European Bank for Reconstruction and Development

Founded:

1991

Mission:

"To develop open and sustainable market economies in countries committed to, and applying, democratic principles."

Total assets:

$71 billion

Headquarters:

London, United Kingdom

Top five shareholders:

USA, Japan, France, Germany, Italy and the UK

Summary of Paris alignment assessment:

The European Bank for Reconstruction and Development is not yet Paris Aligned. It is making slow but steady progress towards aligning the various aspects of its operations to the Paris Agreement on climate change. Areas it should prioritise include fossil fuel exclusion policies and scaling up adaptation finance. The EBRD also has the potential to lead the way in terms of transparency in financial intermediary sub-projects.

This page is part of the E3G MDB Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

Metric	Summary
Promotion of green finance	Transformational – The EBRD has actively and effectively engaged in the greening of the financial system, working with policymakers and regulators (such as in the development of the EU Taxonomy), but also with financial institutions and corporates, including through its Corporate Climate Governance Facility. It has further developed several innovative financial instruments to address both mitigation and adaptation needs; examples include the issuance of Green Transition Bonds and Climate Resilience Bonds – the first green bonds issuance by an MDB to be targeted specifically at climate change adaptation and industrial decarbonisation – and climate-resilient debt clauses. The EBRD could further strengthen the impact of its leadership role by: enhancing its work to cascade learning to its clients and intermediaries as green and transition finance products and standards continue to evolve; and using its upcoming updated green strategy to outline a clear theory of change for working with partners to green the financial system.
Fossil to non-fossil energy finance ratio and scaling up climate finance	Some progress – Between 2019 and 2022 (the latest years for which information is available), for every USD 1 the EBRD provided to fossil fuels, USD 2.6 went towards clean energy, with USD 0.6 going to transmission and distribution (which typically cannot be attributed to any one energy type), and USD 0.7 to other energy projects (e.g. mixed energy, large hydropower, and biomass projects). This clean-to-fossil-fuel ratio is at the lower end of the range among the MDBs covered by the Matrix and has not improved in recent years. The EBRD does, however, have one of the highest shares of climate finance as a percentage of total operations among MDBs, consistently hitting its 2025 target of at least 50% since 2021.
Nature based solutions	Some Progress – The EBRD has made progress on strategies to incorporate nature considerations across its operations, including those set out through its Approach to Nature in 2023. It is furthermore leading on nature risk assessment modelling through its Nature Capital Valuation Model. The EBRD is ramping up its technical assistance offering in the sector, including on improving nature-related data disclosure and developing and enhancing National Biodiversity Strategies. However, the EBRD has not set time-bound targets for nature financing beyond the overarching green (climate and environment) finance target of 50% of total operations by 2025, and there is room for improvement with regard to its policies and targets on forestry.
Climate risk, resilience, and adaptation	Some Progress – The EBRD has a comprehensive set of procedures for project level climate physical and transition risk screening and management, underpinned by the Bank’s Paris Alignment Assessment, which is applied to all projects. It was also the first MDB to commit to comprehensive application of the TCFD Framework. The flagship Corporate Climate Governance Facility further provides comprehensive support in building clients’ climate resilience. In terms of climate adaptation finance, however, the Bank reports one of the lowest shares among MDBs (5.3% in 2023), with no increase in recent years. While its private sector focus (as well as the characteristics of its sectoral and geographic footprint) in part explains this, the Bank should set out an ambitious phased target to increase adaptation finance.
Overarching climate strategy	Paris Aligned – The EBRD Green Economy Transition (GET) 2.1 approach sets out a clear roadmap for Paris alignment alongside ambitious green financing targets (50% by 2025) and clearly identified sectoral priorities and plans for mitigation and adaptation. These commitments are well integrated in the Bank’s overarching strategies. While the “do no harm principle” has previously been noted as integral to the EBRD’s approach in the previous iteration of the GET, it is not explicitly integrated in the GET 2.1 document. To reach “transformational” status, the Bank should tie its roadmap to a 1.5 °C temperature goal rather than the current “well under 2 °C”.
Integration of climate mitigation and resilience in key sectoral strategies	Paris Aligned – The EBRD’s sectoral strategies align with the Paris Agreement’s goals, with decarbonisation and resilience considerations well integrated throughout. The Bank’s approach to integrating climate across its sectoral operations reflects the standard-setting approaches developed throughout Europe. To build on these strong foundations, select sectoral strategies would benefit from clearer exclusions and stronger implementation frameworks to fully meet Paris goals.
