions with MDB/DFI participation
- Recommendations on how best to actively engage and mobilize MDB/DFI capital into transactions  

Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) are amongst the most prominent actors in the blended finance ecosystem, accounting for over a third of all transactions in the Convergence database since 2017. In this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which MDBs/DFIs have participated. Convergence members will share their insights, and participants will discuss current initiatives in small groups.

This is the first training in our five-part series “How Investor Types Blend”. 

*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, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How MDBs/DFIs Blend (Asia/West Coast)

'How MDBs/DFIs Blend' is the first training in Convergence's series "How Investor Types Blend".

How MDBs/DFIs Blend, Asia/West Coast

Texel is a global insurance broker that provides credit and political risk insurance products. They specialize in non-payment insurance, a specific form of insurance often used by DFIs, MDBs, commercial banks, and private sector debt investors that protects against the risk of non-payment of principal from borrowers. 

Effectively, non-payment insurance allows insured parties to transfer to the insurer the risk of borrower default leading to loss. The transfer of risk happens in the form of a guarantee or insurance contract, with the insurer representing lower credit risk than the underlying obligor; the median sovereign risk rating of developing countries is S&P-equivalent “B+”, therefore obligor risk is often very high. Texel’s clients include commercial and investment banks, and increasingly development institutions (Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs)) who use non-payment insurance to increase their capacity to take on more risk and optimize their balance sheets.

Since the size of the SDG investment gap in developing countries is very large relative to existing cross-border investment flows (the OECD estimates that the annual SDG financing gap has risen from $2.5 trillion to $4.2 trillion, due to pandemic-related financing need), products such as non-payment insurance present an opportunity for the insurance market to step-in to diversify sources of investment, and increase the capacity of originating MDBs, DFIs, and banks to underwrite higher levels of investment.  

We spoke to Simon Bessant, Global Head of Insurance at Texel, about their work with development institutions, the incentives for private insurance companies to participate in emerging markets and work with MDBs and DFIs, and what Texel can do to support development institutions and private investors channel greater financing towards emerging markets. 

__What is your experience working with DFIs to date?__

DFIs have been a growing component of our client base. We currently represent a number of development banks, and they are also an attractive and growing part of an insurer’s portfolio, especially if you’re looking at emerging markets. There is increasing recognition of the potential of risk transfer products, such as non-payment insurance, in mobilizing private capital. This new awareness has been led by institutions like the International Finance Corporation ([IFC](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=25863)) and the European Bank for Reconstruction and Development ([EBRD](https://www.ebrd.com/news/2021/ebrd-and-insurer-euler-hermes-are-joining-forces-in-risk-and-green-bonds-.html)), and this has subsequently taken off across the various MDBs and their loan portfolios around the world.

__Historically, we have not seen much investment from insurance companies in blended finance transactions. What are the benefits for private insurance companies to participate in emerging markets, and to work with MDBs and DFIs?__

Insurers particularly see the benefit of supporting DFIs when participating in emerging market lending, where you have to put your capacity behind loans that could suffer from concerns around local currency risk, or political risk. For these reasons, insurers are less comfortable supporting commercial lenders in certain countries, so if they want to support infrastructure development in many emerging markets, the only way to do that from a risk perspective is to support development banks. Development banks also generally look to share risk in an equitable manner, so rather than looking to use the insurance market to provide 90% of the risk protection, they’re often looking to the insurance market to cover 30-50%.

Additionally, there is a greater awareness from the insurance market that they need to support the sustainable development goals (SDGs); including energy transition, global infrastructure development, reducing the trade finance deficit, and working out how to provide access and financial inclusion in many countries. Doing that behind a development bank is often how they can achieve some of those goals in a commercially sustainable fashion. 

Finally, insurers have also experienced incredibly low loss history with development banks. They’re seen as having patient capital. They’re long-term partners and accept that there will be bumps in the road, which means insurance isn’t the first thing they’ll turn to on day two of a default. The insurers are certainly there to pay a claim, which is backed up by the data on the non-payment insurance policy claims to regulated finance institutions (see figure 1), but if all parties agree that more time is needed, then the insurers are often incentivized to push out tenor to mitigate the potential loss and that’s more likely to happen when working with a development institution.  

![Claims Slide-17- Page 1](//images.ctfassets.net/4cgqlwde6qy0/7zf6y3yjUPiigGop42gz7Q/7b39bfb2bc23686bae9a0dae1d0e1581/Claims_Slide-17-_Page_1.png)
*Figure 1: Non-payment insurance market strength*

__How can Texel support development banks and private investors channel greater financing towards emerging markets?__

From a development bank perspective, Texel is here to take them through from understanding the product, what it is and what it can do (e.g. increase gross lending exposures, reduce risk weighted assets held against loans, mobilize private capital into development focused lending), to understanding the context of the market, and guide their usage of the product so that they can reach the much more experienced level of insurance purchasing that some of the larger development banks are already involved in.  

When it comes to private investors, we focus on demonstrating how the insurance product can provide them with the enhancement they require to achieve the rating they need from a risk perspective, and from a capital perspective. Many investors need certain levels of rating thresholds to avoid holding excess capital against an underlying asset, and insurance can be used to elevate an asset to investment grade. Tying together the power of the private investors with the risk-taking capabilities of the insurance market can really help to provide a new form of investment into SDG or climate focused development finance. Texel is at the forefront of shaping these relationships, as we understand the various issues faced by investors looking at obtaining Solvency II treatment for these assets and insurers concerned about how the documentation might need to evolve to meet the investor’s needs. 

__How do you see Texel’s blended finance activities evolving in the future?__ 

The bottom line is that Texel and the wider insurance market would like to be involved in more blended finance transactions. There is an understanding that blending concessional donor capital with commercial private capital will allow scale, and insurers want to be part of that, and they also want to do more with development institutions in emerging markets infrastructure. So, they recognize what they need to do, and they understand the risk sharing capacity of concessional financing; however, providing a third party with blanket underwriting support subject to transactions meeting certain eligibility criteria and then automatically being insured, is something that currently is at the more frontier end of their risk appetite. However, insurers do have the capacity and capability to look at statistical information on Loss Given Defaults, Probability of Defaults, Exposure at Default etc. and underwrite portfolios with a more actuarial focus. Utilizing this portfolio underwriting approach and combining this with concessional and private investor appetites could be incredibly powerful in scaling up blended financing structures to support climate focused lending. 

To continue to develop our market and probably slightly controversially, I believe the insurers need to consider removing the veil of confidentiality that often surrounds the product. When working with development banks for certain larger transactions the insurers could recognize their mobilization role and involve themselves in the structure with this enhancement being clear and transparent to the Borrower. There is a fear for insurers that the moral hazard of knowing that something is insured, could lead to someone making different payment choices when debt comes up for servicing. However, that maybe less relevant when the borrower faces a development institution. You can also structurally ensure that no tranche is disproportionately affected by a failure to pay. ATI and other multilateral insurers are comfortable with this and hopefully the private insurance market will move towards this in partnership with the development finance community over the coming years. 

