Blended finance must evolve to do more with less: Hamburg Sustainability Conference head

Known as the Asia-Pacific Blended Finance Community of Practice, it will also be aimed at improving collaboration and knowledge exchange, particularly at a time when development aid funding is dwindling, shared Henry Alt-Haaker, managing director of the Hamburg Sustainability Conference (HSF). 

Global blended finance volumes has held up in 2024 amid macroeconomic headwinds, but the contraction of foreign aid – most notably cuts to the United States Agency for International Development (USAID) – could test the market in the year ahead. 

Alt-Haaker, who leads a 30-person team from Berlin and Hanburg, tells Eco-Business that the inaugural HSF which was held last year was convened at a time when the world was already defined by geopolitical fragmentation and weakening trust in multilateral institutions. Increasingly, it sees itself playing a larger role in fostering cross-sector alliances and delivering concrete solutions to advance the SDGs, including in the blended finance space. 

The annual conference, which runs this week, is a joint initiative of the German Federal Ministry of Economic Cooperation and Development (BMZ), the United Nations Development Programme, the Free and Hanseatic City of Hamburg and the Michael Otto Foundation. 

In this Q&A, Alt-Haaker speaks with Eco-Business about the urgency of structural reform in blended finance as well as Europe’s role in a shifting sustainability landscape.

How might shrinking development aid funding – which has conventionally been a major source of catalytic capital in emerging and developing economies – impact blended finance flows? 

As development aid declines, global norms are challenged, and the international order grows more multipolar and polarised.

Established actors seem to be less reliable than in the past, and international cooperation is questioned globally. Shrinking development aid funding is expected to constrain the growth and impact of blended finance, especially in emerging and developing economies.

Sadly, development actors and private financiers will have to do more with less. Specifically, the increasing strain on donor budgets limits the availability of concessional and risk-taking capital – crucial components in blended finance structures. This funding squeeze is seen as potentially reducing the scale and reach of blended finance initiatives, making it harder to crowd in private capital.

As development aid has historically underwritten first-loss positions or technical assistance facilities, a decline in this support weakens the ability to de-risk projects, thereby discouraging private sector participation.

That, however, does not need to be a reason for despair but can also be an opportunity for innovation and creativity. If used intelligently, blended finance instruments can allow government funding to fulfil a role that private capital cannot and – intelligently set up – serve as a lever to increase the impact of joint financing tools.

HSC emerged as a vital forum to safeguard progress on the sustainable development goals (SDGs) at a time when the world was increasingly defined by geopolitical fragmentation, economic uncertainty and weakening trust in multilateral institutions. Now it continues to foster cross-sector alliances and deliver concrete solutions. 

These will be developed during the sessions this week. Topics for discussion will likely include development impact bonds (DIBs), where private investors fund development programmes upfront and receive returns based on the achievement of agreed-upon outcomes, and social impact incentives (SIINC) that provide time-limited premium payments to companies for achieving social impact.

We are also likely to explore carbon finance mechanisms including carbon credit,  as well as an initiative to scale blended finance through standardisation and centralised capital formation which was initiated at last year’s conference.

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As development aid has historically underwritten first-loss positions or technical assistance facilities, a decline in this support weakens the ability to de-risk projects…That, however, does not need to be a reason for despair but can also be an opportunity for innovation and creativity. 

Henry Alt-Haaker, managing director, Hamburg Sustainability Conference

What new initiatives are set to come out from the conference to address some of these immediate strains in donor funding and longer-term structural challenges in blended finance, especially in the Asia Pacific region?

We see Asia Pacific as a highly important region. Initiatives focused on this region include the launch of the Asia-Pacific Blended Finance Community of Practice. This will be a regional platform aimed at improving collaboration, knowledge exchange, and deal origination among stakeholders. It is expected to enhance coordination and mobilisation of resources for blended finance in the region.

Furthermore, we are hosting a closed-door high-level roundtable on systemic issues. Here, we will focus on overcoming systemic barriers such as lack of standardisation, pipeline visibility, and data transparency. It seeks to drive consensus around the prioritisation of enabling reforms and policy tools to improve the blended finance ecosystem.

And finally, we aim to showcase scalable regional models. We have several sessions that will be discussing innovative financing mechanisms and regional structures (e.g., guarantee platforms, debt funds) that can scale despite constrained concessional capital. Special attention is given to Asian Development Bank initiatives and public-private collaboration models.

These initiatives aim to diversify funding sources, enhance local market capacity and institutionalise blended finance solutions, thereby addressing both the symptoms and root causes of underperformance in blended finance markets.

What are the interests and sentiments around sustainability emerging in Europe on the back of the shifting political landscape?

Europeans know from their hard and painful history that sustainability and peace are inherently intertwined. 

