Catalysing Sustainable Private Investments with De-risking Strategies
How can Risk Mitigation Mechanisms unlock private capital for nature and climate solutions in developing countries? This interactive World Café will bring together experts to brainstorm on various de-risking tools, with a focus on blended finance structures such as guarantees (for energy, nature & agriculture, and impact investment), grants, first loss equity and technical assistance, as well as derivatives and innovative insurance products. The event aims to exchange ideas on these mechanisms and how they can be deployed, discover key examples, and gather insights from various professionals on challenges, how to address them, lessons learned and best practices.
Framing this topic
This short section provides context for the event to ensure all participants, regardless of prior knowledge, are equipped to engage with the discussion.
Developing countries require an estimated $2–4 trillion annually to address climate change, yet high perceived risks often deter private investors. Risk mitigation mechanisms can help bridge this gap. Blended finance combines public and private funds to improve the risk-return profile of investments. It can be used in different ways, such as to provide first-loss capital, guarantees, concessional finance (below-market-rate financing), or early-stage funding (e.g. pre-seed and seed). Guarantees act as protection against specific risks, enhancing investor confidence. Other tools, such as parametric and non-parametric insurance products, as well as derivatives and hedges, can further protect against climate, market, and financial risks, creating more certainty for investors.