At the end of the day, I believe that insurers being able to talk about their mobilization efforts and allowing publicity around the product and recognition around what they’re doing would only bring them more business rather than lead to more losses.  If people knew more about what the insurance product was doing, then it would grow in usage and relevance and thus mobilize more development lending. Development banks use many billions of private insurance every year to provide larger levels of financing to their members and member countries, but they could do more, and Texel is here to help them do that. We feel that there’s a huge opportunity here and the relationship between insurers and development institutions can only grow, and the more that is known about it, the more it is discussed, the more efficient it can be. 


We spoke to Simon Bessant, Global Head of Insurance at Texel, about their work with development institutions, the incentives for private insurance companies to participate in emerging markets and work with MDBs and DFIs.

Convergence member spotlight with Simon Bessant of Texel

Member spotlight with Simon Bessant of The Texel Group

*Figure 1: Market size and growth of blended finance for health and education*

The urgency of achieving SDGs 3 (Good Health) and 4 (Quality Education) by 2030 remains acute. At least half of the world’s population [still lacks access](https://www.uhc2030.org/blog-news-events/uhc2030-blog/mobilizing-private-sector-contributions-to-resilient-and-equitable-health-systems-what-will-it-take-555543/) to essential health services and [up to 53%](https://unesdoc.unesco.org/ark:/48223/pf0000375577) of ten year-olds in low- and middle-income countries are unable to read and understand a short age-appropriate text. The COVID-19 pandemic has [strained](https://www.convergence.finance/news-and-events/news/3mh2pgzn6viJg6maXsJCIw/view) health systems globally and closed schools in many parts of the world. The pre-pandemic estimate of the annual funding gap for health stood at [$134 billion](https://www.usaid.gov/sites/default/files/documents/1864/Blended-Finance-Roadmap-508.pdf#:~:text=gap%20to%20achieve%20the%20health%20SDGs%20in%20low-,an%20important%20tool%20to%20address%20this%20funding%20gap.), while the pandemic could grow the annual funding gap for education from $148 billion towards [$200 billion](https://en.unesco.org/news/unesco-warns-funding-gap-reach-sdg4-poorer-countries-risks-increasing-us-200-billion-annually). Finally, institutional investors [typically prefer](https://www.convergence.finance/resource/67341256-9cf6-492a-b6e2-166e0591f187/view) larger-scale, more established sectors like financial services and energy to health or education, where ticket sizes are smaller and the role of the government (as opposed to the private sector) in service provision has traditionally been more prominent.

However, blended finance can help create de-risked vehicles capable of attracting private investors into these more emergent and fragile sectors. Convergence’s latest [Data Brief](https://www.convergence.finance/resource/4b2ac87a-a562-4da9-98d7-cc8fa1f488fb/view) analyzes the 83 transactions targeting SDG 3 (Good Health) and the 36 transactions targeting SDG 4 (Quality Education) recorded by the Convergence database, representing $15.8 billion and $1.46 billion in total committed financing, respectively. The brief also presents insights from interviews with key stakeholders.

Here are some key takeaways from the Brief:

__Impact bonds are more prominent in blended finance for health and education:__ A plurality of developing market impact bonds has [targeted](https://www.brookings.edu/wp-content/uploads/2017/09/impact-bonds-in-developing-countries_web.pdf) health (including the treatment of cataracts, nutritional education for prediabetic women, and improved maternity care), they are also much more prominent in education compared to the overall market (14% vs 2%). Impact bonds allow financial payments to be tied to specific development interventions but can be resource intensive and less scalable. Impact bonds that have attracted institutional backing include the $27 million [ICRC Programme for Humanitarian Impact Investment](https://www.devex.com/news/icrc-launches-world-s-first-humanitarian-impact-bond-90981), launched in 2017 to build physical rehabilitation centers in conflict-affected countries in Africa.

![Screen Shot 2022-01-14 at 10.15.49 AM](//images.ctfassets.net/4cgqlwde6qy0/4RqvDzjlybH3swcQ4yLuum/6b2ef5917523d62adff0e6516a545103/Screen_Shot_2022-01-14_at_10.15.49_AM.png)

*Figure 2: Health transactions by blended finance vehicle type*

__Health and education transactions are generally smaller in size compared to the rest of the blended finance market:__ The global private K-12 sector is highly fragmented, with many small-scale proprietors and [only around 15 for-profit companies](https://www.lek.com/insights/sr/private-schools-public-goods) with revenues over $100 million existing globally. Education transactions have thus tended to be smaller in size, with a median size of $31.5 million and 64% being below $50 million. Meanwhile, health transactions have a median transaction size of $50 million, compared to $57.8 million for the overall market. However, health transactions can range widely in size. 29% of them are over $100 million in size, led by large-scale international facilities like the [International Finance Facility for Immunisation ](https://iffim.org/)or the [Africa Medical Equipment Facility](https://disclosures.ifc.org/project-detail/SII/42706/africa-medical-equipment-facility), a $150 million unfunded risk sharing facility launched in 2020 by IFC, in partnership with local participating financial institutions and original equipment manufacturers.

![Screen Shot 2022-01-14 at 10.08.35 AM](//images.ctfassets.net/4cgqlwde6qy0/7uzlGOSj7utdIfKx8i20HF/565ed2359bd7ce9986c43de063be5074/Screen_Shot_2022-01-14_at_10.13.29_AM.png)

*Figure 3: Education transactions by total size*

__Within education, greater use of guarantees and greater targeting of local financial institutions may be key to achieving scale:__ Financial institutions have been the direct beneficiaries of only 17% of education transactions (compared to 23% in the wider market), but our interview respondents note that the high demand for finance amongst private schools in developing countries could be met through local financial institutions if they were shown that the sector is investible. Similarly, guarantees and risk insurance have been underutilized in education compared to the broader market (14% vs 30%), but our interview respondents note that if there were higher numbers of guarantors of education loans, this would remove some of the key barriers local financial institutions face in appraising and underwriting private schools. 

![Screen Shot 2022-01-14 at 10.17.06 AM](//images.ctfassets.net/4cgqlwde6qy0/59Z21MPMoBsL3yKWMGdsyl/f0e321cec24e6bcb202a4159b7cb6540/Screen_Shot_2022-01-14_at_10.17.06_AM.png)

*Figure 4: Education transactions by blending archetype(s)*

__Scaling private financing into health and education will require the development community to deploy catalytic financing to launch funds of funds to develop a broader investment ecosystem in the space:__ Our interview respondents note that the investment landscape for health and education is defined by single fund managers, foundations, and donors, without that layer of funds of funds that can be found in other sectors like technology. Going forward, the development community should commit catalytic capital towards building out an ecosystem of funds of funds that can mobilize capital into health and education at scale.  

