Christie Getman is the country director for Vietnam at the SNV Netherlands Development Organisation
Blended finance is likely the most effective way forward for climate goals, but conditions must apply
Last week, my office in Vietnam was surrounded by water and my child’s school was nicknamed “Lake Hanoi”. We were left to manage the severe impacts of the 11th typhoon this season, and the third time in six weeks that schools and offices have closed due to severe flooding.
Having worked in the humanitarian and development sector for more than 25 years, I know that shifting global priorities means there is no co-ordinated cavalry of assistance coming for a response, and less so for future adaptation and climate risk reduction programming.
Government advisers and global experts are instead looking to the private sector and a range of climate-focused blended investment opportunities to bring solutions. However, for this approach to be successful, investments must be truly blended.
What this season reveals
Natural disasters such as typhoons are the most newsworthy of the climate impacts we are seeing. The economic and social effect of these storms reaches far and wide.
Typhoon Bualoi at the end of September cost Vietnam $303mn in property damage. Typhoon Yagi, which hit Hanoi and surrounding areas in 2024, cost the country an estimated $1.6bn in direct damage and overall losses totalling $1.77bn.
The long-term, ongoing effects of climate change in Vietnam promise to be equally severe — an estimated loss of 12–14.5 per cent of GDP a year by 2050.
The country’s economy grew by 8.3 per cent last quarter, but severe flooding events beg the question as to the private sector’s role in development, risk reduction and climate resilience, and climate mitigation.
Rapid urban development with improper attention to environmental clean-up and drainage construction is one contributing factor to the messy situation, and an illustrative example of how — had environmental and climate-risk based approaches been in place — perhaps the outcomes to recent flooding would have been different.
Vast amounts of capital are coming into the country for new growth opportunities — $25.3bn in 2024, setting a record for foreign direct investment for Vietnam.
While exact figures are not clear for how much of this FDI was considered “green” or “climate” finance, it can be estimated at potentially 25 per cent of all investment in Vietnam. The question is not if there is sufficient climate financing, but how that financing is being administered.
What needs to change?
In the development sector, we are often known for bringing two key things to the table: deep yet practical technical knowledge; and a rigorous commitment to designing for and measuring impact.
I have noticed over the years what feels like an unlimited number of investors and potential investment opportunities for Vietnam, and most of those we engage with are seeking “impact” and especially “green” investment opportunities.
And yet, rarely will investors extract a portion of their funding to pay for technical assistance to a business that de-risks the investment and ensures adherence and accountability for the climate-related impact goals that are theoretically one of the drivers for the investment.
Even bilateral and multilateral donors, where there are still ODA funds available, should be targeting the use of their grant funds directly linked to support investment opportunities from their countries
Blended finance, which combines commercial lending with concessional models, is likely to be the most effective way forward for climate goals.
However, blended finance investments have this potential only if they are truly blended. This means concessional financing terms, but also extracting funds from finance tools for fee-based technical assistance or non-repayable loans or grants. This can enable development finance institutions, impact investors or traditional banks to ensure the businesses to which they are lending also get the proper support needed for the “impact” side of things, and are held accountable with metrics.
The Dutch Fund for Climate and Development is one example of where this is working well. The Dutch development bank FMO has pulled aside non-repayable grant funds to complement its €440mn climate Investment Fund, to engage SNV to originate and de-risk investible business and provide ESG-based technical support and impact measurement.
We need more of this in the climate space. Even bilateral and multilateral donors, where there are still overseas development assistance funds available, should be targeting the use of their grant funds directly linked to support investment opportunities from their countries, and set the standards for insisting on accountability, data and reporting.
Are we there yet?
There was a time, early in my career, when few donors wanted to invest in impact measurement or “monitoring and evaluation”. In time, it became widely accepted that funding proper technical support and measurement systems accelerated results, while enabling public reporting of verifiable impacts.
A similar case could be made for blended finance. Extracting 5–10 per cent of overall investment funds towards non-repayable support services and accountability around climate objectives would ensure that we see results in climate adaptation and would probably improve the ultimate bottom line.
It can be done — and the dramatic images of submerged vehicles and flooded businesses in Hanoi remind us of the urgency of making it happen.