Enabling Capital To Bridge A Trillion Dollar SDG Gap

Private sector finance is not structured to support sustainable development at the scale and speed required to achieve the SDGs and the stated goals of the Paris Agreement. The financing gap to achieve the SDGs in developing countries alone is estimated to be circa 3 trillion USD p/a. Blended finance initiatives seek to align both commercial and non-commercial funding sources in a coordinated pattern of investment behaviours, allowing for a more inclusive and holistic approach to sustainable development. However, a key issue remains that is almost universal – the reluctance by investor participants to accept risk. Credit Risk Mitigation tools that typically support lending and associated investments into large-scale infrastructure projects or emerging technologies required to enable the transition, are simply not effective measures for bridging this trillion dollar financing gap. When Blended Finance initiatives and Credit Risk Mitigation tools cannot support complex transactions, an alternative approach is required.