Become a [member](https://www.convergence.finance/membership) and read the full [brief](https://www.convergence.finance/resource/4b2ac87a-a562-4da9-98d7-cc8fa1f488fb/view) for more insights, including top concessional funders and top commercial investors. 


Can blended finance help fill the financing gap in health and education?

*Toronto, January 12, 2021* – Convergence awards a feasibility study grant to Fairventures Social Forestry GmbH (FSF) for the design of the Fairventures Social Forestry Fund, a blended fund for financing sustainable forest landscape restoration and conservation in Indonesia. This grant is awarded through the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), co-designed with and funded by the [RS Group](https://www.rsgroup.asia/), a Hong Kong based family office.

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), with key drivers being extensive mining, logging, and conversion of forest land to agricultural plantations. The Fund has the potential to demonstrate a viable social forestry model for emerging markets by partnering with local communities to restore degraded land and conserve existing forests, ultimately leading to improved local biodiversity and carbon sequestration. 

The grant will explore the feasibility of establishing a € 50 million, structured debt and equity fund to sustainably manage 50,000 hectares of forest land by financing projects involving – (i) sustainable agroforestry on restored degraded land through intercropping of timber with cash crops; and (ii) conservation of existing forests leading to generation of carbon credits. In this feasibility study, FSF will build on the initial work undertaken as part of an ongoing 3,000-hectare pilot in Central Kalimantan, Indonesia. 

“This blended fund demonstrates a viable model to address the funding gap for forest conservation and restoration in emerging markets. What makes it even more compelling is the social forestry model it applies, which finds a way to ensure that conservation and building the resilience of local communities go hand in hand,” says Joan Larrea, CEO at Convergence.

The Fund will integrate local communities in the implementation of sustainable forestry projects and provide them with employment opportunities as well as a share of profits from the projects. In the long-term, the Fund 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.

“We are very excited about this opportunity with Convergence. Blended finance structures will be key in addressing the current funding gap for forest landscape restoration, as they combine different sources of capital and risk appetite required for this new asset class. We will create a financing structure that enables efficient scaling of the sustainable system developed by FSF, and the positive impact it has for people, the environment, and investors.”, says Robert Buermann, CEO of Fairventures Social Forestry GmbH.

The [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window%5D) is currently accepting applications, with an upcoming deadline of __March 10, 2022__. 

__About Convergence’s Design Funding Program__

Convergence’s Design Funding Program provides early-stage capital to support blended finance solutions in frontier markets and nascent sectors in order to accelerate the number of investible transactions targeting the SDGs. Initiated, co-designed, and funded by the RS Group with $3 million in funding, the Asia Natural Capital Design Funding Window supports blended finance solutions that find new ways to enhance and protect the world's stock of natural assets, including water, land, soil, air, plants, and animals, by attracting private investment at scale. This design funding program is the first of its kind focused on Asia. Please visit Convergence’s [Design Funding page ](https://www.convergence.finance/design-funding)for submission deadlines as well as other open windows. 

__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 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. 

__About Fairventures Social Forestry Gmbh (FSF)__

FSF is a for-profit social venture based in Germany created as a vehicle for investing in sustainable forest landscape restoration and conservation. FSF´s CEO has extensive experience in structuring companies and investment vehicles and fundraising for various structures in the sustainability space. FSF has a subsidiary in Indonesia, PT Fairventures Social Forestry, which has a team of local employees involved in the operations and administration of the sustainable forestry projects. FSF also has a non-profit sister company, Fairventures Worldwide gGmbH which has been active in Indonesia since 2014 and provides R&D and socialization support to FSF for its sustainable forestry activities in Indonesia. To learn more, visit www.fairventures.earth.


Convergence awards a feasibility study grant to Fairventures Social Forestry GmbH (FSF) for the design of the Fairventures Social Forestry Fund, a blended fund for financing sustainable forest landscape restoration and conservation in Indonesia. 

Grant for Sustainable Forest Restorations & Conservation 

Convergence Provides Funding to Support Social Forestry Model for Sustainable Forest Restoration and Conservation in Indonesia

The [Net-Zero Asset Owner Alliance](https://www.unepfi.org/net-zero-alliance/) and Convergence Blended Finance announce the signing of a collaboration agreement to increase investment in climate and net-zero solutions in emerging and frontier markets. 

The 66 members of the Alliance represent more than US$10 trillion in assets under management and are in the process of transitioning their portfolios to net-zero greenhouse gas emissions by 2050. Convergence is the global network for blended finance, dedicated to generating blended finance data, intelligence, and deal flow to increase private sector investment in emerging markets. 

The climate investment needs in developing countries are estimated at over US$2 trillion annually, but the [OECD reports](https://www.oecd.org/environment/forward-looking-scenarios-of-climate-finance-provided-and-mobilised-by-developed-countries-in-2021-2025-a53aac3b-en.htm) that the amount of private investment mobilized has been stagnant at around US$14 billion. 

Ahead of COP26, the official development finance community published the [Climate Finance Delivery Plan](https://www.gov.uk/government/news/uk-cop26-presidency-publishes-climate-finance-delivery-plan-led-by-german-state-secretary-flasbarth-and-canadas-minister-wilkinson-ahead-of-cop26), showing the trajectory for developed countries to deliver on the Paris Agreement goal of mobilizing $100 billion per year in climate finance to support developing countries. The plan outlines 10 clear collective actions that developed countries will take, which includes improving the effectiveness of private finance mobilization.

The median sovereign risk rating of developing countries is S&P-equivalent “B” – often insufficient to attract capital from institutional investors exercising fiduciary duty. However, [blended finance](https://www.convergence.finance/blended-finance) has the potential to de-risk investments and achieve target investment returns. 

This collaboration will build on the work the Alliance has already undertaken in the blended finance space. The Alliance released its [Scaling Blended Finance](https://www.unepfi.org/news/industries/investment/net-zero-asset-owner-alliance-calls-for-scaling-blended-finance-to-meet-the-1-trillion-climate-finance-gap-for-emerging-markets/) discussion paper in November 2021, which (i) identifies obstacles to investing in climate solutions in emerging markets, (ii) argues that blended finance vehicles can mobilize investment at scale to help close the existing funding gaps and (iii) lays out several potential solutions for overcoming the barriers. The Alliance has also issued a [Call to Asset Managers](https://www.unepfi.org/news/themes/climate-change/net-zero-asset-owner-alliance-calls-on-asset-managers-to-support-blended-finance/) to collaborate in driving the development of blended finance vehicles.  

The Alliance and Convergence will collaborate in 2022 to: (i) increase the Alliance members’ access to development finance and blended finance transactions seeking private investment, (ii) increase direct collaboration between the Alliance members and the official development finance community, and (iii) realize the intersecting recommendations of the Scaling Blended Finance discussion paper and the Climate Finance Delivery Plan. 


The Net-Zero Asset Owner Alliance and Convergence Blended Finance announce the signing of a collaboration agreement to increase investment in climate and net-zero solutions in emerging and frontier markets. 