Institutional leadership	Transformational – The EBRD is a leader on Paris alignment of indirect finance flows, as illustrated by its ambitious Paris Alignment Methodology, its initiatives to support climate governance among its clients, such as the flagship Corporate Climate Governance Facility, and broader efforts to green the financial system through its efforts in international fora including the Network for Greening the Financial System. The EBRD has also been engaged in pioneering country level work, most prominently through its involvement in country platforms and its advocacy for the establishment of the Long-Term Strategy Programme. The Bank has launched the first resilience-themed green bonds – the Climate Resilience Bonds – and also leads innovative work in other fields such as blue economy.
Energy access and fuel poverty	Not applicable – Energy access is not a key consideration across the EBRD’s present countries of operation.
Energy efficiency strategy, standards and investment	Paris aligned – Energy efficiency is identified as a priority area within the EBRD’s Green Economy Transition (GET) 2.1 approach and the Energy Sector Strategy (ESS) 2024–2028, though the Bank has not adopted the “energy efficiency first” principle. The EBRD has adopted strong energy efficiency standards in buildings and transport, though its approach would again benefit from a more systematic operationalisation of the “Avoid–Shift–Improve” framework in the latter. While financial intermediaries are required to follow “best practice in sustainability management”, this has not translated into stringent standards.
Fossil fuel exclusion policies	Some progress – The EBRD’s Energy Sector Strategy (ESS) 2024–2028 represents a positive but limited step towards exclusion of fossil fuel financing. It builds on the existing exclusion on coal financing and upstream oil exploration included in the ESS 2019–2023 strategy, extending exclusion to all upstream oil and gas development projects (including production and extraction) and midstream oil. However, it falls short of a total phase-out of fossil fuel finance by allowing midstream gas and downstream oil and gas financing. Supply side efficiency is promoted, despite the lack of emissions performance standards.
Greenhouse gas accounting and reduction	Some progress – The EBRD has a comprehensive carbon footprint methodology which includes the lowest inclusion threshold of all MDBs assessed (on par with the European Investment Bank (EIB) and the Asian Development Bank (ADB)), and both absolute and relative emissions tracked across all sectors. The EBRD’s primary emissions reduction target is a net reduction of 25–40 million tonnes of GHG emissions over 2021–2025, based on cumulative ex ante estimates. The EBRD should build on this by adopting a science-based 1.5 °C-aligned emissions reduction target encompassing its overall portfolio emissions, including scope 3 emissions.
Shadow carbon pricing	Paris aligned – The EBRD applies an ambitious shadow carbon pricing scheme. The mechanism is applied to all projects exceeding 20 ktCO₂e/year in absolute emissions or relative (positive or negative) emissions. The mechanism goes beyond High-Level Commission on Carbon Prices (HLCCP) recommendations, with prices set at EUR 101 in 2022 and set to rise to EUR 179 by 2030 and EUR 602 by 2050 (subject to periodic review). The Bank could reach transformational status through greater inclusion of scope 3 emissions, which are currently generally not captured.
Country level work	Paris Aligned – The EBRD’s country approach includes consideration of climate change, including both mitigation and adaptation. The Bank integrates Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTSs) in country level programming, while its NDC Support Programme assists in their enhancement. The EBRD’s Just Transition Initiative, as well as its active engagement in country platforms in North Macedonia and Egypt, represent transformational approaches to country transition planning, which could be further scaled.
Technical assistance for implementing Paris goals	Paris Aligned – The EBRD actively supports the implementation of Nationally Determined Contributions (NDCs) through its membership of the NDC Partnership and its NDC Support Programme. The Bank should consider clarifying that the programme’s goal of “strengthening” NDCs actively enables and encourages efforts to increase ambition, rather than solely to accelerate implementation. Membership of the MDB’s Long-Term Strategies Programme (LTS-P) will further strengthen its ability to support these efforts. Beyond NDC work, the EBRD offers a large array of technical assistance with a particular focus on the private sector, such as through the Corporate Climate Governance Facility and the Green Economy Finance Facilities.
Transparency of climate finance data	Some progress – The EBRD publishes its project level climate finance data and makes it available to the OECD-DAC climate-related development finance database. However, disclosures related to project and portfolio level impact indicators results and sovereign loan agreement contracts should be improved. While it discloses financial intermediary lending information, it is insufficiently granular as it does not systematically include disclosure of subprojects. The EBRD undertakes comprehensive TCFD reporting, reflecting best practice among MDB peers.