London School of Economics

Blended Finance Lab

Mobilising private capital for climate and development

The Blended Finance Lab, based at CETEx, is focused on developing the institutional, market, and policy constraints that continue to limit the mobilisation of private capital for climate action and sustainable development, particularly in emerging markets and developing economies. 

While blended finance has become a central feature of international discussions on development and climate finance, progress in mobilising private investment at scale has remained limited and uneven. The Lab was established in response to this gap between stated ambition and observed outcomes.

The Lab works with policymakers, development banks and development finance institutions, investors, academia, and civil society to strengthen the evidence base for blended finance and to support more effective policy and market practice.stable opportunities.

Our approach

The Lab works at the intersection of academic research, practitioner experience, and public policy. Its activities are designed to clarify where risks are genuinely constraining investment, where perceptions diverge from observed outcomes, and how public finance and policy frameworks can be better aligned with the objectives of private capital.

The Lab’s work is organised across four interrelated areas:

  • Focused engagement with practitioners and policymakers
    Bringing together development finance institutions, investors, governments, and civil society in targeted settings to work through specific challenges in blended finance, with an emphasis on diagnosing constraints and identifying feasible responses.
  • Empirical research and analysis
    Undertaking and supporting research that strengthens the empirical foundations of debates on risk, return, and investment performance in emerging markets and developing economies.
  • Policy development and engagement
    Developing policy-relevant proposals informed by research and consultation, and engaging with decision-makers at national and international levels.
  • Coordination and education
    Contributing to greater coherence across the blended finance ecosystem, and supporting teaching and capacity-building where this can add practical value.

Meet our team

Workstreams

The Lab organises its activities through targeted stakeholder groups and collaborative spaces that convene practitioners from different parts of the blended finance ecosystem. Where issues cut across multiple stakeholder groups, the Lab also convenes cross-cutting groups to examine specific questions and advance work in a more integrated way.

Asset owners

This workstream convenes representatives from pension funds, insurers, and sovereign wealth funds to explore how institutional capital can better engage with blended finance. Participants discuss practical issues like risk and ratings, regulation, mandates and asset allocation, and collaborate with peers and other ecosystem actors to identify solutions that could help direct more capital toward sustainable and impactful investments.

Asset Managers and Banks

This workstream brings together professionals from investment firms and banks to explore how blended finance can be scaled within mainstream financial markets. Participants discuss practical challenges (like standardisation, structuring deals, or ensuring liquidity) and collaborate with development banks, policymakers, and others to design solutions that make blended finance more accessible and effective.

Development Banks and DFIs

This workstream convenes representatives from multilateral and development finance institutions to explore how their capital and mandates can be better used to mobilise private investment. Discussions focus on practical ways to scale blended finance through risk-sharing tools like guarantees and first-loss capital, improved coordination, and a shift from “investing directly” to enabling markets.

NGOs and Foundations

This workstream brings together foundations, NGOs and philanthropic organisations to explore how their resources (capital, technical assistance, networks) can unlock greater private investment in sustainable development. Participants share experiences, identify where their interventions can have catalytic effects, and collaborate with other actors to strengthen the enabling environment for blended finance.

Governments

This workstream engages policy makers, public officials and regulators to discuss how laws, incentives, and financial architecture can support the scaling of blended finance. Topics include regulatory barriers, fiscal tools, MDB mandates, and how governments can design smarter interventions to crowd in private capital.

Research and Education

The Lab undertakes research and education activities to strengthen the evidence base and practical understanding of blended finance. This includes collaborating with academic partners, producing practitioner-oriented insights, and supporting the integration of blended finance into graduate-level economics and finance education. These activities aim to support and inform all Lab workstreams.