Consultancy Support: CLIC Blended Finance Playbook for Agrifood Systems

Terms of Reference: CLIC Consultancy Support

Blended Finance Playbook for Agrifood Systems

December 2024

CLIC and Knowledge Products Background

CPI is the Secretariat of CLIC, a global coalition driving investment in low-carbon, climate-resilient, and nature-positive agrifood systems. CLIC’s mission is to accelerate and scale the finance necessary to transition agriculture and food systems to net zero emissions by 2050. CLIC produces knowledge products on climate finance to the agrifood sector and hosts action groups on ‘financial innovation’ and ‘tools, methods and knowledge co-creation’ for its members. CLIC operates the Agrifood Investment Connector, a platform to support climate-resilient and nature-positive agri-SMEs to access funding to scale their impact. CLIC is funded by the UK FCDO.

Consultancy Support Sought

The CLIC Knowledge Product Team seeks a consultant to research and develop a playbook highlighting blended finance instruments past, present, and future, that hold most potential to support agrifood system climate and nature transitions. The playbook should be a practical, action-oriented report which outlines key steps to take to achieve the effective construction of blended finance tools. It should map out existing instruments, understand what allows them to work and when they work best, and provide examples to back up the analysis.

To do so, the Consultant should leverage external resources and summarise internal research from CPI programs, and from relevant CLIC members. The playbook will build on CPI’s existing learning and frameworks, pushing forward the organization’s knowledge base on the topic of blended finance.

Scope

The Agrifood Sector (AFS) holds immense potential for sustainable growth and development. However, it faces persistent challenges, including limited access to finance, high vulnerability to climate change, and environmental degradation. While the AFS is a key economic driver, traditional financial sources have been insufficient in meeting the sector's financing needs. The CLIC team is interested in instrument practices that can be effectively deployed in emerging markets, in particular Latin America & The Caribbean, Sub-Saharan Africa, and South East Asia.

Blended finance has shown to be, at times, a viable solution to address risks and bridge this gap, particularly for financing small and medium-sized agricultural enterprises. Analyzing existing blended finance flows and the appropriate enabling conditions as well as identifying key players within this landscape can provide actionable insights to scale up financing and support a sustainable agricultural transition.

Tasks

Task 1: Overview of existing blended finance mechanisms in use in the agrifood sector space and summary of in-house knowledge

The consultant should identify various types of blended finance instruments and their role in reducing investment risk and attracting private capital for climate mitigation, adaptation and/or nature outcomes. The instruments should be defined as based on the definitions used by Convergence and CPI.

Blended finance refers to financial instruments or strategies that leverage public, philanthropic, or concessional capital to de-risk and mobilize private investment. By combining these sources, blended finance aims to address market gaps and encourage private sector participation in projects that deliver social, environmental, or economic impact, particularly in underserved or high-risk areas. The Consultant should analyse how these mechanisms address specific financing gaps and risks in the agrifood sector. The agrifood sector classification should follow existing CLIC work, such as the recent CPI-FAO report on finance needs for agrifood systems, which lays out a definition of the agrifood sector.

Of particular interest are mechanisms supporting financing of agriculture and smallholders, but we are also interested in those funding other actors in the supply chain. Blended Finance Instruments will look different depending on which sections of the agrifood supply chain is being targeted. The Consultant should look to map out relevant blended finance mechanisms for different section of the supply chain, as well as their beneficiaries and unique attributes.

The consultant should Leverage CPI resources (The Lab which has over 10 years’ experience in developing blended climate finance instruments, the Catalytic Climate Facility, CLIC) and CLIC members (ISF, Convergence, and BII for example), as well as any other outside source deemed fit, to support the results of task 1, and provide more insights on leading methods used for blended finance practices.

The blended finance research should build on existing CPI frameworks, such as our work on leveraging policy tools to improve financial instruments in sustainable agriculture, our toolbox on financing nature-based solutions, successful blended finance lab instruments, our landscape of global concessional finance, and more.

Key aspects to summarise could include:

• Key blended structure elements of instrument design for derisking
• Main perceived and real risks that prevent private capital from flowing to agrifood sector in emerging markets, as addressed by the BF instrument
• 2-4 examples per instrument group, detailing the involved actors, current status, investment volume (both direct and leveraged), and the targeted outcomes
• Take-up to date – how successful has the mechanism been and where at mobilising what kinds of and volumes of capital from whom for whom
• What impact are they delivering or seeking to deliver
• Part of the agrifood supply chain targeted
• Key limitations or challenges
• Level of concessionality

For each relevant blended finance mechanism, the consultant should:

• analyse case studies of successful projects to identify factors that contributed to their success, such as effective risk-sharing, public-private partnerships, supportive policy frameworks, and so on
• Provide key takeaways and recommendations regarding replicability and scalability of these approaches

The CPI team will provide a package of materials from relevant in-house programs.

