{"id":10919,"date":"2023-06-27T09:58:31","date_gmt":"2023-06-27T09:58:31","guid":{"rendered":"https:\/\/lsfi.lu\/?p=10919"},"modified":"2023-06-27T09:58:31","modified_gmt":"2023-06-27T09:58:31","slug":"interview-with-chris-clubb-managing-director-at-convergence","status":"publish","type":"post","link":"https:\/\/lsfi.lu\/fr\/interview-with-chris-clubb-managing-director-at-convergence\/","title":{"rendered":"Interview with Chris Clubb, Managing Director at Convergence"},"content":{"rendered":"

Within the sustainable finance ecosystem, blended finance has been and is fundamental in the transition towards sustainability. It consists of using catalytic capital from public or philanthropic sources to increase private sector investment in developing countries to realise the Sustainable Development Goals (SDGs).<\/strong>
\nHowever, to achieve these SDGs, more and more capital is needed. According to Convergence\u2019s 2022 annual blended finance report, the gap between official development flows and the funding necessary to achieve the SDGs is at $2.5 trillion and is constantly growing.<\/strong>
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\nThis month, we have discussed with Chris Clubb, Managing Director at Convergence. He explained what Convergence\u2019s mission is, why blended finance is relevant, and what we can do to scale up\u00a0blended finance investments.<\/strong><\/p>\n

(Luxembourg Sustainable Finance Initiative) What\u2019s Convergence’s mission, and why create a network dedicated to blended finance?<\/span><\/strong><\/p>\n

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(Chris Clubb) Convergence, the global network for blended finance, was established in 2015 \u2013 the same year the United Nations members launched the SDGs and Paris Agreement, with the goal of increasing the total amount of investment in Emerging Markets and Developing Economies (EMDEs) in order to achieve the Sustainable Development Goals and the Paris Agreement.
\nAs we know, blended finance refers to the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development. It mobilizes private investment to good quality projects and borrowers located in countries with medium-high country risk and currency risk. Therefore, a blended finance transaction combines funding from organizations pursuing development impact and climate impact and private sector investment to achieve investors\u2019 investment objectives, e.g., fiduciary and regulatory compliant investment, with market-equivalent risk-adjusted returns, with strong \u201cpurpose\u201d investment objectives like impact investment and climate\/net-zero investment.
\nThe most significant underlying investment challenges in EMDEs are medium-high country risk (e.g., 76% of EMDEs are rated \u201cB\u201d or lower) and medium-high currency risk (e.g., medium deprecation risk). These investment difficulties are addressed by blended finance solutions which also produce investment opportunities that fit within investors\u2019 fiduciary and regulatory risk limits and have market-equivalent risk-adjusted returns.<\/span><\/p>\n<\/div>\n

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Convergence, the leading global expert organization on blended finance, co-develops with partners the blended finance market\/ecosystem and supports the successful fundraising of blended finance transactions. We generate blended finance data, intelligence, and deal flow to increase private-sector investment in EMDEs; we also create a network of public, private, and philanthropic members working in blended finance addressing important challenges in the field of investment in EMDEs. For this reason, Convergence provides a platform for collaboration, knowledge sharing, and coordination among diverse stakeholders, fosters innovation, mobilizes capital, mitigates risks, advocates for supportive policies, and monitors the impact of blended finance initiatives.<\/span><\/p>\n

(LSFI) What makes blended finance so distinctive, and what are its main characteristics?<\/span><\/strong><\/p>\n

(CC) Blended finance is a structuring approach that allows organizations with different objectives to invest alongside each other while each achieving their own objectives (e.g., financial returns and\/or development impact and\/or climate impact). Because all blended finance transactions have one or more organizations allocating their funding to achieve development impact and\/or climate impact, all investment assets created by blended finance have strong alignment with investment theses like impact investment, ESG investment, climate investment and green finance.
\nThe main focus of blended finance is, in fact, to catalyze private investment into EMDEs to achieve the SDGs and Paris Agreement.<\/p>\n

We could say that the three key signature markings of a good-practice blended finance transaction are the following:<\/p>\n