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Blended finance: how investors can do good without taking too big a risk 

IbyIMD+ Published 17 January 2024 in Finance • 10 min read • Audio availableAudio available

Blended finance has the power to unleash the capital needed to drive progress toward the UN Sustainable Development Goals. Here’s how the world of finance can manage different investor risk and return profiles to fund impact projects.

More than two billion people – or a quarter of the global population – live in fragile contexts. Through the UN Sustainable Development Goals (SDGs) and other frameworks, the global community is committed to advancing development and assisting our fellow human beings in humanitarian need. 

To help achieve this, official development assistance (ODA) totaled $185.9bn in 2021.  This is a lot of money, but not nearly enough to resource sustainable development and humanitarian assistance worldwide. In fact, if all of this capital went to the world’s least resilient countries only (which it does not), today’s development assistance would be just over $90 a year per person. That is roughly the cost of the world’s cheapest smartphone plus a solar cooker. To finance the attainment of the SDGs, we are short anywhere between $2.5tn and $4.2tn per year. Moreover, this gap is bound to widen: post-COVID-19 investments in the economy and society, climate change adaptation, and…

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