International Research Seminar in Finance: Blended Finance

On 7 April 2025, Professor Caroline Flamer from the Columbia Business School, USA, presented her paper on “Blended Finance” co-authored by  Thomas Giroux and Geoffrey M. Heal. Blended finance is a funding approach that combines public or charitable money with private investments to help pay for projects that protect the environment and benefit society. Many projects that help tackle climate change, biodiversity loss, or social inequality don’t make enough profit to compensate for risks that are embedded in these projects to attract private investors. By providing public money at favourable rates or by sharing risks, development finance institutions (like the World Bank’s International Finance Corporation) help make these projects financially viable for private investors.

Professor Flamer argued that blended finance deals are especially helpful for projects with big sustainability benefits, like renewable energy, sustainable agriculture, and nature-based solutions, because more public support (subsidies or guarantees) is given to projects with higher environmental and social impacts. These projects often take place in developing countries where political and economic risks are higher. Without blended finance, many of these projects—such as climate-friendly infrastructure or sustainable farming—would likely not happen.

In short, blended finance helps bridge the funding gap for global goals like fighting climate change, protecting biodiversity, and improving livelihoods, especially in poorer regions. By doing so, it unlocks much-needed private money to scale up green solutions, reduce carbon emissions, and support communities that are most affected by environmental damage.