Net-Zero Asset Owner Alliance and Convergence collaboration

Net-Zero Asset Owner Alliance and Convergence Blended Finance collaborate on climate investment solutions

*Toronto, 21 December 2021* - Convergence awards a feasibility study grant to the consortium of ADM Capital Group, IDH - the Sustainable Trade Initiative, and Alune Aqua to develop a blended finance solution, the Asia Aquaculture Facility (AAF), that utilizes a revenue-based financing model for aquaculture farmers to engage in sustainable intensive aquaculture in Asia and support mangrove conservation. This grant is awarded through the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), co-designed with and funded by the [RS Group](https://www.rsgroup.asia/), a Hong Kong based family office. 

The aquaculture sector plays a critical role in ensuring food security and meeting the world's increasing demand for protein. According to the OECD, by 2029 the sector will supply 58% of the fish available for human consumption. However, many farms still follow traditional semi-intensive practices with limited yield and profitability potential. AAF plans to tackle such challenges by introducing a financing system that facilitates sustainable aquaculture intensification.  

Convergence’s grant will explore the feasibility of establishing the AAF, a $10-20 million, 10-year financing facility. The AAF will provide revenue-based financing for sustainable aquaculture intensification through a debt fund, where financing would be contingent upon achievement of certain environmental outcomes (e.g., improving the waste management system), and support mangrove conservation and reforestation through a linked technical assistance facility. The aim is to pilot the vehicle in Indonesia with a focus on shrimp aquaculture and potentially expand to India, Vietnam, and the Philippines. The facility will engage with value chain actors and broader stakeholders to bolster the transition to sustainable aquaculture intensification. 

“Blended finance makes it possible to design a solution like AAF that improves the sustainability and efficiency of the aquaculture sector, while simultaneously supporting mangrove conservation and reforestation. What makes it even better is its replicability and the demonstration case it provides for the market,” says Joan Larrea, CEO at Convergence. 

The pilot in Indonesia has the potential to directly improve 5,000 livelihoods by improving productivity and reducing loss events. In the initial phase, the facility could support the regeneration of 500 ha of mangrove and the protection of 1,800 ha of mangrove. The facility, once fully mobilized, has the potential to protect or capture around 250,000 tonnes of carbon. 

“With catalytic support from Convergence and the RS Group, ADM Capital and its AAF partners will refine our approach to financing aquaculture,” said Chris Botsford, ADM Capital co-founder and CEO. “We know that many high-impact aquaculture business models can’t access traditional early-stage finance. The AAF will seek to address this through a financing model that is more financially, behaviourally, and culturally suited to borrowers.”

“The AAF will provide finance designed to react and reflect the realities of aquaculture farming. As champions of farmers, Alune all too often sees farming businesses limited by traditional financial options,” said Alexander Farthing, CEO of Alune Aquaculture. “The support of Convergence and RS Group accelerates access to better financial products for thousands of aquaculture farmers. We are excited to continue our work with our partners ADM Capital and IDH as we scale blended finance for aquaculture together.”

“For AAF to be successful, it needs to be strengthened with jurisdictional sustainability governance, by specifically addressing risks related to aquaculture, such as diseases, lack of community business models, and negative environmental impacts like mangrove conversion. IDH believes that partners within AAF can support the further development of appropriate blended finance at scale,” says Fitrian Ardiansyah, Executive Chairman & CEO, IDH Indonesia.

__The Asia Natural Capital Design Funding Window is currently accepting applications, with an upcoming deadline of March 10, 2022.__ [Please visit our website for more details. ](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window%5D)

__About Convergence’s Design Funding Program__

Convergence’s Design Funding Program provides early-stage capital to support blended finance solutions in frontier markets and nascent sectors in order to accelerate the number of investible transactions targeting the SDGs. Initiated, co-designed, and funded by the RS Group with $3 million in funding, the Asia Natural Capital Design Funding Window supports blended finance solutions that find new ways to enhance and protect the world's stock of natural assets, including water, land, soil, air, plants, and animals, by attracting private investment at scale. This design funding program is the first of its kind focused on the Asia and Pacific. Please visit Convergence’s [Design Funding page ](https://www.convergence.finance/design-funding)for submission deadlines as well as other open windows. 

__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 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. 

__About the consortium__

__ADM Capital Foundation__ was established in 2006 by ADM Capital, recognizing the need for innovative and replicable models of funding for impact. Working with a multitude of partners (IUCN, Marine Stewardship Council, UNEP and Conservation International) across Southeast Asia, the foundation aims for a cleaner and more secure water supply, better air quality and a halt to the free flow of wildlife product. 

__IDH, the Sustainable Trade Initiative__, works in multiple sectors and landscapes in Africa, Asia, and Latin America with over 600 companies, civil society organizations, financial institutions, producer organizations and governments towards sustainable production and trade. IDH has reached over 3.5 million smallholder farmers of tropical food and cash crops in multiple sectors to improve livelihoods and is supported and endorsed by donors such as: BUZA (The Netherlands), DFID (UK), USAID (US), and Bill and Melinda Gates Foundation.

__Alune Aqua__ is an Irish aquaculture financial technology company with offices in Indonesia and Singapore. Creating an aquaculture financial ecosystem for people and planet, Alune provides category-leading, proprietary credit and risk tools, investment support teams, industry partnerships and distribution channels for shrimp aquaculture. Alune manages over $60m USD in capital for the aquaculture industry in SEA, supported by an ecosystem of multinational feed companies, aquaculture technology companies, and a network of farmer confidantes around the world. 


Convergence awards a feasibility study grant to the consortium of ADM Capital Group, IDH - the Sustainable Trade Initiative, and Alune Aqua to develop a blended finance solution, the Asia Aquaculture Facility (AAF)

Convergence supports sustainable aquaculture in Asia

Convergence Provides Funding to Support Sustainable Aquaculture Intensification in Asia

The top 5 list you’ve all been waiting for. We ran the numbers and here are the top blended finance reports, case studies, blogs, and more from Convergence that you engaged with the most in 2021. 

__Top Report: The State of Blended Finance 2021__

In addition to the usual insights on blended finance trends from the last year, the 2021 report also focused on scaling the blended finance market, outlining challenges and putting forth concrete recommendations for how we can achieve scale together – with special op-eds from expert voices, including BlackRock, IFC, the African Trade and Development Group, Publish What You Fund, and much more. 

The report found that since 2015 annual blended finance capital flows have averaged approximately $9 billion. However, like the rest of the global financial system, the blended finance market was impacted by the unprecedented effects of the COVID-19 pandemic. In 2020, the year covered by the current report, blended finance flows were significantly lower at $4.5 billion. In the past decade or so, aggregate blended finance flows have totaled just over $160 billion.

