Advising EIB on its green finance portfolio

THE BACKGROUND

In its Climate Bank Roadmap, adopted in 2020, the EIB has committed to increasing the share of its green portfolio significantly. Notably, it identified the need to increase intermediated lending for climate action as a key area to seize opportunities to support final beneficiaries that the EIB for the reason of scale was not able to reach directly, such as micro, small and medium-sized businesses (MSMEs) but also MidCaps companies.

Translating investment needs into green finance eligible interventions that EIB could finance therefore required substantial efforts, including new and adapted financial products tailored to local circumstances.

THE PROJECT

Thierry Senechal, FINANCE FOR IMPACT Managing Director, was appointed Team Leader on the development of an EIB green finance strategy in January 2022. Under his supervision, a team of consultants advised on the financial instruments and approaches to be implemented to support the development of a green finance portfolio in several countries in the Middle East and Africa.

The specific objectives of the projects were:

• Carry out a market scoping analysis in 23 countries
• Advise on the design of products and approaches for climate action and green financing, including financial and non-financial products (equity and quasi-equity, hedging for local currency lending, senior and subordinated lending, guarantees, investment grants, etc.)
• Provide support to the drafting of investment proposals for the European Fund for Sustainable Development (EFSD+)
• Design a pilot program to promote energy efficiency and renewable energy investments in Jordan

THE RESULTS

A team of experts carried out a comprehensive market assessment that supported the development of a portfolio covering several thematic areas including energy efficiency; renewable energy; climate change mitigation in agriculture, forestry, fisheries and aquaculture; low-carbon transportation; climate change adaptation investments; green technology financing; and other sustainable finance investments, e.g., in the blue economy.

In particular, the following outcomes were achieved:

• Developing a green finance portfolio strategy in several regions/countries
• Designing a suite of financial products aimed at financing the green transition
• Preparing operational guidelines, manuals, and processes to support EIB green strategy at the country level
• Contributing to the preparation of a large-scale investment programme under EFSD+.
• Advising on how to combine different implementing modalities, namely EU budgetary guarantee and regional blending facilities (for investment grants, financial instruments, and technical assistance) to support green and climate change targeted investments