Four Things You Should Know About Blended Finance for Climate


Andrew Apampa, CFA


4 min read

During COP26, Convergence and the UK’s Foreign, Commonwealth & Development Office (FCDO), published the Blended Finance for Climate Report, exploring the successes and the gaps in mobilizing private capital to climate solutions. The report includes insight and feedback from our engagement with over 20 donor organizations, MDBs, DFIs, 100+ investors (e.g., asset owners), asset managers, and project sponsors on blended finance solutions for climate objectives.

Blended finance and climate are inextricably linked. Overall, our database shows that climate finance represents a sizeable proportion of the blended finance market: climate-related transactions account for about 50% of all blended transactions in our database (340 transactions), and 66% of total capital flows ($105 billion).

Below are some key takeaways from the report:

1. Climate adaptation has remained largely overlooked and underinvested compared to climate mitigation

According to the Climate Policy Initiative, global adaptation finance increased to $46 billion in 2019-20 from $30 billion in 2017-18, but is still nowhere near meeting the estimated needs of $180 billion per year through to 2030. In contrast, financing for climate change mitigation reached $571 billion in 2019-20. Similarly, most climate blended finance deals have targeted climate mitigation; specifically, renewable energy (43% of climate transactions) and energy efficiency (20%). Meanwhile, climate adaptation has not been highly targeted by blended transactions, with sub-sectors like sustainable agriculture being targeted by only 8% of climate transactions.

However, there are promising signs that blended finance is having more success in mobilizing capital towards adaptation. Convergence has observed uptake in several adaptation finance sub-sectors since 2018, such as in climate-smart agriculture and land and marine resource management. For example, one of the earliest blended solutions supported by Convergence’s Design Funding program, the $364 million Blue Bond for Ocean Conservation, recently reached a financial close. Backed by the Nature Conservancy, Credit Suisse, the Government of Belize, and the U.S. International Development Finance Corporation (DFC), the bond will allocate capital towards debt sustainability and marine conservation for Belize.

2. Climate transactions tend to be structured as projects and funds, and are typically larger in size, indicating the scalability of the sector.

Blended climate transactions have often been structured as projects (34% of climate transactions). This is largely due to the prominence of energy-focused climate transactions; energy is one of the few sectors where blended solutions have most commonly been structured at the project level, with 55% of all energy transactions having been structured as projects. Meanwhile, funds are the second most common type of structure amongst climate-focused transactions (33% of climate transactions). Convergence argues that collective investment vehicles like funds represent the kind of standardized and familiar structure that can mobilize private investors at scale. Examples of large-scale blended climate funds include the $850 million Climate Investor One, which supports renewable energy projects in developing markets, and Climate Investor Two, which recently announced a $675 million first close, and will  focus on water, sanitation, and oceans infrastructure.

Finally, blended climate transactions have typically been larger compared to the overall market, with the median blended finance transaction for climate transactions being $80 million, compared to $57 million across the overall market. Most (69%) blended renewable energy transactions have been larger than $50 million, with 51% being at least $100 million in size.

3. Climate and renewable energy-focused institutions are staring to incorporate gender-lens strategies into their investment processes

Women are disproportionately impacted by climate change: they are over-represented in the informal sector; have less access to finance and education; and are more exposed to gender-based violence in the aftermath of climate-risk events. With gender equality coming to the fore in blended finance as a whole, institutions focused on climate change and renewable energy like Green Climate Fund (6 concessional commitments in the gender-climate nexus) and Shell Foundation (6) have prioritized gender considerations in their investment processes. In what remains an emerging area, Convergence will also be supporting innovative blended solutions at the nexus of climate change and gender equality through early-stage grant funding, recently launching the $4 million Gender-Responsive Climate Finance Design Funding Window alongside the Government of Canada. Overall, our database records 63 climate transactions that also address SDG 5 (Gender Equality), representing aggregate financing of $6 billion.

4. Donors can mobilize more capital at scale to address climate change by allocating budgets for private investment mobilization towards the SDGs and Paris Agreement objectives.

To achieve scale, the donor community must design and implement a strategy to prioritize private sector mobilization, and allocate a known amount of development funds on an annual basis to blended finance transactions that will deliver on that objective. With only around 2-3% of official development assistance (ODA) currently being allocated annually by the donor community towards private sector mobilization, and risk averse MDBs and DFIs tending to use concessional financing to mobilize their own capital, there is a lot of space for private investment mobilization to be boosted by establishing a clear action plan within the donor community.


A. Environmental Stewardship
To protect the environment, we organize programmes like mangrove nursery and Reforestation, Coastal and River Clean-Up, Community Based Environmental Solid Waste Management, Environmental IEC Campaign and Eco-Academy

B. Food Security and Sustainable Livelihood
To ensure a sustainable livelihood for the community, eco-tourism include Buhatan River Cruise Visitor Center Buhatan River Mangrove Boardwalk are run by the community. Others include Organic Vegetable and Root crops Farming, Vegetable and Root crops Chips and by-products Processing and establishing a Zero waste store.

C. Empowered Communities
To empower the community, we provide product and Agri-Enterprise Development Training, Immersion and Learnings Exchange Program, Earth Warrior Training and Community Based Social Entrepreneurship Training


Andrew Apampa, CFA

Senior Associate, Content

As a Senior Associate, Andrew is responsible for developing Convergence’s data and research activities, including building out Convergence’s database of historical blended finance transactions and developing blended finance trends analysis and benchmarks. Prior to joining Convergence, Andrew worked at the African Private Equity & Venture Capital Association (AVCA) as a Research Associate. While there, Andrew inaugurated the Special Report series, publishing in-depth studies on thematic issues within African private equity, such as political and currency risk in African PE, and the rise of the private credit industry in Africa. Prior to joining AVCA, Andrew worked at HSBC as an Emerging Markets Equity Strategist, where he published reports focused on investing in frontier equity markets. During his time at HSBC, he also worked on the European Equity Strategy team and the Global Research Marketing team. Prior to his time at HSBC, Andrew was at the University of Cambridge, where he completed his master’s thesis on protest and mobilization in Sub-Saharan Africa. He is a CFA charterholder.

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