[Read the report and visit the microsite.](https://www.convergence.finance/resource/0bbf487e-d76d-4e84-ba9e-bd6d8cf75ea0/view)

__Top op-ed: Five critiques of blended finance – and five responses from Convergence__

As blended finance becomes more prosaic and widespread, it also attracts more skeptics. To provide a bit of clarity on the role of blended finance in sustainable development, we put together some responses to common critiques of blended finance that we've come across, including that blended finance doesn’t support low-income countries, lacks transparency and accountability, and has no proof of effectiveness or impact.

[See how we responded by reading the op-ed.](https://www.convergence.finance/news-and-events/news/7DQVQeR4TfTDLLqbsyszb8/view)

__Top blog: Gender Equality is Coming to the Fore in Blended Finance__

Back in 2020 Convergence developed a gender strategy to weave gender equality into the fabric of how the firm works and supports capital providers and deal sponsors. The groundwork we did internally enabled us to start having deeper conversations with blended finance actors around how they apply a gender lens to their investment mandate and deal structuring activities. In this blog we identified several trends and insights from these conversations, and concluded that gender equality has evolved from a ‘nice-to-have’ social impact target to a goal in and of itself. For a growing number of organizations, applying a gender lens is no longer the exclusive responsibility of the impact team, instead it is a shared consideration across teams responsible for financial structuring, business development, and fundraising.

[Read the blog. ](https://www.convergence.finance/news-and-events/news/1RzMCTVtshipW87WMKExXw/view)

__Top Case Study: Climate Investor One__

Climate Investor One (CIO) is an $850 million blended vehicle designed to accelerate the development of renewable energy infrastructure projects in emerging markets. Comprised of three inter-linked investment funds (the Development Fund, the Construction Equity Fund, and the Refinancing Fund), CIO provides fit-for-purpose financing across the project finance lifecycle. The Fund aims to support ~30 projects over its 15-year investment term and will target a variety of renewable energy technologies.

[Read the case study for an in-depth look into CIO's design, fundraising, structure, governance, operations, and much more.](https://www.convergence.finance/resource/c98944c2-2391-43e2-bf3d-80611b0b4d4c/view)

__Top News: Launch of the Gender-Responsive Climate Finance Window__

The Government of Canada and Convergence launched the CAD 5 million (approximately USD 4 million) [Gender-Responsive Climate Finance Design Funding Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window), which will award early-stage grant funding for the design and launch of innovative blended finance solutions at the nexus of climate change and gender equality in emerging markets worldwide. The Window is currently open and accepting applications, the first submission deadline is on __January 28, 2022__. 

[Learn more about the Window and Convergence’s Design Funding Program ](https://www.convergence.finance/design-funding)

The top 5 list you’ve all been waiting for. We ran the numbers and here are the top blended finance reports, case studies, blogs, and more from Convergence that you engaged with the most in 2021. 

Top blended finance news of 2021 from Convergence

Our top 5 of 2021

*Originally published on the Asian Venture Philanthropy Network [website](https://avpn.asia/blog/four-things-you-should-know-about-blended-finance-for-climate/). *

During COP26, Convergence and the UK’s Foreign, Commonwealth & Development Office (FCDO), [published](https://www.convergence.finance/resource/1826c214-00cf-42c0-a95d-3650ca65d2a7/view) the Blended Finance for Climate Report, exploring the successes and the gaps in mobilizing private capital to climate solutions. The report includes insight and feedback from our engagement with over 20 donor organizations, MDBs, DFIs, 100+ investors (e.g., asset owners), asset managers, and project sponsors on blended finance solutions for climate objectives.

Blended finance and climate are inextricably linked. Overall, our database shows that climate finance represents a sizeable proportion of the blended finance market: climate-related transactions account for about 50% of all blended transactions in our database (340 transactions), and 66% of total capital flows ($105 billion).

Below are some key takeaways from the report:

## 1. Climate adaptation has remained largely overlooked and underinvested compared to climate mitigation

According to the Climate Policy Initiative, global adaptation finance [increased](https://www.climatepolicyinitiative.org/wp-content/uploads/2021/10/Global-Landscape-of-Climate-Finance-2021.pdf) to $46 billion in 2019-20 from $30 billion in 2017-18, but is still nowhere near meeting the estimated needs of $180 billion per year through to 2030. In contrast, financing for climate change mitigation reached $571 billion in 2019-20. Similarly, most climate blended finance deals have targeted climate mitigation; specifically, renewable energy (43% of climate transactions) and energy efficiency (20%). Meanwhile, climate adaptation has not been highly targeted by blended transactions, with sub-sectors like sustainable agriculture being targeted by only 8% of climate transactions.

However, there are promising signs that blended finance is having more success in mobilizing capital towards adaptation. Convergence has observed uptake in several adaptation finance sub-sectors since 2018, such as in climate-smart agriculture and land and marine resource management. For example, one of the earliest blended solutions supported by Convergence’s Design Funding program, the [$364 million Blue Bond for Ocean Conservation](https://www.convergence.finance/news-and-events/news/53nMkbseHrNo8CBK9Um1U1/view), recently reached a financial close. Backed by the Nature Conservancy, Credit Suisse, the Government of Belize, and the U.S. International Development Finance Corporation (DFC), the bond will allocate capital towards debt sustainability and marine conservation for Belize.

## 2. Climate transactions tend to be structured as projects and funds, and are typically larger in size, indicating the scalability of the sector.

Blended climate transactions have often been structured as projects (34% of climate transactions). This is largely due to the prominence of energy-focused climate transactions; energy is one of the few sectors where blended solutions have most commonly been structured at the project level, with 55% of all energy transactions having been structured as projects. Meanwhile, funds are the second most common type of structure amongst climate-focused transactions (33% of climate transactions). Convergence [argues](https://www.convergence.finance/resource/0bbf487e-d76d-4e84-ba9e-bd6d8cf75ea0/view) that collective investment vehicles like funds represent the kind of standardized and familiar structure that can mobilize private investors at scale. Examples of large-scale blended climate funds [include](https://impactalpha.com/climate-fund-managers-raises-675-million-for-green-blended-finance-fund/) the $850 million Climate Investor One, which supports renewable energy projects in developing markets, and Climate Investor Two, which recently announced a $675 million first close, and will  focus on water, sanitation, and oceans infrastructure.

Finally, blended climate transactions have typically been larger compared to the overall market, with the median blended finance transaction for climate transactions being $80 million, compared to $57 million across the overall market. Most (69%) blended renewable energy transactions have been larger than $50 million, with 51% being at least $100 million in size.

