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Blog
06 Dec 22

CEO Letter - Joan Larrea

CEO Letter - Joan Larrea

We live in a tumultuous time. The war in Ukraine continues to rage, leading to mounting death and destruction within the country and impacting food systems globally, all while the effects of COVID-19 continue to reverberate and extreme weather tied to climate change pummel every continent. This has led to rampant inflation, which has tightened pocketbooks and affected donor budgets. As we face these mounting global challenges, the importance of blended finance has never been clearer, more than ever we will need to activate the full array of capital if we hope to overcome them.

It was a big year for blended finance as well as Convergence. Most recently, at COP27, dubbed “the implementation COP,” numerous speakers from investment houses, philanthropies, and governments stated plainly that blended finance was going to be key to galvanize the investment needed in developing economies to deliver on adaptation and mitigation goals alike. We launched our Action Plan for Climate and SDG Investment Mobilization with USAID at COP27, which was developed in consultation with over 100 public, philanthropic, and private stakeholders, and provides a concrete blueprint for increasing climate and SDG investment. We were also one of the lead institutions contributing to the Sharm El-Sheikh Guidebook for Just Financing, a key document on climate finance emerging from COP27 under the Egyptian presidency.

As indicated above, one of the largest trends we saw in blended finance in 2022 was a wave of interest in blended finance for climate, from John Kerry calling on MDBs to deploy more funds for climate through blended finance structures, to the Net-Zero Asset Owners Alliance’s call on policy makers to facilitate the scaling of blended finance structures to fund climate solutions. Convergence is working with the Alliance to implement the solutions they highlighted. At Convergence we see climate as the greatest existential threat, crosscutting most of the SDGs, and we believe that blended finance has a role to play - over half of the transactions in our Historical Deals Database are climate-focused. So, this year we published our annual State of Blended Finance report with a focus on climate, where we found that despite increased rhetoric there was a 60% decline in aggregate financing levels for climate in recent years.

Findings like these bring us back to reality. Talk is not enough; we need to see concrete solutions and real capital start to flow. To accelerate the blended finance market, this year Convergence launched or initiated a number of funding opportunities that support the design, launch, and expansion of blended finance solutions. We launched the SDG Impact Finance Initiative Design Funding Window funded by UBS Optimus Foundation and State Secretariat for Economic Affairs (SECO), we received an anchor commitment from the Monetary Authority of Singapore for our upcoming Asia Climate Solutions Design Grant focused on high-impact climate financing solutions in emerging markets in Asia, and we are on track to launch the Catalytic Climate Finance Facility in 2023, a major partnership with the Climate Policy Initiative to accelerate early-stage sustainable climate finance.

We've come a long way. The conversation has moved beyond whether blended finance should be part of the solution to the global challenges we face, to determining how it can be best deployed. To date, we have recorded over 750 blended finance transactions, representing a total deal volume of over $170 billion. This is not insignificant, but to bend the arc of capital so that it starts flowing at scale into places that need it most will take much more. We are at a crossroads; the opportunity for blended finance is immense, as are the challenges it seeks to address. In the year ahead Convergence, along with our broad network of members and partners, will be building on our wins, calling out solutions to the obstacles we see, and charting a faster and better way forward.

Joan Larrea Signature

Joan M. Larrea CEO, Convergence Blended Finance

About the Author
Joan M. Larrea

Joan M. Larrea is an expert in catalyzing investment in places that need it most and brings with her close to 30 years of experience in emerging markets investing. Joan has led Convergence since its inception, establishing it as the leading independent authority on blended finance. She serves on the Global Environment Facility Advisory Group for Non-Grant Instruments, the Advisory Council for FinDev Canada, and the Advisory Council for the U.S. Millennium Challenge Corporation. Prior to joining Convergence, she led the U.S. Overseas Private Investment Corporation's (OPIC) efforts to partner with philanthropic and private investors to increase capital flows to OPIC's target markets. While there, she also directed a pilot program to finance smaller, high impact, and innovative funds, many of which drew on blended finance structures. Previously, Joan served as a managing director on the emerging markets team at Global Environment Fund, an asset manager dedicated to the energy, environmental, and natural resource sectors. She began her career as an investment officer at International Finance Corporation, the private sector arm of the World Bank Group, where she concluded pioneering transactions in a variety of infrastructure and manufacturing sectors across Asia.