By Vanora Bennett
The European Bank for Reconstruction and Development (EBRD) is reinforcing its position as a leader in green finance with an ambitious plan to broaden and deepen its climate activities and become a majority green bank by 2025.
The EBRD’s new Green Economy Transition (GET) approach for 2021-25 forms part of the Bank’s overall strategy for the next five years, which won approval on Wednesday from the Board of Governors at the EBRD Annual Meeting. GET 2021-25 will be the EBRD’s new blueprint for supporting its countries of operation to pursue a green, inclusive and resilient recovery from the impact of the pandemic.
GET 2021-25 will build on the success of an already ambitious GET approach for 2015-20, which the EBRD launched in the run-up to the Paris climate conference, where countries agreed to take action to keep global warming below. The first GET approach has already taken EBRD green investments to over 40% of its total investment last year, from an average of 24% in the decade to 2015.
In a powerful pre-recorded video address to the Annual Meeting, The Prince of Wales urged the business community to be “even more ambitious, and even more radical” in moving towards a low-carbon future, as “time is rapidly running out.”
The Prince of Wales, who has a lifelong commitment to a greener future, said he wants the worldwide goal of net zero carbon emissions by 2050 – which should keep global warming below an agreed target of 2C – to be brought forward. “I am afraid 2050 simply suggests we have room to delay. We do not,” he said in a recorded speech at the opening of the two-day meeting.
“International financial institutions and development banks such as the EBRD have an absolutely crucial role to play in this. After all, we know that it is not a lack of capital that is impeding our progress, but how we deploy it,” he added.
The EBRD is pursuing its ever more ambitious green strategy while continuing to offer short-term support to its countries and clients to address the implications of Covid-19. All EBRD investments in 2020-21, worth €21 billion, are already committed to helping these countries counter the economic effects of the coronavirus pandemic.
An emergency support programme for infrastructure providers is helping ensure the provision of vital services and the continuation of sustainable infrastructure projects despite acute pressure from the pandemic.
While in the short term the need for liquidity cuts across all other investment considerations, the EBRD’s new green approach looks further forward to provide planning tools that will also prepare the Bank to handle the post-crisis economic recovery phase.
Josué Tanaka, the EBRD’s Managing Director for Energy Efficiency and Climate Change, said: “Covid-19 is a sharp warning shot about the urgency of addressing the rising climate and environmental crisis. Accordingly, the new EBRD Green Economy Transition approach identifies specific policies and investments in the short term which will support a green, inclusive and resilient recovery. And it also defines a set of actions to support its countries of operations to progress towards a low-carbon and resilient future.”
GET 2021-25 sets an ambitious target for the green share of EBRD investment to reach more than 50% by 2025. It also commits the EBRD to focus on aligning with the Paris Agreement goals, with a decision on full alignment to be considered within the next two years.
Another focus is enhancing policy engagement to develop long-term decarbonisation and resilience pathways. As the world moves into a crucial period – the decade identified in the 2018 IPCC report as the time in which key changes must be made to allow global temperature rises to be kept below 2C – aligning different organisations’ approaches and metrics becomes ever more vital for success in moving towards a low-carbon future. Building closer partnerships at country and sector level as well as with MDBs and other institutional partners is at the core of the GET 2021-2025 approach.
In implementing GET 2021-2025, the EBRD will also pay particular attention to the social implications of change. The importance of a just transition, in which no one is left behind as carbon-intensive industries are reshaped, as well as its implications for gender, will be carefully examined.
The new GET 2021-25 approach will broaden the range of the Bank’s green investments by innovating across a range of thematic action areas including energy efficiency, adaptation, green financial systems, industrial decarbonisation, sustainable food systems, energy systems integration, cities and environmental infrastructure, sustainable connectivity, green buildings and natural capital.
To counter the pandemic’s economic effects, large-scale stimulus packages will be needed to kickstart activity. Linking this economic stimulus with ever more effective climate action – and helping the world “tilt to green” in time to avoid catastrophic levels of global warming – will be critical in accelerating the transition to a low-carbon economy. GET 2021-25 offers a clear and structured roadmap towards a sustainable future.
“We have a once-in-a-lifetime opportunity to rebuild much of the global economy post-Covid-19,” said Mattia Romani, Managing Director, Economics, Policy and Governance.
“Why rebuild it on the same premise as before – with high emission intensity and environmental costs – when we know that this is the past, not the future? We must use this opportunity to rebuild economies greener, fully taking into account the risks of climate change.”
The author is a writer on sustainable infrastructure and green economy transition at the EBRD.