With the intensification of the effects of climate crisis, such as the environmental tragedy in Rio Grande do Sul, or the historic drought that hit the Amazon in 2023, debates on how companies can be allies in transformation have gained strength. In this catastrophic scenario, the need for innovative and resilient approaches to face these challenges becomes even more relevant. This is where the so-called blended finance.
What is it blended finance?
Also known as hybrid finance or mixed financing, is an investment strategy that combines different types of capital, with independent return objectives and different risk tolerances, which can be, for example: public + private capital; two forms of private capital; philanthropic + public capital… —. Its objective is to finance initiatives that generate a positive social, environmental or economic development impact. This modality stands out mainly for contributing to the achievement of SDGs (UN Sustainable Development Goals), established by the UN, to comply with the Agenda 2030.
Why should companies align themselves with the SDGs?
You SDGs represent an ambitious global challenge, aiming resolve a number of crucial issues, ranging from climate change until the eradication of poverty and hunger. In Brazil, with so many problems to be solved, the initiatives of blended finance find fertile ground. This is because the ESG It has long since ceased to be an option, to become a decisive criterion for many investors and consumers. But is ESG without generating a positive impact enough? No!
In 2019, during the World Economic Forum, the UN released an estimate indicating that the investments needed to achieve the SDGs were in the range of US$ 5 to US$ 7 trillion annually, which amounts to just 1% to 2% of total global financial assets. At this rate, experts point out that agenda 2030 sustainable development will only be fulfilled in 2086. But we need solutions now! Therefore, it is essential that companies create rapid solutions to resolve and mitigate present and future challenges.
How can companies contribute to the 2030 Agenda?
A promising solution is the blended finance. To finance the sustainable development and financial solutions in line with the UN 2030 agenda, these structures adopt the strategic use of catalytic capital to mitigate the risk of impact projects and attract commercial capital. In this way, each actor contributes the type of capital they have/can and receives what is important to them – be it impact, financial return or a mix of both.
But the main challenge in directing these investments to the SDGs is to balance the relationship between risk and return in order to attract private capital and maximize impact.
To this end, with over 15 years of experience, Sitawi developed a innovative approach that, from the mixed financing, promotes the development of organizations impact first, enables attractive financial returns for investors and helps companies to align themselves with the ESG agenda, with proven impact.
Given the urgency of solving the challenges we face, it is essential that companies engage in innovative and effective initiatives to mitigate problems and build a more sustainable future. Want to know how your company can promote positive impact through blended finance? Contact us! We are ready to offer attractive solutions that align with your goals and values.
