The Glasgow Financial Alliance for Net Zero, together with British International Investment and Boston Consulting Group, has released a report setting out how blended finance funds can be structured more effectively to mobilize private capital for climate and development projects in emerging markets and developing economies. The analysis, based on more than 40 funds across markets and sectors, provides a practical framework for assessing when concessional capital is needed, which instruments to use and how much support is required to attract commercial investors while using scarce catalytic capital more efficiently. The report focuses on recurring barriers that make blended finance funds difficult and costly to establish, including gaps between the needs of concessional capital providers and the constraints faced by commercial investors. It profiles five investor groups, insurers, pension funds, banks, sovereign wealth funds and family offices, which collectively manage more than USD 280 trillion in assets, and groups their main constraints into downside risk, return requirements, cashflow and liquidity, and performance volatility. It then links those constraints to tools such as subordinated capital, preferential repayments, liquidity facilities and hedging mechanisms, with the aim of helping fund managers shorten negotiations, build more replicable structures and scale vehicles across markets.

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