As [United Nations Development Programme administrator] Achim Steiner said last year at the HSC: “There is no peace without development and there cannot be development without peace.” 

This has not changed with some of the geopolitical upheavals of the last months and years. Germany, being at the heart of Europe, surrounded by friends and strongly dependent on international trade, has always been a champion of multilateral cooperation. 

However, we also see clearly that the last decades of international cooperation have been equally beneficial to all states on the globe, and this is one reason why the rules-based international order faces unprecedented challenges, and the universality of global norms is being questioned.

The HSC provides a platform to build alliances for multilateral action to advance the SDGs. The task ahead is urgent: as nations struggle to adapt to shrinking development space, trade tensions, and fragmented governance, the need to forge alliances that transcend outdated public-private and north- south distinctions has never been more apparent. 

Sustainability does not depend on a single champion; it thrives within a collaborative, distributed ecosystem of bold partnerships that can harness innovative solutions and inspire transformative action.

Europe maintains the single most integrated market with a functioning rule of law to secure investments and business, high labour and environmental standards and an inherent interest in an equitable international order. 

These are basic tenets of the European Union that cannot be changed by individual parties within member states. And given the role that the European market and innovative businesses still play in the world, this “soft power” is actually a “hard power” and will hence continue to shape international narratives and standards for the years and decades to come. 

This does not diminish the changes that will come about through other dynamic regions like the Asia Pacific, which grows increasingly integrated, despite much more diverse political and economic systems. I don’t believe it is an “either or” but rather both will be true: Europe will remain a leader and important player, and others will be right there with it.

However, it is true that policy makers, think tankers, business leaders and public intellectuals must work harder to explain to the general public why the SDGs and sustainable development globally matter to them. 

It is not a matter of charity or “nice to have” it is simply a matter of global survival of the human race, economic prosperity (both in Europe and beyond), lasting and positive peace and building a world for our children and grandchildren that they can thrive in.

What are some standardised blended finance models that the Hamburg Sustainability Platform have identified that can best scale private investments in the Asia Pacific region?

While there have been talks of the reshaping of international financial architecture for years, the US Trump administration has really stress tested the global financial system What are some of the most urgent reforms that must be pushed so that the economy we build back amid this uncertainty is more inclusive, just and non-fossil fuel dependent?

These are exactly the kind of questions that leaders and experts, whose expertise far exceeds mine, will be discussing in Hamburg, both on public panels as well as in closed-door high-level sessions. I don’t believe there are simple answers and trade-offs will have to be negotiated and managed.

In my conversation with leaders from all over the globe, however, I see that the mindset of simply “doing business as usual” won’t work. Developing countries should not repeat the same mistakes Europe has made in its economic growth and the wealthier nations will – in their own interest – must support a different form of economic growth. And the wealthier nations should question the narrative of GDP growth at all costs, without internalising the real costs of business into the bottom line, behind.

There are so many sustainability conferences out there these days, how do you measure the impact of your conference?

Indeed, that was one of the first questions I asked when I joined the team at the beginning of this year. We are fully aware the world doesn’t need just another conference. 

That’s why the Hamburg Sustainability Conference was designed not as a one-off event, but as a long-term, evolving platform for action – with roundtables and events over the course of the year. We measure our impact in how we build trust across sectors, challenge the traditional dynamics of global cooperation, and create space for new voices – especially from the Emerging Markets and Developing Economies (EMEDs) and the private sector – to not just participate, but lead.

Impact for us isn’t only about the declarations signed (though there are many), but about the coalitions built, the capital mobilised, and the follow-through that happens between events. What sets the HSC apart is our commitment to co-creation – every session, every alliance, every process is shaped with our international partners. 

For this we both evaluate output indicators after each event but also work with external evaluators to assess the much harder question on how we really impacted society and the progress for SDGs.

We are structured as a public-private partnership ourselves, because we believe that sustainability can only succeed when we model the kind of collaboration we want to see in the world. And we have a lean, passionate team working year-round to ensure that what happens in Hamburg doesn’t stay in Hamburg – it moves the needle globally.

The interview has been edited for clarity and brevity. With additional reporting by Rhick Lars Albay and Gabrielle See. 

The 2025 HSC will be held at the Hamburg Chamber of Commerce and Hamburg City Hall between 2 and 3 June in Germany, and can be accessed via livestream: https://www.sustainability-conference.org/en/live. The event coincides with Hamburg Sustainability Week celebrated from 1 to 6 June.

Eco-Business founder Jessica Cheam will moderate a panel discussion on Alleviating Structural Challenges in Blended Finance: Hamburg Sustainability Platform (HSP) Moving to Action. Read our previously published Q&A with her.