EBRD and insurer Euler Hermes are joining forces in risk - and green bonds

By Vanora Bennett

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  • EBRD and Euler Hermes sign master risk participation agreement to expand cooperation
  • Insurer will invest remuneration on selected EBRD projects in green bonds
  • EBRD aims to make more than half of its total investments in green projects by 2025

The European Bank for Reconstruction and Development (EBRD) and trade credit insurer Euler Hermes SA/NV, with the support of the Texel Group, an independent insurance broker, have signed a master risk participation agreement to boost cooperation through the Bank’s Unfunded Risk Participation programme to support investments in green bonds.

In one of the first transactions signed within this framework, Euler Hermes, through its UK branch, has taken on half the risk in an existing EBRD loan to a financial institution in Serbia. The original loan was signed to help the bank on-lend to its small business clients for investments in energy efficiency through the EBRD’s Western Balkans Sustainable Energy Financing Facility (WeBSEFF).

Euler Hermes, a subsidiary of the German insurer Allianz SE, has pledged to use the payments it receives from the EBRD through interest premiums on this agreement to invest in green bonds. Euler Hermes recently launched a Green2Green Single Risk insurance product, which enables it to support green transactions by investing remuneration received through them back into the green economy in the form of green bonds. The bonds are used to finance investments furthering the green economic transition in line with the Paris Agreement on climate change.

Together with providing funding to support the “greening” of the Western Balkans, the Bank is also engaging with governments to reform legal and policy frameworks to create an environment in which projects can succeed and wider impact is possible.

Supporting residential energy efficiency, the EBRD’s Green Economy Financing Facility (GEFF) has reached thousands of families across the six countries of the Western Balkans, providing financing to local banks for on-lending to households to invest in green technologies and solutions such as improving home insulation and installing efficient boilers. Its sister facility WeBSEFF, which began in 2013, has likewise provided finance for hundreds of successful energy efficiency projects for business and municipalities.

Across its countries and regions, the EBRD intends to raise the proportion of its annual business volume invested in green projects to more than 50 per cent by 2025.

Trade credit insurer Euler Hermes is a specialist in the areas of surety, collections, structured trade credit and political risk. Headquartered in Paris, it is present in more than 50 countries and is a full member of Allianz Group.

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