Financial implications and other risks and opportunities for the organization's activities due to climate change

Financial implications and other risks and opportunities for the organization's activities due to climate change

• Reference Number: EC2
• Related Status: Reported
• GRI Status: Core GRI Indicator

Climate action is a top priority for the EIB.
The EIB recognises that climate change is one of the biggest environmental, social and economic threats. To avoid catastrophic consequences, significant reductions in greenhouse gas (GHG) emissions and strategies to adapt to climate change are needed. GHG emission reductions (mitigation) and measures to increase resilience to climate change (adaptation) are complementary. The EIB therefore focuses its climate action on :
• Low-carbon investments that mitigate GHG emissions and climate-resilient projects which take into account the consequences of climate change.
• Consideration of mitigation and adaptation issues in the EIB’s sector guidelines, particularly for the energy, transport, water, wastewater, solid waste, forestry and research, development and innovation sectors.
• Reduction of the climate impact of overall EIB lending activities by introducing corporate targets for climate action (currently 25% of total lending) and requiring that all projects use the best appropriate technology for energy efficiency.

For the past three years, the EIB has been calculating the GHG emissions of all projects with a significant climate impact (carbon footprint). This is done by measuring the projects’ emissions and comparing them to the most likely alternative.
The Bank offers attractive financing features such as longer grace periods and maturities and the possibility to finance up to 75% of the cost of climate action projects including:
- Renewable energy and energy efficiency projects
- Reduction of greenhouse gases other than CO2 in industries and utilities
- Land use change, notably sustainable forestry
- Sustainable transport
- RDi for early stage low carbon technologies
- Adaptation

Climate change considerations are systematically included in the Bank’s internal appraisal procedures. All projects are routinely screened for their potential to mitigate climate change and generate carbon credits, and adaptation requirements are considered at the design stage to make the projects climate change resilient.


Climate Awareness Bonds (CABs)

Historically, generic EIB bonds have had appeal for certain socially responsible investors and indices. More specifically targeting SRI investors, the EIB has been at the forefront of developing, on a voluntary basis, specialised bonds for climate-conscious investors. Climate Awareness Bonds (CABs) are EIB bonds whose proceeds are ring-fenced from the Bank’s general funding portfolio and are used exclusively to finance projects supporting climate action. Since their inception in 2007, EIB Climate Awareness Bonds have raised the equivalent of EUR 1.4bn, through 10 transactions in 6 currencies. The residual treasury balance available for disbursement in 2011 was EUR 57m, coming from the last 2010 CAB transaction issued in November 2010. These funds were fully allocated to projects in 2011 in the fields of renewable energy and energy efficiency, which include, but are not limited to:

• renewable energy projects such as wind, hydro, solar and geothermal energy production; and
• energy efficiency projects such as district heating, co-generation, building insulation, energy loss reduction in transmission and distribution and equipment replacement with energy efficiency improvements of 20% or more.
2011 allocation of funds from Climate Awareness Bonds


In October 2011, State Street Global Advisors (SSgA), the investment management arm of State Street Corporation, launched its High Quality Green Bond strategy. The EIB’s Climate Awareness Bonds are among the eligible instruments targeted by the fund, which will invest primarily in ‘green’ bonds issued by supranational or multilateral development banks