Report Distils Lessons from over 40 Blended Finance Funds to Help Financial Institutions More Efficiently Structure Deals, Deploy Catalytic Capital, and Mobilize Private Investment at Scale
LONDON—The Glasgow Financial Alliance for Net Zero (GFANZ), British International Investment (BII), and Boston Consulting Group (BCG) today released Scaling Blended Finance II: Optimising Catalytic Capital in Blended Finance Funds, a new analysis identifying how financial institutions can structure blended finance funds to more effectively mobilize private capital for climate and development in emerging markets and developing economies (EMDEs).
Launched at London Climate Action Week and building on the first edition, published in 2025, the report gives investors a practical framework for assessing when, what, and how much concessional capital is needed to attract commercial investors. Based on over 40 real-world examples examined across markets and sectors, the analysis can help ensure scarce concessional capital is used as efficiently as possible to maximize the private investment it mobilizes.
Blended finance draws private investment into climate, infrastructure, and development projects in EMDEs by using concessional or catalytic resources to mitigate risk that private investors cannot absorb without support. The field has made real progress, including earlier work that began to codify structures and scorecards that actually work. But building a blended fund remains difficult, time-consuming, and costly for all parties, limiting its institutional appeal. Concessional capital providers are often unfamiliar with the constraints faced by commercial investors, who in turn are often unaware of proven ways to structure blended finance funds or to use concessional capital efficiently.
Scaling Blended Finance II addresses this gap by distilling practical lessons that help identify investor constraints, select the most appropriate catalytic instruments, and determine the level of concessionality needed to unlock commercial capital. By setting out approaches to fund design and catalytic capital deployment, the report will help fund managers, including those in emerging economies, structure funds faster, shorten negotiation timelines, and develop investment vehicles that can be easily replicated, grown, and adapted across markets, including local fund managers in emerging economies.
“It’s encouraging to see a growing number of blended finance funds successfully mobilize commercial capital into clean energy, industry, and infrastructure. But further scaling this work will require public and private sector institutions to build on what is already working, partner more effectively, and move with greater urgency,” said Mary Schapiro, Vice Chair, Glasgow Financial Alliance for Net Zero. “By distilling the lessons learned from over 40 funds, Scaling Blended Finance II will help market participants–especially those in emerging markets and developing economies–more effectively scale blended finance models that work.”
“Mobilizing private capital at scale is how we close the investment gap in emerging markets, and concessional capital is one of the levers that makes it possible,” said Leslie Maasdorp, CEO, British International Investment. “This framework gives development finance institutions and their commercial partners a practical way to structure that capital so it draws in the greatest possible volume of private investment.”
“Catalytic capital is scarce, and it does one of two jobs: take pioneering risk in nascent markets or mobilize private investment for impact at scale,” said Greg Fischer, Partner, Sustainable Investing and Social Impact, BCG. “Doing either well means understanding the specific constraints that keep investors out—risk, return, liquidity, or volatility—and committing only enough concessional capital to relieve them. Because these constraints recur, the structures that address them can be reused rather than reinvented; the more accurately the instrument and the amount are matched to these constraints, the more private capital each concessional dollar mobilizes and the more impact we deliver at scale.”
The report profiles five major commercial investor groups—insurers, pension funds, banks, sovereign wealth funds, and family offices—that manage, in aggregate, more than $280 trillion in assets. Across these groups, it identifies frequently cited constraints that limit investors’ ability to allocate capital to EMDE opportunities in four dimensions: downside risk, return requirements, cashflow and liquidity, and performance volatility. It then maps those constraints to concessional tools–such as subordinated capital, preferential repayments, liquidity facilities, and hedging mechanisms–that can be embedded within a fund structure and describes common approaches to scaling these tools effectively.
Read Scaling Blended Finance II: Optimising Catalytic Capital in Blended Finance Funds here.
Media Contacts:
GFANZ: press@gfanzero.com
BII: press@bii.co.uk
BCG: gregoire.eric@bcg.com
About GFANZ
The Glasgow Financial Alliance for Net Zero (GFANZ) is an independent, private-sector-led initiative focused on mobilising capital and removing barriers to investment in the global transition. GFANZ brings together financial sector firms — including banks, insurers, asset owners, asset managers, and service providers — and is globally active through Regional Networks in Africa, Asia Pacific, and Latin America & Caribbean, as well as Chapters in Brazil, the Caribbean, Japan, and Hong Kong.
About BII
British International Investment is the UK’s development finance institution and impact investor. The organisation invests in businesses in developing countries to improve people’s lives and help protect the planet. BII’s work targets the underlying causes of poverty and the climate crisis, helping countries break free from aid dependency for good. Between 2026-2031, at least 40 per cent of BII’s total new commitments by value will be in climate finance. BII is also a founding member of the 2X Challenge which has raised over $33.6 billion to empower women’s economic development. The company has investments in over 1,600 businesses across 66 countries and total net assets of £9.87 billion. For more information, visit: www.bii.co.uk | watch here. Follow British International Investment on LinkedIn, Bluesky and X.