Financing resilience: blended capital for climate, nature and livelihoods

Can private capital fill the ‘climate finance gap’, the trillions of dollars shortfall between what is needed to mitigate and adapt to climate change and the actual funding available? The gap is acute in emerging and developing economies, not least the entire African continent.

To explore this question, Freshfields co-hosted a high-level discussion with FSD Africa on blended finance solutions for climate, nature and livelihoods. Taking place during London Climate Action Week 2025, one hundred leaders across government, financial institutions, guarantors, climate-focused funds, companies and development organisations heard from colleagues on the frontline how to unlock capital at scale for critical energy, health, education and infrastructure in Africa. 

Louise Walker, head of private sector and capital markets at the Foreign, Commonwealth and Development Office (FCDO), set the scene with a keynote on the enabling role of official development assistance in blended finance, focusing on the FCDO’s role in developing supply and demand, as well as enabling policy.

Discussions moderated by Amanda Mapanda, Senior Associate at Freshfields, and Reshma Shah, Carbon Markets Lead at FSD Africa, spotlighted issues as wide ranging as creating pipelines of bankable projects in early stage markets less familiar to financial institutions (such as nature-based solutions) and the role of actors throughout the value chain in mitigating perceived risks.

The role of guarantees in mitigating perceived risks was highlighted. Concerns were raised that perceived and real risks can often be mismatched, hindering access to capital. This can work both ways: sound projects working in novel areas may be perceived as riskier than they actually are; while conventional projects that are familiar to financial institutions may be considered investable despite their impact on climate and nature, and associated risks. It was noted that nature-based risks in particular are rarely priced in to valuations effectively, nor are they reflected in credit ratings.

A number of touchpoints to Freshfields emerged during the discussion. One of these was replicability: the need for innovative and scalable blended finance to break out of its ‘bespoke’ box into multiple, familiar-shaped projects backed by standard legal agreements. Our recent work advising Greenlight Planet Sun King Nigeria stood out – we advised this leading distributor and financier of pay-as-you-go off-grid solar products on a c.$80m local currency financing. The transaction involved innovative blended finance to drive the energy transition, combining domestic denominated lending, development capital, and commercial debt (more here).

Similarly, the carbon finance agreement that Freshfields developed pro bono for Save the Children Global Ventures – launched in February 2025 – has potential to scale finance into community resilience projects in locations destabilised by climate change. The scheme benefits from catalytic support from FSD Africa that is returned through long-term (commercial) funding from law firms (more here).

Participants in the discussion were diverse, from institutional investors and development banks to lawyers, corporates, guarantors, project developers, communities, regulators and foundations. This reflected the complementary roles of different market actors, and the value of drawing them together.

While the discussion centered on bringing forward individual projects, financings and transactions, a key underlying question is what system (aka policy and political) conditions would favour more rapid deployment of blended finance solutions? Potentially something to explore further in another event.