Task 2: Synthesis and Policy Recommendations

The Consultant should provide 3-5 detailed case studies of successful blended finance projects in the agrifood sector, highlighting key factors that enabled their success. They should also specify the primary enabling conditions and actionable steps that public and private sector agents must take to foster growth in the agrifood sector using blended finance.

The consultant should also offer targeted recommendations for policy makers, financial institutions, accelerators, and NGOs. This should be limited to 2-3 actionable recommendations per stakeholder group, focusing on high-impact areas. The aim of this report is to provide a comprehensive overview, for all relevant actors, of the potential of blended finance instruments and the requirements for their success.

Final deliverable: A playbook (~6000-8000 words) with accompanying case studies that CPI/CLIC can publish, combining the learnings of steps 1 and 2.

Background Materials Provided to the Successful Consultant

CLIC will provide the following materials to the Consultant(s).

• CLIC taxonomies for agrifood systems, and existing research on flows, needs, and gaps for agrifood systems
• The Lab taxonomy for blended finance instruments
• List of all Lab-developed / endorsed agrifood systems instruments
• A forthcoming CPI report on building financial instruments for climate adaptation
• Instrument analysis reports for sustainable agriculture-related instruments developed and endorsed by the Lab, which includes instrument mechanics graphics
• Lab impact reports
• Toolbox on Financing NbS as well as other relevant mapping and interview notes done by the CPI team responsible for the report
• Understanding Global Concessional Climate Finance 2024 report
• Other transaction and deal information found in the Convergence Historic Deal Database (HDD)
• Interviews with CPI analysts familiar with blended finance for agrifood systems, including those that have supported the Lab and the CC Facility

Outputs and Timeline

Outputs will be delivered to the CLIC Secretariat team. The precise scope, structure and length of outputs will be agreed with the consultant(s) during the assignment kick-off meeting and where appropriate, amended during regular check-in meetings between the consultant(s) and the CLIC Secretariat team.

All changes to the agreed scope, structure, and length of outputs of outputs following the kick-off meeting must be approved in writing over email by the CLIC Secretariat team.

Milestones and Deliverable dates

Milestone 1

Milestone Output Description: Internal meeting discussing the findings of step 1

Deliverable date: 20/03/2025

Milestone 2

Milestone Output Description: Internal report with findings of step 1

Deliverable date08/04/2025

Milestone 3

Milestone Output Description:Playbook detailed in step 2

Deliverable date: 31/04/2025

Proposal Requirements****The consultant(s) must be able to demonstrate the following areas of expertise:

• Knowledge of financial products, investment trends, and capital flows within AFS, as well as experience working with agricultural SMEs and understanding their financing needs
• Understanding of blended finance models and mechanisms along with experience in designing financial instruments for sustainable agriculture
• Experience in climate finance, green finance, and mechanisms that promote environmental sustainability
• Knowledge of policy frameworks and regulations affecting agricultural finance, and experience developing policy recommendations to promote sustainable finance and green investment in agriculture
• Skills in gathering, analyzing, and interpreting financial data and market trends, including estimating financial flows and assessing potential for greening, with proficiency in quantitative analysis, financial modeling, or impact measurement
• Understanding of the economic, environmental, and social challenges and opportunities within the agrifood sector, as well as familiarity with regional development goals, policy environments, and socio-economic dynamics affecting agricultural financing

Proposals for this work will need to set out:

• CVs of all proposed experts.
• Technical proposal (5 pages max) including: Consultant or consultancy team skills/experience and how these meet the above requirements; a proposed methodology for the work, including any suggestions for adjustments to these TORs where appropriate; a proposed work-plan and timeframe for delivery of the outputs.·
• Budget proposal - Interested consultants should get in touch to request the CLIC budget template. Please email alexandre.kirchherr@cpiglobal.org.

Deadline for proposals is 9am (GMT) on Friday 17th January 2025.

Budget

A maximum budget of £60,000 is available for the assignment inclusive of UK VAT. Financial proposals must be submitted using the CLIC_TOR4_budget_template. (Please email Alexandre.Kirchherr@cpiglobal.org for a copy of the budget template to use). All proposed experts must be detailed in the budget proposal. The successful consultant(s) will be contracted based on milestone payment points.

Keywords

Blended FinanceAgrifood SystemsClimate FinanceSustainable AgricultureFinancial InstrumentsPolicy RecommendationsClimate ResilienceNature TransitionEmerging MarketsBlended Finance Mechanisms