This interview is republished from the Hamburg Sustainability Conference.
We spoke with Jessica Cheam about her role in advancing sustainability in Asia. She delves into the importance of blended finance in overcoming challenges to sustainable development, sharing her thoughts on why this approach is crucial for scaling sustainable projects across Asia.
Why do you think blended finance is so important for sustainable development in Asia-Pacific?
Jessica Cheam: I think blended finance is an emerging but very key instrument to help finance sustainable development projects at scale, especially in Asia-Pacific, where developing markets suffer from a lot of risks that a substantial amount of private capital would not typically touch.
Since 2015, when the SDGs (Sustainable Development Goals) and Paris Agreement were adopted, it has been an increasingly important agenda item in international forums, but as a funding mechanism itself, it has not scaled. The approach of blending public, philanthropic, and private capital to de-risk investments is crucial, but its implementation faces challenges.
Convergence, the global network for blended finance, has said that blended finance transactions totalled about US$213 billion as of 2024, but this is a small amount compared to private capital. Geopolitical tensions that have flared up recently and the wait-and-see approach by politicians and business leaders are not good for climate action or progress for the SDGs. There is a need to scale successful platforms, addressing issues like effective taxonomies, standardisation, and regulatory barriers.
Platforms like the HSC are vital to bring stakeholders together on global efforts to standardise and harmonise blended finance approaches.
Would you still say that blended finance would be the solution to the sustainable financing gap?
Jessica Cheam: I think we all need solutions, right? I mean, there is obviously a huge momentum being generated and achieved in things like green bonds all over the world, sustainability-linked loans, and a lot of debt financing that’s happening as well. So, I wouldn’t say it’s the only solution, but I would say it’s a very key solution that complements a wide range of sustainable finance mechanisms happening right now.
But it has a lot of potential. My view is that we are not really harnessing the potential of blended capital, even though there’s a lot of willingness and advocacy around it. The implementation part of it is a little bit more challenging than the will and desire.
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It takes someone to say: “I want to make the non-bankable bankable because it drives positive outcomes for society.” That’s a very powerful narrative that not enough leaders talk about.
Jessica Cheam, founder, Eco-Business
What do you think would make blended finance easier to implement?
Jessica Cheam: In terms of challenges in Asia, it is the lack of investable projects and also the lack of standardisation and transparency. We need to build capacity in the region to get these projects structured in a way that makes them investable, then get blended capital to de-risk them.
One example is a blended finance platform called FAST-P, launched recently in Singapore by the Monetary Authority of Singapore. It combines concessional capital such as grants and loans on favourable terms together with private and philanthropic capital to create a larger pool of financing for sustainable development-focused projects. It has since been joined by organisations like the IFC, the Global Energy Alliance for People and Planet, the ADB, and even the German Development Finance Institution (DEG).
It will together raise up to US$5 billion to support Asia’s green and transition financing needs. They are now looking to deploy this capital into energy transition and industrial transformation projects, especially in hard to abate sectors, and they have used this platform to standardise the criteria for what can qualify as a viable project.
This is a perfect example of how multilateral banks, sovereign wealth funds, development financial institutions, philanthropies, and the private sector can come together to scale solutions. We are starting to see more of these examples, and it is really encouraging.
What do you think holds investors back? What are their reasons and risks not to invest?
Jessica Cheam: If you look at sustainable development challenges, these are most acute in developing countries and emerging markets, and that’s where the capital should be going.
The risks, of course, are the political regimes that come and go, currency risks, and a lot of red flags that would ordinarily just be shot down by private capital in the first instance.
So, you have this unique problem where the need is most acute in emerging markets, but the risk profile of these markets is not palatable to private capital and investors who want to come in.
Blended finance addresses this problem specifically because it comes in and, for example, takes the first-loss guarantee. If there’s any risk, it shares that, which then unlocks the capital for private investors to come in.
More institutional investors will have very strict capital criteria on where they deploy, and that’s where we’re seeing a lot of innovation happening, especially in Asia and Africa. Even though the start has been slow, where a lot of private capital was reluctant to come into this conversation, we’re starting to see development banks, governments, and philanthropic capital coming into de-risk the first part.
