Advising on the climate and sustainable strategy

THE BACKGROUND

Climate change is, without doubt, the single most important global challenge. It has an increasingly large impact on communities, especially in developing countries, due to geographical vulnerability, a lesser ability to cope, and political fragilities. Climate change threatens biodiversity, causes natural resource degradation and depletion, and leads to a higher probability of pandemics and forced dislocation. A renewed focus and additional development finance resources are necessary to support a transition to low carbon. The European financial architecture for development plays an increasingly important role in support of the external policy objectives of the European Union (EU) through complementing traditional development cooperation tools and leveraging substantial resources for external investments. Nevertheless, there have been calls for reform or rationalization of the existing institutional and operational framework. This is to ensure that it is fully commensurate and delivers efficient and effective impact to the current investment challenges in Sub Saharan Africa, the EU’s Neighbourhood, and elsewhere in the world, and that it delivers impact efficiently and effectively.

THE PROJECT

Our team conducted an in-depth analysis of options available to policymakers for creating a new European Climate and Sustainable Development Bank. We assessed the feasibility of each option and highlighted ways for the EU to improve development performance with greater positive impacts, better visibility, brand recognition, alignment with EU policy objectives, and efficient use of financial instruments.

Options for consolidation of European Development Finance:

• Option 1: Turn the EBRD into a new Climate and Sustainability Development institution by transferring the extra EU activities of the EIB to the EBRD.
• Option 2: Task the EIB with creating a subsidiary for its extra EU activities and participating in it as a shareholder alongside Member States, the European Commission, and national development banks.
• Option 3: ‘Status Quo+’, Analyzing further possible enhancements in the current institutional set up, to maximize the visibility, brand recognition, and development impact of the EU’s development cooperation.

THE RESULTS

The team provided strong evidence to streamline development and climate finance from an EU perspective. The team extensively used data modeling for assessing financial, shareholding, and operational implications for each of the options under study. The team participated in several rounds of presentations and cross-examinations with senior EU policymakers, including the EU Economic and Financial Committee. Our analysis was well-received, seen as objective, comprehensive, and of high quality.