Blended finance platform to back sustainable projects
View(s):Three major Sri Lankan authorities have banded together to form a blended finance platform where donor assistance is combined with additional private and public financing to leverage funds to back sustainable projects, officials said.
The Sri Lankan Bankers’ Association (SLBA) under its Stainable Banking Initiative (SBI) together with the Sustainable Development Council, and the Ceylon Chamber of Commerce is exploring this concept, officials said. “The model we are working on is having a pipeline of growth phase companies to fund projects and to bring in donor agencies, impact investors, etc and make a matching platform between these two. We aim to do a feasibility study on this,” an official source told the Business Times on Thursday. He said, mixing different forms of capital in support of development is emerging as an important solution to help raise resources for the Sustainable Development Goals in developing countries.
A senior banker said that blended finance will help to get capital to where it is needed most. This will also help public, private, and non-profit sectors collaborate on projects that would otherwise be very difficult to get off the ground, he added.
Blended finance is a mechanism that allows investors with varying risk appetites to collectively invest in the same project, he said. This approach enables those investors who have a higher risk tolerance to act as a protective layer for others who prefer a lower-risk investment strategy but are still interested in supporting high-impact projects.
The SBI was launched by the Sri Lanka Banks’ Association (SLBA) in July 2015. The main objective of this initiative is to promote responsible banking practices that can contribute to sustainable economic growth in Sri Lanka. This initiative aligns with the increasing number of similar initiatives in the global financial sector, which recognise the role that banks have in achieving the goals of international and national policies addressing climate change, promoting green growth, and fostering more inclusive economies.
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