Blending Donor Funds for Climate-Smart Investments
The Blended Climate Finance (BCF) team manages concessionary donor funds to be deployed for investment and advisory projects. These funds aim to address climate change by catalyzing private sector investments and advisory projects that would not otherwise happen under current market conditions. Blended Climate Finance can take the form of a variety of products and structures including risk sharing products, lower interest rates, longer tenors, subordinated rank in loans, or lower returns for equity investments.
BCF manages approximately $700 million in funds from the Climate Investment Funds, the Global Environment Facility, and the Canada Climate Change Program. These funds are often matched by IFC resources and can be deployed as softer loans, guarantees, equity, and grants for projects that would generally not be taken up by the private sector alone due to high project risks, technology costs, or technology risk. Blended climate finance enables projects to take place over time, demonstrating their viability and paving the way for financing on fully commercial terms. Concessional funds also support standard-setting innovations and advisory services to build local capacity within firms and governments, and to develop new financial products allowing firms to identify opportunities to reduce GHG impacts and countries to adopt more favorable regulatory and business environments for renewable energy, energy efficiency, and cleaner technologies.