THK Platform for Blended Finance
Workstreams 2021
Kick-off meeting for each of the four workstreams were held in May and June 2021. The work of the various groups will continue until the end of the year and into 2022.
“Transparency and Impact”
Background
Transparency and impact are two key aspects of blended finance. On one side measuring and managing the impact of blended finance is crucial to show the real added value of the approach. On the other side, greater transparency on development results is necessary to lay the foundation for more informed decision making, more accountability and better allocation of resources, including information to assess the development impact of and learnings from DFI investments.
Based on this premises, the transparency and impact workstream will focus on key issue areas that are pertinent to THK members in terms of transparency and impact. More specifically, the first topics that will be addressed are commercial confidentiality – which is often cited as a reason why more granular disclosure of investment information can’t be provide – and the way in which development finance providers can better involve stakeholders in the definition, monitoring and disclosure of development impact results.
Key questions to be addressed:
- What are some practical solutions employed by THK community to improve transparency and impact of blended finance?
- What are the recent developments, research, and reports related to impact and transparency?
Work Program Proposed
WS1 | Roundtable 1
Balancing commercial confidentiality with granular impact reporting
OUTCOME: briefing note outlining practical steps to build a blended finance strategy as part of a country financing roadmap.
WS1 | Roundtable 2
Stakeholder-centric approaches to measuring and managing the impact of investments
What are the latest developments and research on the impact of blended finance? How do organisations deploying blended finance manage and measure their impacts?
OUTCOME: briefing note outlining latest research and developments on impact.
Potential topics for 2022 include
- ESG and accountability to communities – how transparent are DFIs when it comes to local accountability?
- Accounting for gender impacts: the 2X challenge and the risks of impact and gender washing
- The impacts of climate finance
Co-leads
Gary Forster (Publish What You Fund) and Priscilla Boiardi (OECD)
If you want to contribute to this working group, please email the co-Chairs.
“Blended Finance Financing Strategies
in Developing Countries
post-Covid-19”
Background
Financing growth and achieving the SDGs requires a surge in financing and investments that will in turn require a new strategy by governments. This strategy demands not only systemic reforms on a wide range of areas (from public administration to good governance at the national and sub-regional governments) but also, and especially, the innovative ways of financing. Blended finance can accelerate and expand capital available that is needed to achieve the SDGs and finance longer-term investments. However, many developing countries currently lack a framework for how to increase the use of blended finance to help finance the SDGs.
In parallel, the COVID-19 pandemic has significantly altered the funding landscape, particularly in developing countries, and heightened the challenges of financing regional development by not only introducing new risks but also worsening existing vulnerabilities. Developing countries have very limited scope and ability to adequately respond to the attendant economic consequences of COVID-19 and other pre-existing structural economic fault-lines, and are facing a liquidity crisis which in turn has severely restricted the maneuverability of its governments, placing them in a fiscal straitjacket. With the considerable funding shortfalls and constraints in developing countries, the role of DFIs and NDBs has become even more critical in propelling sustainable economic development – concurrent pressures on their cost of capital and balance sheets notwithstanding. With the considerable funding shortfalls and constraints in developing countries, the role of DFIs and NDBs has become even more critical in propelling sustainable economic development – concurrent pressures on their cost of capital and balance sheets notwithstanding.
Key questions to be addressed
- How to set up a Blended Finance Framework as part of a country financing strategy? When and how should blended finance be used? Who are the actors to consider, what are their existing and necessary capacities, and what role should they play? What is the necessary enabling environment/investment climate to encourage the use of blended finance?
- What is national development bank’s (NDBs) role in building back better after COVID through blended finance approaches? How to foster partnerships and further collaboration on blended finance amongst national development banks?
Work Program Proposed
WS2 | Roundtable 1
How to set up a Blended Finance Framework as part of a country financing strategy?
OUTCOME: briefing note outlining practical steps to build a blended finance strategy as part of a country financing roadmap.
WS2 | Roundtable 2
How to foster partnerships and further collaboration on blended finance amongst national development banks?
OUTCOME: briefing note outlining key steps to build partnerships, including on climate amongst national development banks across developing and emerging economies.
Co-leads
Laura Sennet (UNCDF), San Bilal (ECDPM) and Teni Ntoi (DBSA)
If you want to contribute to this working group, please email the co-Chairs.
“Green, Social and Sustainability (GSS)
Bonds and Biodiversity”
Background
The GSS Bonds and Sustainability Work Stream will focus on fostering discussions around the creation of a blueprint for supporting developing countries’ issuance of sustainability bonds. Such blueprint will be developed taking into consideration the challenges of developing countries in issuing products that are suitable for meeting investors’ risk appetite while not incurring into sustainability-washing.
The GSS Bonds and Sustainability Workstream aims to engage a wide range of stakeholders, including developing countries, DFIs and MDBs and the private sector.
Key questions to be addressed
- Can we develop a financial product for climate that allows to invest in climate mitigation (and not only adaptation), having long-term effects? What would that product look like?
- What is the role of DFIs and MDBs in stimulating more issuance of GSS bonds at the local level, in local currency? How can we avoid that they crowd-out the private sector?
- What is the impact of GSS Bonds? Is it possible to create a “THK Standard” for GSS Bonds issuance in developing countries?
Work Program Proposed
WS3 | Roundtable
How to create a blueprint for sustainability bonds in developing countries
OUTCOME: briefing note outlining the key lessons learned from MDBs and areas for potential further collaboration to stimulate GSS markets in developing countries.
Co-leads
Valeria Ramundo Orlando (Greensquare Ventures), San Bilal (ECDPM), Lasse Moller (Danish MoFA), Nancy Lee (CGDev) and Stanislaus Deh (Stanbic Banc Ghana)
If you want to contribute to this working group, please email the co-Chairs.