On Tuesday 13 December, the EIB organised a workshop in Brussels to update civil society stakeholders about the Bank’s climate finance tracking and GHG methodologies, with a particular focus on Energy, and discuss how these standards support the transition to low-carbon and climate-resilient economy.
Defining and reporting on climate finance: transparency is the key
Climate finance tracking is increasingly gaining momentum. The EIB Climate Change expert Nancy Saich explained how the Bank has been working closely with other Multilateral Development Banks (MDBs) and developed a transparent methodology to track and report what counts as Climate Finance. Over the last year, the Bank and other MDBs have aligned their principles for tracking climate mitigation activities with the International Development Finance Club (IDFC), agreed initial principles for tracking adaptation finance and have started a process on the next steps for harmonizing their approaches for adaptation finance. Moving forward, the various stakeholders should promote Common Principles as their starting point and ensure all differences in reporting are transparently dealt with. The EIB experts further highlighted the importance of financial streams being clearly and transparently defined when using terms such as green, clean and/or sustainable and identified a role for civil society in requesting clarification on such points when there is uncertainty or lack of clarity.
Reviewing GHG methodologies: harmonisation and impact reporting
Accounting for carbon footprint constitutes an important element in measuring the climate impact of projects financed. The Bank applies its carbon footprinting methodology to all sectors, accounting for about 95% of total greenhouse gas (GHG) emissions from EIB’s investment projects. During his presentation, the EIB Economic Advisor Eugene Howard outlined how the Bank incorporates the cost of environmental externalities into the project cash flows as well as how EIB experts evaluate and compare two different alternatives of a project, particularly in the area of renewables and energy efficiency to determine the investments’ carbon footprint. Importantly, the Bank has also played a leading role in harmonisation and standard-setting within the international financial institutions (IFI) community, which has published harmonised approaches for GHG accounting in these fields. The IFI group is actively exploring how to extend the harmonised methodologies in order to further support the Paris Agreement. The EIB has also taken important steps forward in reporting on carbon footprint data for projects and enhancing impact reporting on green bonds (with a ground-breaking move to obtain an independent reasonable assurance report for its Green Bonds (Climate Awareness Bonds) in September 2016).
Tracing the way forward: civil society perspectives
In the subsequent Q&A, civil society representatives praised that the Bank recognizes the need to focus on low carbon pathways and requested clarifications on a number of specific steps and measures that the EIB has put in place within its energy lending and climate strategy. The issue is particularly salient with regard to fossil fuels financing and their compatibility with the well below 2ºC/1.5 ºC goal. The discussion then focused on the need for harmonisation and standardisation, which some NGO participants in the room pointed out as being even more important than focusing on transparency.
The participants further welcomed the review of the EIB methodology for calculating greenhouse gas emissions, particularly with regard to the intention shared with other IFIs to adopt a forward-looking approach for baseline setting as well as the Bank’s ambition to review the Emissions Performance Standard as a part of the next regular update of the standard planned for 2017. However, they also urged the Bank to adopt an even more comprehensive assessment of projects’ climate impacts, notably by including both direct and indirect emissions and by accounting for average amounts of natural gas leakages and their climate impacts.
The questions and comments from the various civil society representatives were greatly appreciated by the EIB experts present at the seminar. The Bank noted the various recommendations and suggestions and will continue to engage on issues of climate finance tracking and carbon footprinting throughout the upcoming months, particularly in the context of the effort for enhancing harmonisation and standardisation of reporting among IFIs.
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