Blended finance unlocks tricky investments
- Sustainability
- Agroecology
- Impact investing
- Sustainable agriculture
- Earth
The transition to a future-proof agricultural system requires investments – risky investments. Can new financing models help? “Blended finance can be used to finance things not typically viable for commercial banks,” explains Rabobank’s Agnes Johan.
Nitrogen emissions, biodiversity loss, the burning Amazon: the media is full of negative news about the agricultural sector. But that doesn’t mean that the sector has been sitting on its hands in recent years. The Dutch agricultural sector, for example, reduced its nitrogen and phosphate surpluses by 32 and 94 percent respectively between 1990 and 2017. But despite steps in the right direction, we are still a long way from a sustainable system.
Put simply: the task is too substantial and efforts so far have fallen short. Large-scale changes are necessary. These changes also require investments, but when it comes to innovation and sector-wide transformation, or financing smaller more players, the risks tend to be too big or the amounts too small for commercial banks. That’s where blended finance comes in.
What is blended finance?
Blended finance involves using a combination of money from various types of investors in order to create a desired impact. These investors could be governments, banks, so-called “impact investors” or philanthropic organizations. Crucially, one of the investors must be a public body. “By definition, all of the blended finance team’s deals are transactions which have a positive impact,” says Agnes Johan, head of Rabobank’s blended finance team.