This January 2016 report from McKinsey & Company argues that if the world is serious about meeting the Sustainable Development Goals, including climate goals, accelerating the flow of private capital into sustainable infrastructure has to be part of the strategy. Increased private sector financing is key to building and sustaining urban, transport, water, and energy systems that the world needs. This report examines how to make that possible.
The report highlights the importance of public “project preparation facilities” (page 40) which can structure transactions to make them attractive to private investors. These dedicated institutions can help with the bankability of projects and help develop larger project pipelines. They also bring technical and financial expertise to projects and can create standards that reduce transaction costs. These institutions are able to invest in sustainable infrastructure due to their public missions and mandates and their experience taking on what appear to be riskier projects. Over time, their experience could help actors such as private-sector and institutional investors, developers, operators, and governments to get more comfortable with taking on such projects.