## 3. Climate and renewable energy-focused institutions are starting to incorporate gender-lens strategies into their investment processes

Women are [disproportionately impacted](https://www.convergence.finance/resource/7zmK3a7wEGmtWqGqSycsIF/view) by climate change: they are over-represented in the informal sector; have less access to finance and education; and are more exposed to gender-based violence in the aftermath of climate-risk events. With gender equality [coming to the fore](https://www.convergence.finance/news-and-events/news/1RzMCTVtshipW87WMKExXw/view) in blended finance as a whole, institutions focused on climate change and renewable energy like Green Climate Fund (6 concessional commitments in the gender-climate nexus) and Shell Foundation (6) have prioritized [gender considerations](https://www.convergence.finance/news-and-events/news/7qPqWJompgLDEMLeyNDk0H/view) in their investment processes. In what remains an emerging area, Convergence will also be supporting innovative blended solutions at the nexus of climate change and gender equality through early-stage grant funding, [recently launching](https://www.convergence.finance/news-and-events/news/41btp5PEigK4YYzC7qgBUM/view) the $4 million Gender-Responsive Climate Finance Design Funding Window alongside the Government of Canada. Overall, our database records 63 climate transactions that also address SDG 5 (Gender Equality), representing aggregate financing of $6 billion.

## 4. Donors can mobilize more capital at scale to address climate change by allocating budgets for private investment mobilization towards the SDGs and Paris Agreement objectives.

To achieve scale, the donor community must design and implement a strategy to prioritize private sector mobilization, and allocate a known amount of development funds on an annual basis to blended finance transactions that will deliver on that objective. With only around 2-3% of official development assistance (ODA) [currently being allocated ](https://www.convergence.finance/resource/0bbf487e-d76d-4e84-ba9e-bd6d8cf75ea0/view)annually by the donor community towards private sector mobilization, and risk averse MDBs and DFIs tending to use concessional financing to mobilize their own capital, there is a lot of space for private investment mobilization to be boosted by establishing a clear action plan within the donor community.

The Blended Finance for Climate Report explores the successes and the gaps in mobilizing private capital to climate solutions. Here's what you need to know about the report. 

4 Things You Should Know About Blended Finance for Climate

Four Things You Should Know About Blended Finance for Climate

*Toronto, December 16, 2021* – Six years since Convergence was launched, the global network for blended finance has supported blended finance solutions that have mobilized over $1.5 billion from public, philanthropic, and private investors to address the Sustainable Development Goals (SDG) in emerging markets.

The need to mobilize private sector capital has never been more urgent, as the SDG funding gap continues to grow, climate action stalls, and COVID 19 continues to ravage populations and devastate economies worldwide.

Over $1.5 billion catalyzed in blended finance deals is a major milestone not just for Convergence, but for the blended finance market as a whole, which continues to [struggle to achieve scale](https://www.convergence.finance/news-and-events/news/3fub0uSTYfcX6xQqKn3XLj/view). Convergence is an important example of how donors can be more catalytic with their grant funding. In Convergence’s case, a relatively small amount of grant capital from donors, including the Government of Canada, the Australian Government, RS Group, and the MacArthur Foundation,  has gone on to establish an ecosystem builder that now generates its own revenue line, while delivering outsized and lasting impact to the market.  

“The impact of the $1.5 billion milestone is manifold. There’s the mobilization impact, where additional capital is unlocked for the SDGs. There’s ecosystem additionality, meaning we provide a chance for new concepts to reach the market. There’s also the underlying development impact, each deal Convergence supports, in one way or another, goes on to improve the lives of real people, whether it’s by offering them renewable sources of energy or improving their access to healthcare. The field is still far from going from billions to trillions, but as far as the impact a single organization can make, I’m very proud of what we have been able to achieve in six years,” says Joan Larrea, CEO at Convergence. 

In concrete terms, this capital was mobilized through Convergence’s market acceleration activities, specifically the [Design Funding](https://www.convergence.finance/design-funding) program, which awards grants to design blended finance solutions that attract private capital to global development at scale, and from Convergence’s deal matchmaking platform, which seeks to connect investors to blended finance deals. Convergence’s other core activities, as a global network, data aggregator, knowledge producer, and capacity builder, reinforce our market acceleration and deal matchmaking work, bolstering the market as a whole and facilitating capital mobilization. 

Through Convergence’s Design Funding program over $8 million has been awarded to 29 blended finance solutions in a variety of sectors and geographies. A significant proportion of the $1.5 billion mobilized comes from our early Design Funding support to Aligned Climate Capital to coordinate and design the Climate Finance Partnership (CFP), an unprecedented blended finance partnership between the world’s largest asset manager - BlackRock - and leading philanthropies and governments. At COP26, BlackRock announced an [initial financial close of $673 million](https://www.convergence.finance/news-and-events/news/3s7v2XsCRrzfeHTxqf7Lzn/view).

Convergence also provided early Design Funding support to The Nature Conservancy and its NatureVest impact investing team to design debt conversions for ocean conservation. This initiative led to the recent [announcement](https://www.convergence.finance/news-and-events/news/53nMkbseHrNo8CBK9Um1U1/view)  of a $364 million financial close at COP 26, making it the world’s largest marine-focused debt conversion to date.

 “Global capital markets can play an essential part in achieving the scale and pace of conservation we need to tackle the twin crises of climate change and biodiversity loss,” said Slav Gatchev, Deputy Managing Director responsible for Sustainable Debt at The Nature Conservancy.  The early catalytic support from Convergence allowed us to demonstrate how science, policy, and private finance with public risk mitigation can help countries reach conservation goals while supporting nature-based economies and livelihoods.”

To date, 150 deals have been posted on our deal matchmaking platform, of which around 30% have gone on to raise additional financial commitments after being listed. Our member [Earthspark International](http://www.earthsparkinternational.org/) was able to secure a $9.9 million commitment from the Green Climate Fund’s Private Sector Facility. 

"After posting on the Convergence platform, EarthSpark was contacted by a member of the Green Climate Fund's Private Sector Facility with an invitation to submit a proposal for an RFP. We have now received GCF board approval for $9.9M of support and are working to secure the required co-financing to bring clean, reliable electricity to 80,000 people in rural Haiti. Blended project finance for aggregated clean energy microgrids is complex, but with the good guidance of Convergence, we are getting it done!" - Allison Archambault, President, EarthSpark International
Convergence is currently accepting proposals for its three open Design Funding Windows: the [Gender-Responsive Climate Finance Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window), focused on the intersection of climate change and gender equality in emerging markets globally; the [Asia Natural Capital Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), focused on natural capital in Asia; and the [Indo-Pacific Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), focused on climate finance and gender equality in the Indo-Pacific region. 

To post a deal on Convergence’s deal matchmaking platform, your organization must first register as a Convergence [member ](https://www.convergence.finance/membership)and the deal must 1) have a blended finance [structure](https://www.convergence.finance/blended-finance), 2) have confirmed third party interest, 3) have a minimum ticket size of $ 5 million, and 3) target at least one Sustainable Development Goal in a developing country(ies).

__ABOUT CONVERGENCE__

Convergence is the global network for blended finance, and generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Our global membership includes public, private, and philanthropic investors as well as sponsors of transactions and funds. We offer this community a curated, online platform to connect with each other on blended finance transactions in progress, as well as exclusive access to tailored trainings and original knowledge products such as case studies and reports. To accelerate advances in the field, Convergence also provides grants for the design of blended finance solutions that could attract private capital to global development at scale.

