The COVID-19 crisis and prospect of a green recovery has led to growing interest from national and regional governments in creating Green Public Financial Institutions.
These banks, also known as Green or Climate Banks, provide finance to priority activities for decarbonisation and the energy transition, alongside other policy instruments and market developments.
One challenge of implementing these institutions is their perceived complexity.
However, our experience at E3G– first in the UK and then in South Africa and Colombia – shows there are common design principles applicable everywhere, even as local contexts and institutions differ.
We were at the heart of developing the world’s first-ever Green Investment Bank in the UK and continue working closely with it today. As the original public bank dedicated exclusively to financing low carbon and green infrastructure and business, the UK Green Investment Bank has gone on to spur a movement, with over a dozen publicly owned banks now established around the world.
The complexity of infrastructure decisions and investments require institutions with the capability to develop sectoral strategies. This also requires the ability to adapt to changing contexts, while complementing existing financial institutions.
Delivering the net-zero transition requires institutional innovation.
We have developed a framework which captures key learnings, mapping out the procedural steps required to set up green financial institutions.
In the links above on this page you will find a selection of relevant work, including:
- An overarching blog making the case for green investment banks;
- A Green Bank Design Hub Case Study on the UK Green Investment Bank;
- A presentation on the Process of Designing Green Banks and Financial Institutions made in Paris last year during the Green Bank Summit;
- A case study on learnings from South Africa;
- A briefing on the green bank design principles outlining the process of creating these types of institutions; and
- A 90-second animated video on how to design a green bank.
E3G explores how to design a green bank in this 90 second video.
Most recently, we have used this experience to advise on the design of the London Future Finance Facility. This new institutional concept builds on established models, addressing London’s goals by uniquely combining innovation with market-making, reflecting local needs and the local institutional landscape.
We are also using our framework to advise European Investment Bank (EIB) shareholders on the EIB’s transition to becoming a climate bank.