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There is an urgent need to better understand the role that the use of blended finance in development co-operation can play in achieving the Sustainable Development Goals (SDGs). By adopting the "Blended Finance Principles for Unlocking Commercial Finance for the SDGs" in 2017, members of the OECD's Development Assistance Committee committed to "monitor blended finance for transparency and results". The practical implications of monitoring and evaluating blended finance are currently being explored with a view to providing further policy guidance on the implementation of these Principles. This paper contributes to the ongoing consultation process by discussing governance and methodological challenges in blended finance evaluation and proposing a few options to deal with them.

The development community agrees on the need to address conflict and fragility for global security and sustainable development. Peace is a global public good, the focus of the 16 th Sustainable Development Goal and a cross cutting ambition of the 2030 Agenda. Spurring virtuous, sustainable and peaceful growth in fragile contexts is even more crucial, considering that they represent almost a quarter of the global population. In such complex and unpredictable situations, development cooperation must consider the full range of tools available and strive to include multiple actors at various levels of society. Hence, the growing volume of cross-border private capital flows cannot be overlooked. Despite growing recognition, blending is often omitted in development cooperation strategies to address fragility The multilateral scene has broadly acknowledged the need to catalyse private capital, not only for development, but also for peacebuilding. Yet, national strategies for addressing fragility often bear no specific reference to the role of private investors. Those that do, often focus on capacity building and private sector development. Only a few strategies explicitly identify the private sector as a potential source of additional funding in fragile contexts. Certain multilateral development banks have adopted an explicit focus on mobilising additional private finance, commensurate to the presence of fragile and conflict situations. Most bilateral development finance institutions limit their interventions to private sector development and only a minority has explicitly committed to mobilising private finance in fragile contexts. This paper was prepared by the OECD Development Cooperation Directorate (DCD) under Director Jorge Moreira da Silva. Irene Basile, Policy Analyst, was the manager and lead author of the publication, under the supervision of Paul Horrocks, Head of the Private Finance for Sustainable Development Unit, and the strategic leadership from Haje Schütte, Head of Financing for Sustainable Development Division, DCD. Carolyn Neunuebel | 9

Few evaluation reports become publicly available Evaluating blended finance vehicles entails specific challenges and limitations Conclusions 5 Policy implications Most blended finance vehicles strive to contribute to the international agenda for sustainable development Many environmental, social and governance standards exist, but their application by blended finance investors remains unclear Funds and facilities differ in their approach to development performance The vehicle's size and age may also affect its capacity to track and assess development performance Most "impact reporting" relies on client declarations before the end of the investment Governments, as investors and managing organisations, are raising the bar for accountability on development performance Funds and facilities can better contribute to increment public evidence on development results of blended finance References 10 |