The UN Global Compact has launched a new guide, Business-Led Blended Finance: A Practical Playbook, to enable companies take a more active role in blended finance.
Blended finance, which involves the strategic use of public or philanthropic capital to improve the risk-return profile of investments and unlock private capital in underserved markets, has seen significant growth over the past five years, growing from $14 billion in annual flows in 2020 to $24 billion in 2024.
“The private sector has a unique and largely untapped role to play in blended finance, but as an architect of deals that drive systemic impact across industries and markets,” commented Sanda Ojiambo, CEO and executive director of the UN Global Compact. “This playbook is the operational tool that enables finance leaders to step into that role.
“At a time when public balance sheets are under pressure and the SDG financing gap stands at $4 trillion annually, we cannot afford to leave corporate leadership on the sidelines. Nor can we afford financing models that are disconnected from country priorities. This playbook helps align private capital with nationally driven pathways to resilience and growth.”
Practical guidance
As UN Global Compact noted, while the blended finance market has grown in recent years, most guidance has to date been aimed at governments, development finance institutions and multilateral development banks, rather than the business sector.
It added that the new playbook ‘changes that’, including practical guidance for firms seeking to develop blended finance projects, and featuring interviews with companies that have successfully completed blended finance transactions.
“Blended finance has the potential to become one of the most powerful tools in sustainable finance, particularly in supporting capital-intensive decarbonisation and transition initiatives,” added Koushik Chatterjee, executive director and CFO of Tata Steel and co-chair of the Advisory Board for the UN Global Compact CFO Coalition for the SDGs.
“Our experience demonstrates that large-scale industrial transformation is only possible when governments, business and financial institutions work in close partnership to align long-term economic resilience with sustainability objectives. This playbook is important because it gives companies practical guidance on how to engage earlier, structure transactions more effectively and help shape projects that deliver both commercial viability and measurable impact.”
Case studies
Case studies featured in the playbook include FCC Construcción’s work on coordinating 13 organisations across five countries to fast-track digital infrastructure; Safaricom’s expansion efforts in Ethiopia, supported by international financial institutions; and a partnership between Tata Steel and the UK Government to decarbonise steel manufacturing at Port Talbot, Wales.
The playbook also features a blended finance risk management and capital structuring toolkit, alongside guidance on due diligence and project preparation.
“This playbook is an important step forward because it helps translate blended finance from a niche financing concept into a practical mechanism that businesses can use to support long-term growth, resilience and sustainability,” added Mahar Al-Haffar, CFO of Cemex and co-chair of the Advisory Board for the UN Global Compact CFO Coalition for the SDGs. Read more here.
