Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks

The paper examines the role of Multilateral Development Banks (MDBs) in bridging the climate investment gap in developing countries by utilizing de-risking strategies. It argues that MDBs can mobilize private capital by transferring risk at the portfolio level or sharing risk at the project level, specifically by managing political and regulatory risks. The analysis identifies barriers to scaling these efforts, such as insufficient data accessibility regarding credit history and default probabilities in emerging markets. Based on case studies including Room2Run and the Pacific Renewable Energy Program, the paper proposes four strategies for MDBs: expanding financial innovation, treating de-risking as a tool for sector-wide transformation, fostering internal institutional collaboration, and increasing data transparency to facilitate investor decision-making.

• MDBs can mobilize private capital by applying de-risking strategies at two distinct levels: the portfolio level, where risk is transferred to private investors, and the project level, where risk is shared with them.
• A significant barrier to scaling de-risking initiatives is the lack of accessible performance data, specifically credit history and default probabilities in emerging markets, which is currently limited to a small number of MDBs and development finance institutions (DFIs).
• To effectively scale private investment, the paper proposes that MDBs should shift from focusing on single assets to addressing risks across the entire life cycle of a project within a sector to drive sector transformation.
• MDBs provide 'additionality'—specific financial and nonfinancial inputs not available from other sources—which is essential because, without their involvement, certain climate investments would not occur.

APA

World Resources Institute (n.d.). Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks. https://www.wri.org/research/mobilizing-private-investment-climate-solutions-mdbs

Chicago

World Resources Institute. Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks. n.d. https://www.wri.org/research/mobilizing-private-investment-climate-solutions-mdbs.

Wikipedia

{{cite report |author=World Resources Institute |title=Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks |url=https://www.wri.org/research/mobilizing-private-investment-climate-solutions-mdbs |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendmobilizing, author = {{World Resources Institute}}, title = {{Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/mobilizing-private-investment-climate-solutions-mdbs}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }