Blended Finance Bulletin

Q1. Sterlite technologies on its ESG initiatives work in four focus areas - Women Empowerment, Healthcare, Education and Environment. Can you please talk about your work here and your approach over the years including any schemes that involve blended finance?

STL's corporate social outreach agenda and posturing on ESG have been an integral part of its business model. Our social, and sustainability objectives are completely in sync with national and global priority areas while primarily focusing on women empowerment, healthcare, education, and environment conservation.

• On the women empowerment front, our Jeewan Jyoti Women Empowerment Program has been on a relentless mission to transform rural women into agents of change. It provides a holistic ecosystem that includes vocational skilling, entrepreneurship, managerial faculties, and brings micro-financing linkages to the grassroots, leading to better livelihood prospects.
• Our healthcare initiatives improve last-mile accessibility through tele-consultations and onsite visits, affordability, and awareness of aspects like nutrition, eye-care and cardio-metabolic disorders. Over the years, our teams have managed to encourage the use of tele-consultations in India's rural heartlands ensuring anytime access to quality healthcare.
• The Digital Equalizer and Improved Learning (DEIL) program has been instrumental in sustaining the education of underprivileged children amid the lockdown and preventing disenfranchisement. This has transitioned into an in-school program that provides teachers and children with digital and STEM tools to improve learning and teaching.
• Our environmental stewardship program is tailored to help communities adapt and mitigate the impact of the changing climate. Initiatives like the Holistic Water program and Mission Green are not only focused on preserving and optimizing the usage of precious natural resources. They also adopt an inclusive approach focusing on gender equality, generation of eco-conducive livelihoods, smart farming, biodiversity conservation, and much more.

These programs, implemented alongside partners across the social and public sectors, have transformed living for over 2.8million lives to date. But we believe that they are capable of delivering much more. We are currently working on several blended finance options in mission mode to build strong business cases around the initiatives, and scale them to other parts of the country.

Q2. Given your extensive experience in technology and tech for good initiatives, what are some problems and opportunities where you see blended finance playing a larger role in maximizing social impact?

Today the incentive to be sustainable is higher than ever, with both consumers and employees looking to be associated with sustainability and ESG-compliant brands. Blended finance is therefore set to generate a substantial return for investors in the days ahead. The blended financing model will even be a boon for the developing world that is currently home to some of the youngest and most innovative demographics on the planet.

This approach of Blended finance has tremendous potential to alleviate financial risks and facilitate the flow of capital into sustainable development projects.

It helps innovative ideas with high sustainability potential, which may or may not have a proven track record. However, other risks around regulatory complexities and broader market conditions in the respective countries continue to exist. Therefore, I believe that as the need for blended finance for a sustainable future becomes more apparent, governments will have to step in. We will need more enlightened policies around safety, quality, and accessibility to blended finance instruments, facilitating their mainstreaming in the development narrative.

Q3. What can the blended finance and impact ecosystem do better to engage and receive funding support from India's CSR and philanthropic investor community?

In India, the perception around CSR and philanthropy has been chiefly about altruism. Therefore, the notion that socially-environmentally impactful projects can also generate lucrative returns may take some time to take root in the subcontinent. The blended finance and impact ecosystem has a defining role in preparing the base on which this innovative financing mode can thrive. However, they cannot do it alone. Cross-sectorial partnerships must be built for this mission.

• Firstly, there is a need to create awareness, and sensitize potential investors on the nuances of blended finance.
• The government must recognize blended finance as a viable vehicle to bridge SDG funding gap and investments in emission reduction. Here, lobbying by the community demanding reforms like a niche regulator for the blended finance sector or including it in the investor education program can help immensely.
• Secondly, to popularize blended finance as an option over others, there is a need to press for tax breaks and concessions for investing in for-profit social enterprises.

However, for blended finance, the increased exposure to public funds exponentially increases the need for transparency, accountability, and a free data flow. Therefore, a blended finance and impact ecosystem needs to ensure that data on returns and proper disclosure on the sustainable performance of investments are available on demand for potential investors to make better decisions. In tandem, there is a need for investors, mainly foreign, to have one-stop access to qualitative information like the availability of blended finance instruments, their SDG alignment, tax provisions, and subsidies.

Q4. Given your wide experience, what are the emerging / priority areas or sectors (like healthcare, climate action) which you anticipate will attract greater investor attention in the next five years?

I believe that climate action and helping communities develop climate resilience should ideally be the focus of blended finance in the upcoming days, as this is an existential issue. IFC research predicts that the climate business alone can generate economic opportunities to the tune of $23 trillion across the developing world.

• Healthcare should ideally be the next priority, especially across the Third World. The COVID-19 situation has demonstrated that even in the 21st century, a global health crisis can affect economies. Here, perhaps the problem is not as much of quality as it is of scale and accessibility. While tertiary healthcare attracts much of the conventional investment volume, blended finance will be indispensable for scaling primary and secondary verticals and helping governments meet national healthcare goals.
• The third action area should be sustainable waste management and waste-to-energy alternatives. Rising global waste volume is an issue closely linked to environmental pollution. Interestingly, the global waste management sector will be worth over $540 billion in the next four years. In India alone, it will create opportunities to the tune of $14 billion by 2025.
• Finally, I believe sustainable food production is an area that desperately needs the intervention of blended capital at the moment, especially agro-tech. As the planet's resources come under unprecedented pressure, compounded by a changing climate, conventional agricultural practices must change. They need to give way to innovative tech that sustains output while optimizing resource usage. Considering its inherent linkage to strategic food security, I can only visualize growth for it in the days ahead.

Q5. What have been some important and scalable partnerships that you have been able to establish or are seeking to establish as part of the larger CSR and ecosystem building initiatives to support innovative finance?

One of STL's most important assets is its ecosystem of cross-sectorial partnerships. We have invoked our partnerships time and again to align our efforts better with the UNSDGs, scale our social outreach projects, and deliver as per the expectations of our stakeholders.

For instance, in improving learning outcomes, we have partnered with the Government of Maharashtra, and NGOs. This has helped us bring the best of digital technologies, community connects, and policy push to drive the projects. Partnerships have enabled us to reach deeper into rural India and connect with communities. They have also empowered us to bring modern technology for better diagnosing health conditions as well as ensuring 24x7 access to quality healthcare

Our environmental stewardship efforts bring together a cluster of partners, including state and local administration, NGOs and communities. Although our environmental action plan is highly diverse, the intersection of expertise allowed us to practically double the outcomes touching 100,000 lives in FY22. Lastly, our Jeewan Jyoti Women Empowerment program owes much of its success to a holistic ecosystem built through partnerships that includes district authorities, NGOs, NPOs, state banks, among many others. Their role has been pivotal in developing the value chain that helps transforms rural women earlier shrouded by patriarchy into empowered agents of change in their community.

We understand the potential of each of these projects and the capabilities of our partners to deliver. Therefore, STL is exceptionally keen on using blended finance to converge and channel public and private finance into these areas to multiply the outcomes and contribute meaningfully toward the national developmental narrative.