ABSTRACT
Sustainable finance is a broad concept spanning both public and private sectors. It has become recognized as essential for achieving sustainable development objectives by aligning financial flows with sustainability goals. While traditionally driven by public funding, recently focus shifted towards the private sector. In high-income countries, sustainable finance has entered mainstream capital markets, reflected in novel investment criteria and regulatory mandates. However, significant challenges persist, such as greenwashing. Further, low-and lower-middle-income countries are being left behind, with only fractions of sustainable finance reaching them. To address these issues, innovative instruments like blended finance are being utilized to reduce risks and attract private investors. Although progress remains limited, with private finance mobilized through such means still far below what is needed, sustainable finance holds potential for accelerating efforts towards achieving the Sustainable Development Goals with ongoing innovation and alignment.
