In 2016, the European Bank for Reconstruction and Development (EBRD) marked 25 years since its work began to support the transition to open market economies of the countries of central and eastern Europe and later the former Soviet Union.

The Bank was established at a time when many of these countries were facing an environmental crisis, carrying the communist era’s legacy of widespread environmental neglect and wasteful use of energy.

However, despite massive efforts to reduce environmental degradation in our region – and with noticeable improvements in air quality, water management and use of renewable energy sources over the past 25 years – the EBRD region still lags behind, with an average carbon intensity of almost five times higher than the EU-28 average.

Helping our countries get on a path to sustainable growth, both in the economic and environmental sense, has been a key component of the EBRD’s mandate from the very beginning. Since then we have expanded the concept of what sustainability means; moving from a concentrated focus on pollution control to more holistic and integrated considerations of environmental, climate, labour, safety and social issues.

We have also re-assessed and revised the transition concept that lies at the heart of our mission. The updated concept, approved by shareholders in 2016, recognises the need for a strong market as well as state institutions and places greater emphasis on the desired outcomes of the transition process, which should seek to make an economy competitive, well-governed, green, inclusive, resilient and integrated.

Each of these qualities constitutes the roadmap for EBRD investments and policy. From 2017, these six qualities will be formally integrated into the reporting of transition impact, one of the key operating principles of the Bank.

A Bank initiative that explicitly promotes the green transition quality was rolled out in 2016: the Green Economy Transition (GET) approach, which puts investments that are of benefit to the environment right at the centre of the Bank’s activity.

With our new GET approach comes a more explicit acknowledgement that climate change and environmental degradation stand in the way of transition and impede both economic activity and human well-being.

The GET approach seeks to increase the volume of green financing to 40 per cent of EBRD annual investment by 2020. The GET is also helping to broaden the range of environmental projects the EBRD is involved in, while at the same time continuing the policy dialogue and private sector support that the Bank is known for that will drive the growth of the green economy across the region.

A year of progress

In 2016 we placed sustainable investments and development at the heart of our work. It was a year of progress, from influencing reforms and policy dialogue to delivering concrete projects on the ground.

As can be seen in our Stories section, many EBRD clients are already experiencing the benefits and rewards of using energy, water and other resources with greater efficiency.

In addition to promoting and re-energising transition in our countries of operations, the projects we financed in 2016 will see:

13 million

people benefit from improved access
to wastewater services

2.6 million

people benefit from improved
solid waste management


people benefit from improved
public transport


people benefit from improved
district heating

Nearly 6 million

people benefit from improved infrastructure

Cities across the EBRD region are benefiting from improved road safety; cleaner, more-efficient transport; improvements in waste management; and from the creation of safer and more attractive urban centres under the Green Cities Programme. Encouraging municipalities to adapt their infrastructure to changing climatic conditions, as well as the needs of their population, ensures they can prosper in the long term.

Cumulative green finance activity has been well distributed across activity areas both in terms of Annual Bank Investment (ABI) and in the number of operations. Key activity areas have included:

  • Direct energy efficiency financing for industrial and corporate clients covering large energy-intensive industries, such as steel, glass and cement production, agribusiness and large transport infrastructure, such as railways. Cumulative EBRD financing in this area reached €6.0 billion for 428 projects.
  • Sustainable Energy Financing Facilities involving credit lines for on-lending to energy efficiency projects in small and medium-sized enterprises (SMEs) and buildings and for small-scale renewable energy generation. Cumulative EBRD financing in this area reached €3.8 billion for 310 projects.
  • Supply-side energy efficiency supporting energy efficiency enhancements for thermal power generation and for transmission and distribution with cumulative EBRD financing of €5.5 billion for 122 projects.
  • Direct financing of renewable energy with cumulative EBRD financing of €3.7 billion for 122 projects.
  • Municipal infrastructure energy efficiency related to district heating, water and wastewater and public transport network efficiency. Cumulative EBRD financing in this area reached €2.9 billion for 285 projects.
  • Climate change adaptation with cumulative EBRD financing of €976 million for 159 projects.

As well as making real impact in energy-heavy industries, the EBRD has also rolled out its Strategy for the Promotion of Gender Equality and many other important and inclusive initiatives over the past year, from energy efficiency in district heating to creating job opportunities for young people in the Turkish automotive industry. Promoting gender equality and inclusion is vital to our work in making the economies of our countries more resilient, helping them to succeed in the long term.

The EBRD further highlighted its focus on inequality in the Transition Report 2016-17 which cast a spotlight on inclusion, explaining how a failure to deliver a fair distribution of the fruits of progress may lead to set-backs in political and economic development.

We also continue to support our clients in the management of their own environmental and social impacts. One example of this is the guidance we have produced on best practices for managing resettlement and biodiversity impacts in line with our ESP’s Performance Requirements. We have also supported innovative webinars on Environment, Health and Safety (EHS) management for our financial intermediary partners.

Tracking and transparency

Given the wide scope of our work, and the fact it continues to expand, we need to be more transparent about what we do. Good governance sits at the heart of sustainability, and accountability sits at the heart of good governance.

It is our aim to provide more quantitative and qualitative information on the impacts and outcomes of our work, so that our shareholders, donors, civil society and investors can be confident that the underlying green project portfolio is delivering real environmental and sustainability benefits.

We continue to assess and set rigorous and relevant key performance indicators at the outset of projects and employ a robust monitoring system throughout the project cycle to ensure compliance and best use of resources, and enhance accountability (see Measuring and monitoring performance). The Bank also has a dedicated Project Complaint Mechanism to assess and review any grievances we receive related to our projects.

The EBRD has been tracking its climate and resource efficiency investments since 2006. In the last decade we have provided more than €22.2 billion for energy efficiency and renewable energy investments, for projects that promote water and materials efficiency and to help our clients adjust to the impact of climate change.

By the end of 2016, the EBRD’s green investments had saved the equivalent of 85 million tonnes of greenhouse gas emissions per year, more than Romania’s annual CO2 emissions related to energy use.

Investments aimed at optimising materials efficiency have resulted in a reduction of 1 million tonnes of waste per year, comparable with all waste landfilled in Lithuania in 2010.

The EBRD has set up a robust monitoring, reporting and verification (MRV) system, in line with internationally established practice. The system’s guidelines define the characteristics of green projects and project components and they determine the data required for monitoring.

Every EBRD investment is screened for its green potential by technical experts, at an early stage of the project cycle. Projects can be classified as not green, 100 per cent green, or partially green. In these cases, the financial value of the green investment components is determined.

The EBRD continues to scale up its cooperation with NGOs and civil society (see Engagement section). As part of its policy dialogue activities, the Bank works with governments to support the development of strong institutional and regulatory frameworks, a prerequisite for sustainable investments.

Looking ahead

We will continue to build on the progress made in 2016. The Bank continues to play an important role in building partnerships and alliances all over the region to raise the profile of green finance and assist with the implementation of the United Nation’s Sustainable Development Goals . As our countries step up their climate finance, policy reform activities will play an increasingly vital role in our support and we will continue to work with authorities at all levels to promote energy efficiency and renewable energy alternatives in new investments and through the introduction of regulations and legislation.

In addition, we will continue to support the social arm of our sustainability work in the form of gender and inclusion activities as well as crisis responses.

The new GET approach has stepped up our activities in a real and exciting way. We can already see the influence of our work in setting higher standards across the board, delivering tangible results that benefit businesses and communities alike, and making a green business model the new norm across the EBRD region and beyond.