Standalone climate strategy and integration of climate in overarching strategy

Explanation

Overarching strategy

The EBRD’s Strategy Implementation Plan (SIP) 2019-2021 mentions the Paris Agreement as being consistent with its six “transition qualities” (competitive, green, inclusive, integrated, resilient and well-governed) and incorporates its Green Economy Transition Strategy as part of this plan. “Green” is directly related to the Paris agreement. Alignment with the Paris Agreement for “competitiveness” refers to cost-effective renewable energy tenders, while “well-governed” links to the Task Force on Climate-related Financial Disclosure (TCFD) reporting assistance for clients. Finally EBRD understands a just transition as part of the “inclusive” aspect. This is interesting but it would be recommendable to explicitly describe how these transition qualities link to the EBRD’s Paris alignment process and how they might have to adapt during that process. It should be noted however that the more recent Strategy Implementation Plan 2020-2022 appears to have slightly less focus on climate, which is not encouraging. The SIP only briefly refers to mitigation and adaptation, while also not making reference to the do-no-harm principle. This should be incorporated in the SIP 2020-2022.

The current Strategic Capital Framework, which was approved in April 2015 so just before the Paris Agreement, refers to the same “transition qualities” as referred to above. The Strategic Capital Framework is being updated during 2020 and will be influenced by the GET 2.1. approach.

Standalone climate strategy

On July 1st 2021, the EBRD adopted a Governors resolution committing that “All EBRD activities shall be fully aligned with the goals of the Paris Agreement no later than 31 December 2022”

The EBRD approved it Green Economy Transition approach 2.1 in 2020. The approach succeeds the GET 1.0 approach from 2015 – 2020. The declared aim of GET 2.1 is “accelerating the Transition to a Green Low Carbon Economy” and to have transformational impact by enhancing country engagement. The approach foresees a complete alignment of the EBRD’s operations with the Paris Agreement, and implementing a result oriented policy via programmatic approaches with the aim of having a transformational impact. The GET 2.1. strategy also commits the EBRD to a green finance ratio of at least 50% by 2025. The approach incorporates the Joint MDB Paris Agreement Alignment Framework and sets out a timeline to test the alignment approach. However, the strategy stops short of announcing an official date by which it intends to be aligned, postponing this decision until 2022. In July 2020 an EBRD press release specifically stated that:

“As part of GET 2.1, the EBRD would screen all investments for alignment with the Paris Agreement and national climate-related action plans, taking into consideration the priorities set in country and sector strategies.  It would also increase its capacity to support countries, regions and sectors to develop low carbon and climate resilience strategies and scale up its efforts to mobilise climate finance. The EBRD would work towards full alignment with the Paris Agreement, on which a decision would be taken no later than 2022, taking into account the lessons learned from the initial phase of implementation of the methodology jointly developed by the Multilateral Development Banks.”

The GET 2.1. approach in turn is going to inform the Strategic Capital Framework which sets out the Bank’s high level strategic direction which needs to be approved by the board in the near future.

The EBRD also refers to the ‘do-no-significant harm’ principle, albeit in the context of the EU taxonomy