The energy, climate change and sustainability (ECCS) focus area of the Legal Transition Programme (LTP) cover a wide range of initiatives in the EBRD’s Countries of Operations (CoOs). The agenda of the focus area could be broadly divided into three categories: (a) Sustainability Governance and Regulation; (b) Climate Change Governance; and (c) Energy Market Legal Reforms.
The EBRD’s commitment to sustainable development
The concept of sustainability has grown in prominence in the recent years and currently is at the epicentre of international policy-making. Sustainability is closely associated with sustainable development and can be defined as ‘’meeting the needs of the present generation without compromising the ability of future generations to meet their own needs’’ (UN Brundtland Report, 1987). Governments, businesses, international organisations and other stakeholders play a crucial role in achieving the Sustainable Development Goals (SDGs). The need for a coordinated approach between these actors has been further highlighted by the 2015 Paris Agreement and the aim to keep the average global temperature rise “well below 2 degrees Celsius” compared with pre-industrial levels. Such a coordinated approach entails clearly defined commitments, adequate (sustainable) financing and tailored policy reforms.
At the national level, each country has set out in its Nationally Determined Contributions (NDCs) the ways it plans to contribute to this collective endeavour following the Paris Agreement. Multilateral Development Banks (MDBs) constitute drivers of change by providing adequate financing in line with the Addis Ababa Action Agenda (AAAA) and are frontrunners of policy reforms by internalising sustainability objectives.
The EBRD’s commitment to sustainable development serves as the cornerstone of the Bank’s operations and is enshrined in its foundation document, the Agreement Establishing the Bank, which specifically highlights the commitment to ‘’promote in the full range of its activities environmentally sound and sustainable development’’. To this end, the EBRD and other MDBs signed a joint declaration in 2018 committing to align their activities with the goals of the Paris Agreement, and in 2019, pledged in a joint statement, to increase global climate action investments each year to US$ 175 billion by 2025. In addition, the EBRD has adopted and revised its core sustainability-linked policies and strategies, including its Green Economy Transition (GET) 2021-2025 approach as well as its Environmental and Social Policy (ESP), and amended its concept of ‘transition qualities’ to incorporate and prioritise the ‘green’ dimension as an integral aspect of economic decision-making.
The LTP’s role
LTP is the EBRD’s landmark initiative to create a stable, predictable and investor-friendly legal environment in the Bank’s CoOs. The Legal Transition Programme engages in policy dialogue, conducts assessments and training events and contributes to the development of action plans, legislation and regulation, as well as new practices. In particular, the ECCS focus area supports the implementation of the SDGs and other climate-related objectives under the Paris Agreement by providing policy advice and technical assistance to sovereigns, corporates and standard-setting bodies to adopt sustainable practices and strategies, enhance transparency and develop sustainability-sensitive legislation and regulations.
Examples of some core initiatives are presented below:
- Sustainability Governance and Regulation is an umbrella category covering initiatives ranging from enhancing transparency of environmental, social and governance (ESG) disclosures to developing good practices to tackle food loss and waste (FLW). Indicative examples of recent projects include: the development of ESG Guidelines for the Bucharest Stock Exchange (BVB), Romania; promoting ESG Reporting in the Warsaw Stock Exchange (WSE), Poland and the Macedonian Stock Exchange (MSE), North Macedonia; and guidelines for the reduction of FLW at the retail level in Greece and Turkey.
- Climate Change Governance initiatives aim to enable the transition to a low-carbon economy by assessing CoOs’ climate strategies and/or NDCs, and supporting the private sector to develop the necessary corporate governance mechanisms which will allow them to better identify, assess, manage and disclose their climate-related risks and opportunities. The team has worked with and undertaken a series of projects within the auspices of the EBRD Corporate Climate Governance Facility, including the development of a Corporate Climate Governance Guidance (‘Toolkit’) for EBRD’s non-executive directors (NEDs) and the development and subsequent implementation of Corporate Governance Action Plans (CCGAPs) in investee companies.
- Energy Market Legal Reforms target the transition to a net-zero economy by supporting further investments in the renewable energy sector via the strengthening of institutional structures and the adoption of energy efficient policies, legislation and regulations. Indicative examples of recent projects include the development of the first Greek Offshore Wind Law and technical assistance to the governments of Romania and Moldova to amend their Energy Law and Gas Law respectively.
Knowledge exchange and public engagement
In order to raise awareness and to advance the initiatives under its sustainability agenda, the ECCS team collaborates with a number of partners on policy, standards, guidelines, and capacity building. An indicative example is the partnership with the Climate Governance Initiative (CGI), endorsed by the World Economic Forum (WEF), to build the understanding of NEDs and senior management of businesses and financial institutions around climate change. The partnership has resulted in the launch of two dedicated platforms, also known as ‘Chapter Zero’; one in Egypt and one covering Ukraine, Georgia and Armenia. The team has also worked with the Food and Agriculture Organization (FAO) to produce an investment brief which analysed the role of MDBs in reducing FLW and in setting best practice standards. Recently, the team has been with the Network for Greening the Financial System concerning climate-related litigation trends and risks. The team is also due to commence a project in 2023 with the International Institute for the Unification of Private Law (UNIDROIT) to assess sustainability and climate change due diligence practices on global value chains.
For more information, please contact Vesselina Haralampieva, Associate Director, Senior Counsel, HaralamV@ebrd.com.