Good morning, everyone. I am delighted to co-host this roundtable. Thank you, Mark, Ahmed and the Allied Climate Partners team, for doing the heavy lifting to put this together.

2 Asia is rapidly emerging as a key frontier for blended finance. This is no surprise given we are home to more than half of the world’s population and account for more than half of global emissions.

FAST-P

3 Through the US$5bn Financing Asia’s Transition Partnership (or FAST-P), Singapore is bringing together a coalition of the willing in blended finance. FAST-P will apply innovative structures to channel capital to investments that address the most pressing climate challenges of our time. This includes energy transition, coal phase-out, water, waste and the decarbonisation of hard-to-abate sectors like steel, cement and aviation.

4 At COP29, we will announce the appointment of asset managers for the funds under FAST-P, as well as the partners and contributions that have come forward thus far.

5 However, we are looking beyond management appointments and fund launches. Having spent the last year building FAST-P with our partners, I am convinced that we need to build something much bigger - and this has to start with a clear vision of the future of blended finance.

The future of blended finance

6 What is the future of blended finance? I can sum this up in three “Os” – operating platform, optionality and ownership.

7 First, an operating platform – the future of blended finance is one where we will think in terms of operating platforms, not transactions.

8 These platforms will allow for capital aggregation and blending at the platform level, so that every philanthropic dollar is able to be amplified fully at the platform level, with further capital mobilisation at the project level.

9 These platforms will be designed with maximum additionality and minimal concessionality at their core, and allow more standardised blending. This will allow the aggregated capital to be deployed faster, without multiple rounds of negotiation. Replicability is key and the future of blended finance will have us designing platforms that have replicability as a foremost priority.

10 With these platforms in place, we will have scale, a diversity of use cases and the aggregation of risk and returns. This will set off a multiplier effect where innovative climate-positive projects and business models collectively grow, acquire track records and becoming accepted by the mainstream over time.

11 This will require trust and some relinquishment of control. The future of blended finance would see us blending capital at the platform level, which means that we will delegate decision-making to asset managers with some pre-defined parameters but also giving sufficient flexibility. We will leverage their commercial and market-specific expertise.

12 The second “O” is optionality. The future of blended finance is one that provides different optionality both for those who contribute capital and those who need capital for transition.

13 We need to meet the needs of these users of capital. What this means is that we would not only look at equity blended finance funds, where the risk/return paradigm is relatively easier to understand. Indeed, the future of blended finance would meet markets where they are, offering both equity and debt blended finance funds, particularly in regions like Asia where the paucity of debt financing is a key constraining factor that prevents green and transition solutions from scaling and mainstreaming.

14 The future of blended finance will also provide a range of products and structures to meet the needs of different capital contributors, including:

• Banks with credit and cashflow requirements;
• Institutional investors who need a pre-defined pool of underlying investments for diligence, and who need investment products that cater to different risk appetites and asset liability duration requirements;
• Philanthropists who want to recycle their capital so that every dollar is put to work, over and over again.

15 The third “O” is ownership. The future of blended finance is about collective ownership, not mandate restrictions. We need to step beyond the traditional lines that have held our institutions back.

• Sovereigns should step forward to contribute concessional capital, as Singapore has done for FAST-P. This may require changing laws or redesigning and reconfiguring grant pools. We are in discussions with a number of countries that are looking to do this.
• MDBs and DFIs need to be prepared to take more risk with their balance sheet, and de-risk platforms using guarantees and other mechanisms. We have seen some promising developments here, with a FAST-P DFI partner keen to come in with both concessional and commercial capital.
• Philanthropists also play an important role. Through their capital, they can unlock impact by incubating workable solutions and transactions, and shepherding these to the mainstream.

16 Philanthropists will want their capital to remain true to its catalytic nature and create the greatest impact in climate investments. That is a form of ownership, owning the powerful role philanthropists can play in being the most catalytic element in the capital stack.

17 One lesson from FAST-P is that because concessional capital is not unlimited and must be recycled or replenished, seeking returns for concessional capital is good practice. However, we have also learned that the hierarchy or ranking of returns also matters – and the needs of the different archetypes of capital contributors have to be looked at holistically. What we are finding is that in cases where returns are tight, junior concessional capital will need to fully bear the junior role in both loss absorbency and profit distribution. That is the ownership piece that is needed in certain cases.

Building this future together

18 Operating platforms, optionality, ownership – a simple frame, but each of these areas also presents complexity and requires iteration, sometimes difficult conversations and above all, deep trust between partners.

19 Bit by bit, through FAST-P and valued engagements like this roundtable, we are building this future. I look forward to working with you to do this.