Mixed financing facilitates sustainable investments


Vaduz – Private investors, philanthropists and public donors can work together to strengthen the financing of the 17 UN Sustainable Development Goals. This was demonstrated at an event organized by the Liechtenstein Bankers Association (LBA) on “blended finance”. The LBV is involved in the FC4S network for this purpose.

The UN development agency UNDP wants to mobilize 1 trillion dollars a year in public and private funds to achieve the 17 UN Sustainable Development Goals (SDGs). But the need is much greater, said Kennedy Mmasi, SDG Investment Lead of the UNDP Financial Centers for Sustainability Network (FC4S) at an event organized by the Liechtenstein Bankers Association (LBA) on November 21. The financing gap has already risen to 3.7 trillion dollars.

FC4S, a global network of sustainable financial centers, aims to facilitate investments in sustainable projects. The aim of the SDG Pipeline program is to create concrete investment opportunities for investors. To this end, FC4S has examined the needs in several sectors in eleven African countries, including the food sector, renewable energies and healthcare, and identified specific investment opportunities. It was thus able to present a portfolio of projects to Swiss impact investment funds; the first results are expected in early 2024. FC4S has also developed a solution to mitigate currency risks: Investment opportunities are bundled across countries and the individual country risks are balanced out in the package.

Maximilian Martin sees this structuring of projects into attractive investment products as an important prerequisite for sustainable investments. “If an investment is not attractive, you won’t get very far with it,” said the Head of Philanthropy at the Lombard Odier Group. The Geneva-based private bank was involved in structuring a product that was used to modernize three rehabilitation centers of the International Red Cross in Africa over a period of five years. State funds from Belgium and Switzerland, for example, provided the basis for a bond in which private investors could participate; the minimum return was 2 percent. However, Martin points out that such “blended finance” investments with a mix of private, philanthropic and public financing fell by 45 percent in 2022 compared to the previous year.

Nevertheless, LBV Managing Director Simon Tribelhorn sees blended finance as an innovative instrument for financing sustainability goals. The LBV was one of the first members of the FC4S, which now has over 40 financial centers worldwide. ce/stk