The joint paper by BCG and KfW offers a comprehensive overview of how development finance institutions (DFIs) are innovating to align with their ambitious climate finance objectives. It examines key areas of transformation (including business and operational models, as well as the enabling regulatory and policy environment) and highlights the role that development and promotional banks worldwide can play in addressing the significant climate financing gap.
The paper notes that while blended finance instruments like loan guarantees and first-loss provisions have traditionally been used in highly bespoke deals, leading DFIs are now expanding their use within originate-to-share structures such as syndicated loans and asset-backed securities. This shift not only enhances the scalability of these tools but also supports the broader goal of increasing investment volumes, particularly as originate-to-distribute approaches become more standardized and replicable.
