In recent years, there has been a significant shift among institutions such as foundations, hospitals, universities, and religious organizations toward using blended finance strategies. This shift is driven by a desire to align their investments with their core values and mission, recognizing that capital can do more than just generate financial returns—it can also create positive societal change and help divest from industries that do not align with their values.
Traditionally, these institutions focused on impact through philanthropy, such as funding community projects or infrastructure. However, this approach only addressed a small fraction of their total capital. As Shannon Ward, Chief Growth Officer at Genus Capital Management, points out, “Impact has traditionally been expressed through grants, even though these only account for a small fraction of an institution’s total capital. A blended finance approach leverages the entire portfolio to achieve greater impact and alignment with values.”
Blended finance involves combining grants, private and public equity, and fixed-income products to support projects aligned with the United Nations’ Sustainable Development Goals (SDGs). This strategy has been highly successful in mobilizing large amounts of capital. Over the past 15 years, Convergence, a global network for blended finance, has helped raise $213 billion through 1,123 transactions.
Stephanie Tsui, Chief Sustainability Officer at Genus, emphasizes that blended finance allows institutional investors to scale their impact, saying, “By deploying catalytic capital that takes on greater risks or reduced returns, investors can make projects more viable and attractive to other market participants.” This approach not only supports SDG-aligned projects but also provides an opportunity for institutions to explore impact opportunities across various asset classes, including private equity, debt, and public equities.
As Vivian McCormick, Director of Impact Investing at Spring Impact Capital, explains, the growing demand for blended finance in Canada is a sign of how institutions are beginning to embrace these innovative financial strategies. “We are here to support the growing ecosystem with capacity and community building, through convening as well as collaborative knowledge dissemination and skills development,” McCormick adds.
This shift reflects broader societal trends, where stakeholders—whether students, patients, or other communities—are increasingly calling for institutions to take responsibility for the impact of their investments. Shannon Ward notes, “Finance committees not only have a fiduciary duty but also a responsibility to ensure their investments support their organization’s mission.”
For institutions looking to explore how blended finance can help them achieve their goals and support sustainable, mission-aligned investments, Genus Capital Management invites them to consider how impact investing can enhance their capital deployment strategies. As a Certified B Corp asset manager with over 30 years of experience in sustainable investing, Genus has been at the forefront of integrating climate action into investment portfolios.
Through innovative approaches like blended finance, institutions can now maximize their positive impact and align their investment strategies with their values, supporting both financial returns and the global pursuit of the SDGs.
Related Topics:
Financing Europe’s Defense: A Necessary Investment for the Future
Healthcare Industry Leads Data Breaches in 2024, Surpassing Finance Sector
Car Loan Scandal: Payouts Could Reach Billions as Dispute Continues