The catalytic finance system, which is a mix of grants and concessional loans, is being used a lot nowadays, enabling the first part of the risk to be taken on by people who have the appetite and objectives to seed sustainable development projects. This makes it commercially viable for investors and institutions who can only come in when certain criteria are fulfilled.
Speaking of best-practice examples, do you think it is also important to change the narrative in the public sector regarding investment in sustainable development?
Jessica Cheam: Yes, absolutely. There is a lot of awareness, but the narrative is often about uncertainty, especially due to the current geopolitical situation. The macroeconomic outlook is very negative, but I think the narrative needs to be shaped differently to show that blended finance can be a key tool to promote global cooperation and help unlock some of the urgent infrastructure investments we need to see today.
The conversation often focuses on ‘bankable projects’, those that generate returns for private capital, but we also need to focus on the marginally viable projects, especially in developing markets, because of the role it plays in advancing economies.
These projects are essential for impact and development, even if they don’t match return expectations at first. The narrative should focus on making the non-bankable bankable, while addressing the root causes of barriers, and using sustainable finance to drive policy reform and achieve real impact. It takes someone to say: “I want to make the non-bankable bankable because it drives positive outcomes for society.” That’s a very powerful narrative that not enough leaders talk about.
Blended finance has already contributed to transforming the Asian economy. Can you share more examples of blended finance success in the Asia-Pacific region?
Jessica Cheam: Recently, the Asian Development Bank, Japan Bank for International Cooperation, and a group of commercial lenders have signed a financing agreement with PT Supreme Energy Muara Laboh to expand the Muara Laboh geothermal power project in West Sumatra, Indonesia.
The total arranged finance package of US$92.6 million includes a US$15 million concessional loan from the Australian Climate Finance Partnership (ACFP) – this is an example of a concessional blended financing that seeks to catalyse financing for private sector climate adaptation and mitigation investments in the Pacific and Southeast Asia. It addresses market gaps and demand by de-risking development impact projects and bringing them to fruition.
Then there was also the JETP (Just Energy Transition Partnership) platform, announced at the G20 summit when Indonesia hosted it two years ago. The JETP platform is a blended finance model where governments and private sector capital come together to deploy capital into the just energy transition, especially in hard-to-abate sectors like cement, steel, mining, and electricity generation.
In Japan, we have seen initiatives led by GFANZ (Glasgow Financial Alliance for Net Zero Asia Pacific), which have launched a study to model the cost of retiring Japan’s coal plants early, potentially using transition credits and blended finance.
So, we are seeing pockets of success stories, and we will continue to see momentum accelerate, but we need to enable the right regulatory environment and remove barriers to allow these projects to scale.
What is your vision for Asia’s sustainability landscape in 10 years?
Jessica Cheam: I would love to see political leadership and policy coherence. It took 20 years, but we are finally seeing a global standard for sustainability disclosures with the ISSB S1 and S2, and the rise of disclosure mandates all over the world for companies. This standardisation also needs to be accelerated for sustainable finance.
In 10 years, I would love to see things beautifully harmonised, with one standard in place that works, where governments are on board, capital is working effectively, and projects are scaling up. That would be my dream for Asia. But, as we know, diplomacy and international cooperation are being challenged right now, so we will need to double down on the important messages of cooperation and multilateralism, and the role it plays in global progress.
What motivates you to keep going?
Jessica Cheam: That’s such a great question. It depends on the time of year or the news stories I’m reading. But what keeps me going, and what keeps our team going, is the tangible impact we make. Our mission has always been to advance policy-making and improve business practices for the SDGs. In whatever small way we can shape the conversation or unlock insights that enable better-informed decision making, that makes it worth it.
The world is noisy, with so much misinformation, disinformation, and polarisation, especially in the news cycles.
If you care about people and the planet, you have to do something and that’s what keeps me going.
Even though many of my peers have given up and changed industries, we keep pushing forward. It’s not always easy, and it can get discouraging, but I believe everyone needs to play their part, no matter how small. If we all move in the same direction, we’ll make progress.
Interview conducted by Joanna-Luisa Giese on 25 April, 2025.
