WEF elite blended finance to raise $1tr for SDG

LONDON: An additional $1 trillion could be found for the United Nation's (UN) sustainable development goals if development banks focus on making investments digestible for private pools of capital. That's according to a report by the Blended Finance Taskforce released at the annual World Economic Forum (WEF) conference in Davos, Switzerland. The mix of public and private capital is dubbed "blended finance." "Action is needed end-to-end across the whole investment system to scale up the use of blended finance if we are serious about closing the funding gap for the Sustainable Development Goals," said Mark Malloch-Brown, chair of the Business & Sustainable Development Commission, one of the authors of the report.

The sustainable development goals are 17 objectives outlined in 2015 by the United Nations. They span a wide range of issues from clean energy and climate change to hunger to health and are meant to collectively reduce poverty and protect the environment. There is currently a funding gap estimated to be about $2 trillion to $3 trillion for these goals. It has been estimated that public sources could provide half, but the remainder would have to be raised from the private investors.

Blended finance already exists and is estimated to be a $50 billion market, according to the report. Development banks already work with private investors in the renewable energy industry. One recent example was when institutions such as Germany's KfW and Inter-American Development Bank loaned money with a group of commercial banks including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Banking Corp. to finance two wind farms in Chile.

This kind of collaboration needs to be significantly increased, according to Jeremy Oppenheim, programme director of the Business & Sustainable Development Commission and founder of SYSTEMIQ, an impact-investment firm.