Sri Lanka explores Blended Finance instruments to bridge financing gap for SDGs

The 2024 Financing for Sustainable Development Report reveals that nearly USD 4.2 trillion is needed annually worldwide to achieve the Sustainable Development Goals (SDGs) by 2030. Developing countries face an annual funding shortfall of USD 2.5-3.0 trillion to meet these goals. Sri Lanka too requires additional resources for crisis recovery and long-term sustainable development.

A promising solution to address the SDG financing gap is to explore innovative financing mechanisms such as Blended Finance Facilities that could combine public and/or philanthropic capital with private sector investments to promote sustainable development. This approach can pool resources from various stakeholders, accommodating different risks, returns, and impact appetites, and aggregate high-impact investment opportunities.

The Sustainable Development Council recently convened a Roundtable Discussion to explore opportunities and critical enablers towards establishing blended finance instruments in Sri Lanka drawing on the insights of Satya Tripathi, the Secretary General of the Global Alliance for a Sustainable Planet, New York. A former UN Assistant Secretary-General, Head of New York Office at UN Environment and Secretary of the UN Environment Management Group, Mr. Tripathi was instrumental in establishing the Tropical Landscapes Finance Facility (TLFF) in Indonesia in 2016 and the Sustainable India Finance Facility (SIFF) in 2017 to leverage large scale private finance flows to achieve transformative social and environmental impact..

Tripathi highlighted that TLFF in Indonesia focused on reforestation and conservation and showcased how blended finance can effectively mobilize private capital towards public environmental and social goals. By preventing further deforestation and directly employing 16,000 people while indirectly benefiting 34,000 individuals, the TLFF has contributed to Indonesia achieving one of the lowest deforestation rates in the world. Another success story highlighted by Tripathi was the implementation of natural farming practices in Andhra Pradesh, India. Advocating for regenerative agriculture, this initiative emphasized the transition from synthetic chemicals to natural farming methods, resulting in significant economic, environment, and health benefits. Supported by the German Development Bank providing catalytic capital to mobilize private investments, this initiative demonstrated how a holistic approach to sustainable farming can lead to improved livelihoods, reduced disease incidence, and enhanced environmental conservation.

The Roundtable Discussion was attended by key stakeholders including senior government officials, representatives from leading business chambers, banks and other financial institutions, development partner agencies and think tanks.