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Working Paper | Achieving Speed and Scale in Climate Finance: The Platforms as Meta-Intermediaries

Esther Choi
Sustainable Finance Initiative

In the midst of the persistent climate investment gap, a renewed focus has emerged on blended finance to strategically use public and philanthropic capital to catalyze substantial amounts of additional private sector investment for climate projects. However, in today’s complex and fragmented climate finance landscape, investors, intermediaries, and project developers cannot find one another in an efficient and effective manner. This, in turn, incurs significant transaction, search, and opportunity costs, posing a substantial impediment to the progress that is needed to enhance the quantity and quality of climate finance. Without an effective mechanism that can mitigate the mismatch between supply of and demand for climate finance, it is unlikely that blended finance can achieve its potential to effectively mobilize private capital at scale for systemic and transformative climate actions.

In response, an array of online platforms has emerged at various governance levels and sectors to match different stakeholders and accelerate the process. Matchmaking platforms can expedite the discovery of investment opportunities and mobilize untapped resources by facilitating multi-sided interactions and reducing the transaction costs of achieving common goals. These platforms can also serve as an important tool and mechanism for a governance strategy called orchestration. By serving as meta-intermediaries, or an umbrella for public and private intermediaries, matchmaking platforms can help climate finance participants navigate through the highly fragmented landscape and direct their efforts towards accelerating the deployment of climate finance.

Framing the mismatch in climate finance as a governance problem and drawing insights from the literatures on transnational governance, polycentric governance, and collaborative governance, this working paper assesses four platforms that are operating in this space: the International Renewable Energy Agency (IRENA)’s Sustainable Energy Marketplace, CDP’s Matchmaker, Convergence’s Deal Platform, and CleanTek Market. While these platforms represent notable achievements with significant legitimacy, they have yet to play an effective role of meta-intermediary in orchestration. Because of the registration status, the nature of institutionalization,
and/or the lack of resources and appropriate technologies, many function more as a data aggregator than an actual matchmaking platform, often relying on time-consuming manual matching and the expertise of the platform managers. This approach deviates from “democratizing” the deal-sourcing process and what is often thought of as the bottom-up, IT-based platform ecosystem. Therefore, rather than launch another platform that serves the same goal, it is recommended to consider the critical functions and features needed for meta-intermediaries to foster a vibrant ecosystem for climate finance transactions.