__MEDIA CONTACT__

Sijia Yi 

Head of Communications 

+1 647-573-5993

Sijia.yi@convergence.finance


Over $1.5 billion catalyzed in blended finance deals is a major milestone not just for Convergence, but for the blended finance market as a whole, which continues to struggle to achieve scale. 

Over $1.5 billion towards SDGs in emerging markets

Over $1.5 billion mobilized towards sustainable development in emerging markets, through Convergence’s support

[https://prod-convergence-public.s3.amazonaws.com/webinars/GAC+launch+video_edited_FINAL.mp4](https://prod-convergence-public.s3.amazonaws.com/webinars/GAC+launch+video_edited_FINAL.mp4)

The launch of Convergence's new [Gender-Responsive Climate Finance Window,](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window) which will award early-stage grant funding for the design and launch of innovative blended finance vehicles focused on the intersection of climate change and gender equality in emerging markets globally. 

The launch includes a panel discussion on blended finance and the nexus of climate and gender and a Q&A session on how to apply to Convergence's Design Funding Windows. 

Go to our [Design Funding](https://www.convergence.finance/design-funding) page to learn more, and see our other open windows. 

This Window will award early-stage grant funding for the design and launch of innovative blended finance vehicles focused on the intersection of climate change and gender equality in emerging markets globally. 

Gender-Responsive Climate Finance launch

Gender-Responsive Climate Finance Window Launch

Last week at [Building Bridges Week ](https://www.buildingbridges.org/)in Geneva, Switzerland, the Swiss State Secretariat for Economic Affairs (SECO), UBS Optimus Foundation, Credit Suisse Foundation and the Swiss Agency for Development and Cooperation (SDC) launched the [SDG Impact Finance Initiative (SIFI)](https://www.seco.admin.ch/seco/en/home/seco/nsb-news/medienmitteilungen-2021.msg-id-86208.html) – an innovative finance program targeting to raise CHF 100+ million of catalytic funding that aims to mobilize CHF 1+ billion of private finance and investment in developing countries for the Sustainable Development Goals and Paris Climate Agreement objectives. 

Convergence applauds the four founding organizations on this critical market-leading initiative. SIFI has been designed intentionally to address the systemic challenges that impede finance and investment to SDG and Climate projects in emerging markets and frontier markets. 

SIFI will provide catalytic funding in three activities:

1. An Innovation Window to support innovative financial solutions through grant and seed funding, 
2. A Product Window to scale impact, and
3. A Framework Conditions Window to contribute to improved framework conditions for impact investing in Switzerland and promote impact management practices, working closely with Swiss Sustainable Finance and the State Secretariat for International Finance. 

Convergence plans to collaborate with the founding organizations to allocate their catalytic funding to proposals that produce strong development impact and mobilize investment at scale. For the past five years, Convergence and partners have implemented complementary [Design Funding / Market Acceleration](https://www.convergence.finance/design-funding) funding programs, and acts an independent evaluator to the [United Nations Joint Sustainable Development Goals (SDG) Fund](https://www.jointsdgfund.org/sdg-financing). The investment needs to achieve the SDGs and climate objectives are significant – and the potential of SIFI to have truly transformational impact is high. 


The SDG Impact Finance Initiative (SIFI) was launched – an innovative finance program targeting to raise CHF 100+ million of catalytic funding that aims to mobilize CHF 1+ billion of private finance and investment

SDGs Impact Finance Initiative Launched

 Sustainable Development Goals Impact Finance Initiative Launched

*Network Voices is a series where Convergence amplifies blended finance opinions and activities from our network - this interview was originally published in our [State of Blended Finance 2021 report](https://www.convergence.finance/resource/0bbf487e-d76d-4e84-ba9e-bd6d8cf75ea0/view).*

*Interview with Kruskaia Sierra-Escalante, Senior Manager, Blended Finance, IFC*

__From IFC’s perspective, how can DFIs leverage limited concessional financing efficiently to achieve scale?__

First, it’s important to look back at how blended finance activity has scaled since the early 2000s. Five to 10 years ago, when we had a strong year in blended finance at IFC, we were doing around $100 million per year. In the last couple of years, we’ve been doing around $500 million – this year we reached over $700 million. 

Overall, there will always be a limited amount of concessional financing because the challenges we are grappling with are so large. For example, IFC conducted a deep dive into the blended finance needs for climate change, finding that we’re short by around $900 million to be able to achieve our goals and ambitions in the next five years. 

But how we can stretch the amounts we have? There are several strategies we can do to achieve this:

Firstly, we need to have the __right mix of products__. As an example, first-loss guarantees can stretch relatively small amounts of concessional financing quite effectively to support a larger portfolio. We’ve done this in our response to the COVID-19  pandemic through the Working Capital Solutions (WCS) Program. Here, we used $250 million of the International Development Association Private Sector window (IDA PSW) to be able to support over $860 million of IFC’s portfolio to provide working capital to many firms that needed quick solutions.  

Another product that has a lot of promise in stretching donor financing is __performance-based incentives__. These are used to help incentivize a change in behaviour. These differ from what we call participation constraints – when you are supporting de-risking through blended finance products like first loss guarantees, subordinate debt, or equity solutions. For example, we have extended performance-based incentives to support more financing to women entrepreneurs through the Women Entrepreneurs Finance Initiative (We-Fi). 

Traditionally, blended finance has worked by __reducing interest rates__. This works well in more mature markets, but we need more solutions and de-risking for difficult markets. 

However, the available instruments also depend on __donors and conditions of their funding__. For example, with grant funding we can do performance-based incentives and first-loss financing. When donors have return expectations, the ability to take significant risk and the leverage potential are more limited.

At the end of the day blended finance must be used efficiently to avoid crowding out private investment. This means when blended finance is being used in mature markets, there should be a bigger focus on bringing in additional partners, and less need for concessional finance. On the other hand, when working in difficult markets, there is a significantly higher need for concessionality – at least at the start.  Our leverage numbers also show this: For each dollar of donor funding in climate finance, which is mostly focused on middle-income countries, $3 of IFC money is catalyzed, and $7-8 of third-party capital. Meanwhile for projects in IDA countries, there is less capital mobilized, including from IFC and others ($1.5 to $2 of each), as there is a lower quantum of risk capital available and willing to tag along.  

__What can donors do to support MDBs in using blended finance more efficiently?__

Donors need to provide clarity on the key objectives of their financing for blended finance. If the focus is on too many impact objectives, this is harder to achieve.

We also need clarity on return expectations. If a donor wants high impact alongside returns, there will be trade-offs. If the most important thing is to achieve impact, and we can use any instrument and a lot of risk, that allows us to support projects in more difficult contexts. 

Meanwhile if the emphasis is on reporting and evaluating programs, we need the resources to do so.

__What are the benefits of deploying blended concessional financing using a programmatic or platform approach (as opposed to a project-by-project basis)?__

There are two main advantages of using a programmatic approach: i) efficiency, and ii) transparency.

