Given the increasing concern around climate change and environmental degradation, green growth policies have taken centre stage. These policies stress the importance of transitioning away from traditional manufacturing methods and consumer behaviour towards sustainable practices that prioritize environmental conservation. To achieve this goal, it is critical to leverage technological advancements that can facilitate the shift towards cleaner manufacturing processes, especially in developing countries.
As societies strive for technological advancement, the costs of research and development escalate, putting pressure on a nation’s fiscal resources. In response to mounting concerns about climate change and environmental degradation, the popularity of green growth policies has surged. However, the transition from carbon-heavy industrial practices to cleaner alternatives demands a substantial amount of funding.
Developing countries often rely on aid from developed nations to support their growth, but this aid is often limited and comes with strict conditions. Despite the pressing need for climate financing in developing countries, the mobilization of funds has fallen short of the targeted goal of USD 100 billion per year.
Even as climate aid falls short of pledges, blended finance has emerged as a crucial financing mechanism for sustainable development. Blended finance can also play a crucial role in bridging the gaps for climate adaptation in LDCs, strengthening partnerships for development goals, and preparing for bankable projects for climate adaptation and mitigation. Therefore, blended finance has emerged as a crucial financing mechanism for sustainable development, with significant potential to contribute to socio-economic development in developing countries while addressing the challenges of climate change.
Authors: Fahmida Khatun and Foqoruddin Al Kabir
Publication Period: August 2023