Chapter 08 · Finance, data & evidenceSustainable Finance & Investment
De-risking
Definition
De-risking means reallocating, sharing or reducing the existing or potential risks associated with an investment. WRI divides it into policy de-risking — government measures that lower regulatory or market risks — and financial de-risking, where public institutions and climate funds deploy instruments such as guarantees, concessional loans, equity and insurance to absorb part of the risk. Deployed strategically, public resources can make previously unbankable projects attractive to commercial and institutional investors.
References
definition and policy/financial de-risking taxonomy
instrument classification and mobilisation evidence
Overview
What it means
Public money changing the risk equation rather than paying the whole bill — each public dollar positioned to mobilise several private ones.
How it is used
De-risking is the operating logic of blended finance in clean energy and development finance; instruments include guarantees, lines of credit, mezzanine finance and insurance products.
Why it matters
Emerging-market clean-energy investment remains far below net-zero needs largely because of perceived risk; de-risking is the principal policy answer.