1. Efficiency as it relates to processing the underlying deals under the program, but more importantly, efficiency in structuring a solution to the identified market failure that can then help us calibrate the minimum concessionality. 
2. Transparency, including disclosing the type and level of concessionality, and the instruments we are using. 

We also think about replication; if the platform works well, IFC and others can replicate it. For example, IFC’s Small Loan Guarantee Program helps financial institutions reach more SMEs in low-income countries. Through a pooled first-loss structure provided by the IDA Private Sector Window Blended Finance Facility, IFC shares 50% of SME portfolio risk with local financial institutions for an IFC risk amount of up to a specified level.

Finally, “platform” doesn’t always just mean aggregating concessional financing (for example, through first-loss capital), or necessarily establishing a separate fund. It can also mean bundling transactions together (e.g., smaller climate-smart deals) and structuring a solution to the identified market challenge. 

__From IFC’s perspective, how can DFIs ensure the mobilization of third-party capital, in addition to mobilizing their own resources into more challenging sectors and markets?__

Third-party capital from the private sector at scale will tend to flow to the mature sectors where they feel more comfortable, like infrastructure assets. Sectors like health, education, and agriculture are still too nascent for most institutional investors to feel truly comfortable. 

In addition, we must look at bringing in local banks and take advantage of local capital markets. It’s important to remember the role these local institutions can play and their greater comfort in investing in segments and locations that foreign institutional investors would avoid. 

__Convergence observes that there is a need for greater transparency in blended finance transactions. Given IFC’s progress in this space, can you comment on IFC’s work in this regard? __

We are the only DFI that discloses subsidy levels at the transaction level. We started in 2019, and we encourage other DFIs to do the same. In addition to transparent disclosure, more of our programs are using an open approach to bringing in new IFC clients to deliver more impact. At the same time, we need to be mindful that some information is sensitive on a deal-by-deal basis (e.g., pricing and returns) and private sector clients expect that commercially sensitive information is not disclosed. It is a balancing act. 


An interview with Kruskaia Sierra-Escalante, Senior Manager, Blended Finance, IFC

Insights from IFC’s Blended Concessional Finance Program 

Network Voices: Insights from IFC’s Blended Concessional Finance Program 

This year’s COP26 brought momentum from around the world for climate action, with a lot of the conversations and commitments focused on getting the private sector to finance climate mitigation and adaptation efforts. For example, the $130 trillion that Mark Carney mobilized through the Glasgow Financial Alliance for Net Zero and BlackRock’s $673 million Climate Finance Partnership. 

There’s no doubt we’ll need the private sector if we’re going to meet the ambitious climate goal of halving global emissions by 2030. But what’s missing is an intentional focus on gender. 

Canada is an exception. Its Feminist International Assistance Policy explicitly recognizes the active role that women and girls must play when designing strategic responses to climate change. 

This was reflected at COP26, where Canada led the way by announcing it would double its climate investment commitments to $5.3 billion, of which 80% will target gender equality outcomes over the next five years. Alongside Convergence, Canada also launched a CAD$5 million [Gender-Responsive Climate Finance Design Funding window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window) that will award grants to develop new blended finance solutions that address both climate and gender, and draw in private sector investment at scale. 

__The climate and gender nexus__

Climate change and gender are inextricably linked. Women and girls are disproportionately impacted by the negative effects of climate change. This is the case for several reasons: they’re over-represented in the informal sector, have less access to finance and education, and are more exposed to gender-based violence in the aftermath of climate-risk events. 

At the same time, addressing gender equality has been considered one of the most effective, yet overlooked, ways of combating climate change. In fact, empowering women and girls could translate into meaningful climate action. [Research](https://www.brookings.edu/wp-content/uploads/2019/12/Girls-ed-in-climate-strategies-working-paper-FINAL.pdf) conducted by Plan International in Bangladesh and Ethiopia asked girls what would best help them deal with the impacts of climate change. They expressed three clear priorities: greater access to education to enhance their ability to adapt to and reduce climate risks; greater protection from gender-based violence, in response to climate disasters, including child labor, early marriage, and sexual violence; and greater participation in climate adaptation decision-making activities.

Further, companies that have gender-balanced leadership tend to have better climate governance and are more likely to proactively pursue sustainability. An [analysis](https://www.convergence.finance/resource/e720084e-fcfe-4de3-a249-fe46ceafc571/view) of 11,000+ companies by Sasakawa Peace Foundation found that a critical mass of 30% of women on a company’s board made a difference to climate governance, innovation, and emissions growth rates: 0.6% compared to 3.5% for companies with no women on their board.

__Getting the private sector on board__

Although there’s been a growing awareness of the climate-gender nexus over the past decade, few financial solutions currently exist to address it at scale. Climate investments must become gender-responsive; this can be achieved by integrating gender considerations into the investment lifecycle from design to implementation to exit. We also need to see significantly more financing mobilized into all sectors that are deeply tied to climate change and gender equality, such as agriculture, energy, manufacturing, water and sanitation, and financial services. To illustrate the dearth of financing, women make up 43% of the agricultural labour force in developing countries, but receive only 7% of total agriculture investments worldwide according to the [2X Climate Finance Taskforce](https://static1.squarespace.com/static/60d997f2ecd20831960869e0/t/618919e874138e2e98f81af9/1636375018796/2X_ClimateTaskforce_Agri_v12.pdf).

But how do we make these investments happen? One promising approach to address the climate and gender funding gap is through blended finance, which is the use of catalytic capital from public or philanthropic sources to mobilize private sector investment into sectors and regions that are normally deemed too high risk for traditional investment (.e.g., climate and gender). An example of a blended climate and gender deal is the [EcoEnterprises Fund III](https://www.convergence.finance/deal/a0337000009hjA6AAI/view), which received an investment in 2019 from Canada’s development finance institution, FinDev Canada. The fund invests in locally owned and women-led small and medium enterprises in the agriculture, agroforestry, and ecotourism sectors in countries across Latin America that show high potential to protect fragile environments, create jobs, and empower women in rural areas. 

Finally, early-stage grant support, such as the climate and gender funding window mentioned above, can help accelerate the market for new blended finance transactions in the climate-gender nexus, and attract private investors who otherwise wouldn’t participate in the space. The nascency of the field underscores the need for risk-capital early on in a transaction’s lifecycle during the design phase. 

Climate change is the most significant intergenerational issue of our time. The transition to a climate resilient world may take decades. Marginalized populations, including women and girls, will continue to disproportionately bear the brunt of climate change if bold action is not taken immediately. Investing in the climate-gender nexus improves how we combat climate change and pushes us towards a more equitable world, it would be foolish not to do it. 

*The Gender-Responsive Climate Finance Window is currently accepting applications, find out more [here](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window). *

There’s no doubt we’ll need the private sector if we’re going to meet the ambitious climate goal of halving global emissions by 2030. But what’s missing is an intentional focus on gender. 