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Press Release

New Convergence report finds significant decline in blended finance for climate

Toronto, 26 October 2022 – Convergence, the global network for blended finance, launched the 6th edition of the State of Blended Finance report today. For the first time, this year’s report focuses on climate and provides an overview of the state of the market for both blended finance for mitigation and adaptation, including insights on deal and investor trends.

As the world gears up for COP 27, scaling the blended finance market will be especially critical for climate action. Climate-oriented blended finance transactions have accounted for 50% of all blended deals launched annually, accounting for an aggregate annual deal value of around $7 billion. However, the report found a significant decline in aggregate financing levels for climate in recent years – between 2019-2021, $14 billion was invested into climate blended finance transactions, compared to $36.5 billion between 2016-2018 – an over 60% decrease.

“At a time when the rhetoric around mobilizing private capital for climate action has been mounting, this decrease in blended finance flows towards climate was disappointing and unexpected,” says Joan Larrea, CEO at Convergence. “It’s a stark reminder that we must go from talk to action. Our hope is that we are at a tipping point and that the real-world data and opportunities presented in this report can act as a catalyst to get us to where we urgently need to be.”

Adaptation has been an underdeveloped area within blended finance for climate compared to mitigation but is on the rise. Only 14% of transactions to date have had a pure adaptation focus; however, in the last three years there has been a noticeable uptick in adaptation finance; investments into adaptation are 72% higher between 2019-2021 as compared to 2016-2018.

The wider blended finance market saw a recovery from its 2020 low point. The market rose to $7.1 billion in 2021 from $4.5 billion in 2020. The 2020 volume had marked a 50% drop compared to 2019, following the effects of the COVID 19 pandemic. However, investment activity in the energy sector declined over the last year, falling to 29% of transactions in 2021 from 37% in 2020.

The decrease in investment in climate blended finance can be partly explained by the many macroeconomic challenges facing developed and developing markets alike. The invasion of Ukraine by Russia has exacerbated supply blockages and fueled inflation, which will further dry up climate investment through blended finance as public and philanthropic capital pivots to other urgent humanitarian needs. Interest rate hikes implemented in many advanced economies to combat high inflation are further fuelling capital flight away from emerging markets.

"The recent exogenous shocks have contributed to the redirection of climate and development capital. The macroeconomic turbulence that has ensued has only further increased the risk profiles of developing countries that already find it difficult to attract private investment. Here is where blended finance has a tremendous opportunity; in modulating investment risk. Increasing the implementation of blended finance for climate transactions, makes it possible to immediately respond to changing market conditions and create more investable assets in developing economies, thereby strengthening local markets and ensuring that funding for climate is not diverted in response to the types of shocks that we’ve seen," says Nnamdi Igbokwe, Head of Knowledge and Thought Leadership at Convergence.

However, the decline in climate blended finance cannot be attributed to macroeconomic shocks alone. The report points to the lack of strategic coordination and unguided implementation of high-level capital mobilization plans, which has impacted the ability to deliver on funding targets. At the same time, the public sector’s use of concessional capital to catalyze the private sector has been inefficient and ineffective, with capital deployment that is not strategic, too small, too inflexible, and too fragmented.

In addition to the data trends, the report identifies several challenges and recommendations to increasing blended climate transaction as well as expert commentary from Swiss Re, the Nature Conservancy, Shell Foundation, and much more.

Analysis in the report draws from Convergence’s Historical Deals Database, the largest and most detailed database of historical blended finance transactions, comprised of 759 blended finance transactions (359 of which are climate-focused) with an aggregate value of $169.5 billion across all transactions ($108 billion climate-focused).


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, Convergence

Tel.: +1 647-573-5993

[email protected]