Foreign direct investment flows remain uneven. Official development assistance is under pressure. And the estimated $4 trillion annual financing gap for the Sustainable Development Goals (SDGs), the United Nations’ 17 global goals to end poverty, protect the planet and promote prosperity for all by 2030, continues to widen.

Yet within that gap lies a major, underdeveloped opportunity. While much of the financing shortfall will ultimately require public spending and concessional support, an estimated $2.6 trillion of the gap sits in energy and infrastructure. These sectors are well suited for blended finance structures because they combine long-term capital needs with tangible, scalable assets capable of attracting private investment.

At the same time, companies are under growing pressure to invest in resilience: strengthening supply chains, securing energy systems, adapting infrastructure and accelerating industrial transformation. Yet many of the markets and sectors where those investments are needed most are also the same ones where risk, both real and perceived, remains highest.

This is precisely where blended finance matters.

At its core, blended finance is designed to rebalance risk. Public, concessional or catalytic capital absorbs part of the downside, improving the risk-return equation for private investors and helping unlock investment that otherwise would not happen.

When done well, it can deliver tangible results: cleaner steel production in the United Kingdom, expanded digital connectivity in Ethiopia, improved water security in Mexico, and renewable energy deployment in countries such as Zimbabwe, where blended finance is helping expand access to clean power while strengthening economic resilience.

But while blended finance has grown significantly over the past decade, it still has not achieved the scale the world requires. One reason is increasingly difficult to ignore: blended finance is too often designed for business, rather than with business.

For years, the architecture of blended finance has largely been shaped by governments, multilateral development banks and development finance institutions. These actors play an indispensable role. Public capital is often the only funding capable of absorbing early-stage risk and creating the conditions for private investment to flow.

But businesses bring something equally critical: operational reality.

Companies understand where projects stall. They understand supply chains, procurement timelines, customer demand, construction risk and the practical constraints of operating in frontier and emerging markets. They know where capital structures become commercially unworkable and where transaction timelines fail to align with business reality.

Yet despite being the primary implementers of many of these projects, businesses are still too rarely involved early in the design process.

The consequences are visible across the market. Transactions are often bespoke, complex and difficult to replicate. Due diligence can take years. Reporting requirements vary across institutions. Legal structures differ from deal to deal. Many companies, particularly outside the financial sector, still lack practical guidance on how blended finance structures can support their long-term investment strategies.

The issue is not simply mobilizing more capital. It is building a system companies can actually use at scale.

We already know what more effective collaboration can look like.

In the United Kingdom, Tata Steel’s transition at Port Talbot combined a £500 million government grant with approximately £750 million in corporate investment to support lower-carbon steelmaking while preserving industrial capacity and thousands of jobs. In Mexico, Grupo Modelo worked alongside the German Agency for International Cooperation (GIZ), Coca-Cola and other partners to deploy nature-based solutions that strengthen water security while expanding financing opportunities for local farmers.

In both cases, business was not a passive beneficiary. Companies helped shape how risk was allocated, how projects could scale and how commercial logic aligned with national development priorities.

That distinction matters.

Businesses are not simply sources of capital. They are operators, employers, builders and long-term stakeholders in economic systems. A company with deep supplier relationships, procurement power and local market knowledge can often help reduce commercial risk more effectively than financial structuring alone.

This is why the next phase of blended finance must move beyond viewing companies solely as recipients of capital and toward recognizing them as co-architects of investment structures.

That shift is already beginning.

Through initiatives such as the UN Global Compact CFO Coalition for the SDGs, companies, governments, development finance institutions and investors are increasingly working together to move blended finance from fragmented, bespoke transactions toward more practical, scalable models.

Our new report, Business-Led Blended Finance: A Practical Playbook, reflects that evolution. It is designed specifically for real economy companies, helping them navigate blended finance structures, manage risk and engage earlier in project design.

The broader point is simple: public capital alone will never close the global development financing gap. Private capital must play a much bigger role. But private capital will only move at the scale required if businesses are actively involved in shaping how these systems work from the beginning.

Economic resilience cannot be built by governments alone, nor by markets operating in isolation. It will require practical collaboration across both.

Blended finance works best not when it is done for business, but when it is built with business.

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