Estonia and Latvia: EU Taxonomy Implementation and Sustainable Finance Roadmap



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PSD disclosed:

03 Sep 2021

Project Description

Local Currency and Capital Markets Development (LC2) is one of the key strategic initiatives of the European Bank for Reconstruction and Development (“EBRD” or the “Bank”). The objective is to support the EBRD’s countries of operation to build deeper and more resilient local financial markets.  LC2 supports necessary reform programmes to implement country action plans and to address local capital market laws and other legal and regulatory structures to facilitate local currency funding by the Bank and others.

The Directorate-General for Structural Reform Support (DG REFORM) is a service of the European Commission (EC), which is mandated to help Member States of the European Union (“EU Member States”, or “Member States”) to design and carry out structural reforms as part of their efforts to support job creation and sustainable growth.  To this end it coordinates and provides tailor-made technical support to Member States to help them build more effective institutions, stronger governance frameworks and efficient public administrations. DG REFORM achieves this by taking applications from Member States for specific technical support, selecting and funding the projects with the highest potential impact, and monitoring the progress and results from funded projects.  .

One of the key priorities of DG REFORM is to support structural reforms which reinforce the Capital Markets Union action plan of the EC. This dovetails greatly with the EBRD’s LC2 initiative for the Bank’s Countries of Operations (CoO) which are also EU Member States (EU CoO). The “SRSS – Local Currency and Capital Markets Initiative Technical Cooperation Framework” (the “SRSS – LC2 Framework” or the “Framework”) will be led by the Bank’s Capital Markets Development (CMD) team and will cover all policy dialogue and TC work that the CMD team will perform that is funded by the DG REFORM.  The SRSS – LC2 Framework has the broad objective to help EU CoO to make lasting structural reforms that promote capital markets and the use of local currency, especially for EU CoO which do not use the Euro as their unit of exchange.

Assignments for each project under the SRSS – LC2 Framework will be set out in detail in the Terms of Reference (ToR) that will be prepared for each specific TC project. ToR for individual TC projects under the Framework will be finalised in consultation with the TC Team and DG REFORM.

TC projects under the Framework can be grouped into the following six areas, noting that many TC projects may fall into more than one of the categories.

A. Legal and Regulatory – these TC projects aim to reform the legal and regulatory environment in EU CoO in order to support modern capital market activities, instruments, and infrastructure. These TC projects will marry local legal counsel and international legal experts to make structural reforms which move EU CoO towards international best practice whilst ensuring local specificities are accounted for.

B. Capacity and Institution Building – these TC projects aim to build up the knowledge, understanding, ability and experience for key stakeholders in financial markets, such as government ministries, central banks, regulators and market participants. TC projects will deploy an appropriate mix of EBRD staff and external consultants for training, workshops, and conferences.  International market associations with necessary expertise, such as the Association of Financial Markets in Europe (AFME), International Capital Market Association (ICMA) or International Swap and Derivatives Association (ISDA), may also be utilised.

C. Product Development – these TC projects aim to develop the financial products which are available in the EU CoO in order to increase the diversity of the local financial markets.  TC projects will utilise an appropriate balance of EBRD staff and external Consultants to assess the feasibility of products in a given market, set out implementation roadmaps, and provide education on local money and capital market instruments including corporate bonds, covered bonds, securitisations, repos and derivatives (such as FX or interest rate swaps), and specialised equity instruments for SME financing.

D. Infrastructure – these TC projects aim to reform capital market infrastructure, including exchange, clearing, settlement and depository entities, as well as relevant market infrastructure areas of the central bank (e.g. money market systems, government bond trading platforms and registries, and payment and settlement systems). Consultants and EBRD experts will diagnose infrastructure issues in the EU CoO, perform feasibility studies, develop solutions, re-organise and restructure specific entities, and improve domestic and international efficiency and access to markets through enhanced connectivity.

E. Investor Base – these TC projects aim to develop the local and international institutional investor base in the EU CoO, as stimulating growth and deepening of the institutional investor base is crucial for local capital and money market development over the medium and long term.  This will entail efforts from EBRD staff and external Consultants to broaden, grow and upskill the investor base. Such projects will include investor training, education and outreach, enhancing connectivity between investors and other market participants, promoting and creating institutional investors (such as mutual funds), pushing for positive reforms in relevant government policy (for example in the field of pension reform), increasing supervision of pension (and other) funds, increasing knowledge of and access to investible assets, and broadening the attractiveness of the EU CoO to international investors.

This project will provide technical support to the Estonian and Latvian governments in developing a strategic approach for sustainable finance, with a particular focus on engaging with Small and Medium Enterprises (“SMEs”) and to assist in implementing the EU Taxonomy as well as promoting administrative capacity in the area of sustainable finance.

The national authorities that requested technical support and will benefit from this Project are the Ministry of the Environment of Estonia and the Ministry of Finance of Latvia.

Other stakeholders that will benefit from this Project include:

  • the Estonian Financial Supervision and Resolution Authority (Finantsinspektsioon), Central Bank of Estonia (Eesti Pank), Ministry of Economic Affairs and Communications in Estonia, and the Ministry of Finance in Estonia;
  • the Financial and Capital Market Commission (FCMC), the Bank of Latvian the Ministry of Economy, the Ministry of Environment, the Ministry of Agriculture and the Ministry of Transport in Latvia.

The target groups for this project are market participants, including start-ups, SMEs, large non-financial corporations, banks, retail and institutional investors.

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794

Any competitive selections for business opportunities relating to this project will be published on the EBRD's website: Consultancy Procurement Opportunities.

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email to get guidance and more information on IPAM and how to submit a request.

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