Advising national banks on their green transformation journey

THE BACKGROUND

In past years, the European Commission took important steps to reorient capital flows towards a more sustainable economy. In March 2018, the European Commission adopted the action plan on sustainable finance, based on recommendations from the High-level expert group on sustainable finance. Establishing a detailed EU Taxonomy for sustainable activities, setting up the European Green Deal and the related European Green Deal/Sustainable Europe Investment Plan, creating an EU Green Bond Standard, and strengthening sustainability disclosures are among the key elements of an ambitious EU strategic sustainability framework.

As a result of these initiatives, sustainability-related requirements are mounting for financial market participants including the European national public banks and other financial intermediaries. They now require support to develop tools that would allow them to align their activities and working methods with these important changes.

THE PROJECT

FINANCE FOR IMPACT, in a consortium led by ICF, WiseEuropa and Analistas Financieros Internacionales (Afi), were mandated to provide green finance advisory services to Bank Gospodarstwa Krajowego (BGK in Poland) and Instituto de Crédito Oficial (ICO in Spain).

This project took place in the context of the implementation of the InvestEU Programme 2021-2027, which introduced sustainability proofing of investments across the climate, environmental and social dimensions. Demonstration of sustainability has become an important element in the decision-making process when approving the use of the InvestEU guarantees.

THE RESULTS

FINANCE FOR IMPACT equipped the Polish and Spanish national promotional banks with the tools, skills and understanding for implementing the InvestEU sustainability proofing and climate & environmental tracking requirements. We advised these banks on how to develop capacity for complying with sustainable finance legislation and promote investments oriented on specific climate and environmental targets.

We designed appropriate methods for conducting an economic appraisal of projects in the context of InvestEU and in specific sectors, e.g., low-carbon transportation, clean energy (wind and solar), alternative fuelling infrastructure (EV). More specifically, we advised BGK and ICO on how to develop ESG scoreboard and calculate economic rate of return for their green portfolios.