Eight ways the European Investment Bank can help tackle climate change in Africa
The European Investment Bank (EIB) has set off to become the EU climate bank, after having pioneered the green bonds market over a decade ago. Now, in this new leading role, the bank is asking institutions, civil society and the general public to share their views, to be integrated into the EIB Group Climate Bank Roadmap. We joined the discussion and put forward eight concrete recommendations on how the EIB can better support climate change efforts in Africa.
As the EU climate bank, the EIB intends to help advance the Union’s climate change agenda and its new European Green Deal for a climate-neutral Europe by 2050. The bank has started this climate journey with a series of new developments. In November last year, it adopted a new energy lending policy, including the commitment to end its support to new fossil fuel energy projects by the end of 2021. It also committed to aligning fully all its activities with the principles and goals of the Paris Agreement by the end of 2020 and to trigger at least €1 trillion of climate and environment-related investments by 2030 and to support a just transition.
To best guide its actions towards these great objectives, the EIB has launched open and transparent consultations, whose result will be integrated into its upcoming Climate Bank Roadmap for 2021-2025.
We decided to answer the call and shared our views. We built on our work on development finance and sustainable environmental policies – including that on climate change risks through the Horizon 2020 project CASCADES. We made a number of concrete recommendations that focus on selected dimensions where the EIB could make a difference, particularly when it comes to supporting African efforts against the negative effects of climate change.
Our eight recommendations to the EIB
One. Integrate climate change risks into the entire portfolio, drawing from best practice and stimulating an intensified cooperation among multilateral development banks (MDBs) to further develop a set of common principles and good practices.
Two. Pay particular attention to the climate and environmental dimensions of the agriculture and food sectors, and systematically promote sustainable investment in climate-smart agriculture and sustainable food systems. Food systems are one of the largest contributors to climate change. Climate change reinforces existing inequalities in the food systems and increases food insecurity. EIB’s investments in climate-smart agriculture could contribute greatly to creating sustainable food and agricultural systems. This kind of investment would also be crucial in limiting the negative impact of unsustainable food systems and land use on climate change.
Three. Increase investments in climate adaptation by fostering synergies and complementarities between climate mitigation and adaptation in developing countries, particularly in Africa. The EIB is one of the multilateral development banks that is investing the least ($432 million in 2018) in climate adaptation, 12 times less than in climate mitigation ($5,268 million). We have highlighted the importance of boosting EU climate finance by mitigating more without neglecting adaptation in poorer countries, and why this is particularly relevant in agriculture activities of poor communities in rural areas. The EIB needs to fast-track and align its financing with the priorities identified by developing countries in their nationally determined contributions and national adaptation plans, including financing agricultural adaptation in rural areas and climate change adaptation of the urban poor.
Four. Support more actively decentralised access to sustainable energy to promote clean, efficient and renewable energy in a bid to leave no one behind. In line with its Energy Lending Policy, the EIB should enhance its engagement with relevant players. It should leverage more private finance towards innovative technologies and approaches that provide access to reliable, affordable and sustainable energy for more than half of the Africans currently underserved.
Five. Enhance collaboration with other MDBs to harmonise climate adaptation financing taxonomy across both MDBs and development finance institutions (DFIs). There is a need for a better common understanding among MDBs and DFIs of the definition of ‘adaptation’, and to identify common indicators for climate adaptation projects drawing on common principles and lessons learned so far. This is also critical for private investors, who pay increasing attention to sustainability criteria in their investment decisions.
Six. Foster greater collaborations with local institutions in developing countries on climate mitigation and adaptation. This should include private but also public development finance institutions that promote climate-sensitive approaches. In particular, the EIB could offer useful technical assistance on climate finance and other forms of support to local financial intermediaries and national development banks to build their internal capacity.
Seven. Adopt a systemic approach to monitor the impact of initiatives on climate change going beyond simple project-based monitoring. The EIB should adopt a portfolio approach to monitoring the impact of climate-related projects that explicitly captures not only financial but also non-financial additionalities, including those that last over time – such as demonstration effects, technological innovation and policy changes – according to the local context.
Eight. Put in place a mechanism to measure, monitor and evaluate climate change adaptation projects throughout their life cycles to achieve (long-term) sustainable development. Track the progress and impact of EIB investments on both the people and the environment by clearly stating the social, economic and environmental transition indicators to use in the analysis. The assessment of the projects’ impact should extend to cover the transformation created beyond the projects’ life cycles.
The EIB open consultation ends on 12 June. This leaves plenty of time to all those interested in taking part to make further recommendations.
The views are those of the authors and not necessarily those of ECDPM.