European Investment Bank Group Sustainability Report 2020. Группа авторов

gas emissions by 2050. In line with these objectives, the EIB Group committed to aligning all our financing activities with the goals and principles of the Paris Agreement by the end of 2020. The roadmap lays out our framework for putting this commitment into practice. It covers the low-carbon and climate-resilient dimensions.

      To align with low-carbon pathways, we adopted sector-specific criteria for carbon-intensive sectors of the economy, such as energy (already addressed through the 2019 EIB energy lending policy), aviation, road infrastructure, road vehicles, energy-intensive industries, as well as agriculture and forestry. These criteria are set out in a series of simple tables, facilitating engagement with potential clients. Sector-based criteria are also applied across the wide range of EIB Group products. The alignment framework is adapted for intermediated SME and mid-cap finance. For these products, the framework focuses on three sectors: energy, mobile assets for transport services and energy-intensive industries, ensuring that certain high-emitting industries do not receive support from standard products.

      The alignment framework helps define the Group’s priorities for a given sector. For instance, we will focus on improving existing airport capacity, including safety, security and decarbonisation, but will no longer support airport capacity expansion and conventionally fuelled aircraft. In industry, we will look at innovation in low-carbon technologies – and therefore withdraw from any new capacity based on traditional high-carbon processes. In the farming sector, we will concentrate on meat and dairy industries with improved greenhouse gas emissions profiles thanks to the sustainable animal-rearing methods they adopt.

      As part of the roadmap, we revised the shadow cost of carbon, a key technical parameter used to estimate the full value for society when a tonne of carbon is saved. The Bank has been using the shadow cost of carbon for projects that go through an economic assessment since the 1990s. To align with the Paris Agreement, we reviewed the latest modelling evidence and agreed to increase these values. As shown in the graph below, the shadow cost of emitting one tonne of carbon equivalent rises to €250 by 2030 and to €800 by 2050.

      EIB SHADOW COST OF CARBON (IN € PER tCO₂e)

      The graph shows the EIB shadow cost of carbon (a key technical parameter used to estimate the full value for society when a tonne of carbon is saved), as included in the roadmap. It is based on the estimated full cost to society of limiting the rise in global average temperature to 1.5˚C above pre-industrial levels and helps to assess whether EIB financing is on track with this goal. This will be reviewed on an annual basis and the cost will be adjusted accordingly.

      An example of how the revised cost of carbon will affect investments is road infrastructure. In line with the decarbonisation efforts underway in this sector, the EIB will adapt its economic test for large projects. Traffic demand forecasts will be adapted in line with long-term modelling studies, with due attention paid to the penetration rates of electric vehicles. The projects’ net emissions will be valued at the EIB’s new shadow cost of carbon. Adopting the new unit values will strengthen the business case for projects that save carbon while penalising those that increase emissions.

      The second dimension of alignment concerns climate resilience. To manage physical climate risk and promote projects that support resilient development, the EIB has introduced a new Climate Risk Assessment (CRA) system for direct lending. The system will be the cornerstone of our alignment framework. The CRA system helps the EIB and its clients understand how climate change may affect their projects and identify adaptation measures.

      As described later on in the report, we have also developed a climate risk tool which provides an assessment of climate-related credit risk at counterparty level. The tool applies to all counterparties in the EIB Group’s lending and investment portfolio, including corporates, financial institutions, public sector entities, sub-sovereign public authorities, project finance and equity.

      4. Building strategic coherence and accountability

      The EIB Group’s approach will be based on three goals:

      (1) Determining how climate-related activities fit in the wider context of sustainable finance and overall environmental and social sustainability. The EIB Group will align its tracking method for climate action and environmental sustainability with the framework defined by the EU Taxonomy Regulation[6] as it develops over time. We will also examine how best to address climate- and nature-related disclosures, applying relevant reporting frameworks. In 2021, we will revise the EIB Group’s Environmental and Social Policy Framework to reflect new policy developments and emerging environmental and social issues, incorporating lessons learned and meeting the changing needs of our clients and promoters.

      (2) Transparency, accountability and quality assurance. To factor climate change, environmental and social considerations into our financing activities further, the EIB Group will enhance and develop additional risk management tools to assess physical, transition and systemic risks at the project, portfolio and counterparty level. We will also seek to generate the data necessary to track our progress in meeting those commitments through the further development of climate and environment impact measurement and reporting systems.

      (3) Institutional support for the EIB Group’s activities. We will develop further initiatives to align our internal operations with the goals of the Paris Agreement more closely, build strategic partnerships with selected key stakeholders, communicate on progress and challenges and train employees for the tasks ahead.

      TREASURY INVESTMENT ACTIVITIES

      To ensure the EIB and EIF hold sufficient liquidity to meet their lending commitments, the Bank manages treasury portfolios with different instruments and maturities. The EIB’s treasury activities mainly consist of investments in short and long-term portfolios, hedging market risks, treasury management of partner contributions, liquidity planning, and the settlement and payment of all transactions.

      As part of the EIB Group Climate Bank Roadmap and our alignment with the Paris Agreement, environmental factors have been included in our process for long-term treasury investments since mid-2020. This methodology relies on two layers:

      • Exclusion criteria for conventional bonds for sectors with high environmental risks, including, but not limited to, mining, oil and gas, steel, cement and aviation.

      • A best-in-class approach, with the top performers allowed the highest potential allocation of investments.

      Adjustments and additions to this methodology will be carried out following any rules or decisions made as part of the Climate Bank Roadmap that apply to treasury activities.

      STAKEHOLDER ENGAGEMENT

      In developing the Climate Bank Roadmap, we relied on the contributions of many public and private-sector stakeholders. In October 2019, we organised a workshop for stakeholders to discuss our progress in implementing our climate strategy. In addition, we held two series of meetings with representatives from several organisations in March and June 2020, touching on a wide range of topics related to the roadmap.

      During the coronavirus pandemic, all events were organised as webinars. The first series in June was attended by about 300 participants and focused on Paris alignment, private-sector finance, the long-term effects of EIB Group financing and the just transition. The second series in June was attended by about 200 participants. The topics discussed included future requirements affecting the transport and building sectors, energy-intensive industries, the bioeconomy[7] and how to build greater resilience to future climate change.

      These events are testament to the EIB Group’s regular dialogue with stakeholders. Involving civil society in our activities and being transparent is of utmost importance for us. We believe that being inclusive improves the quality of our business and increases accountability towards all our stakeholders. The EIB Group is grateful to all the individuals and organisations that took the time to contribute to our webinars, questionnaires and consultations, as well as those who submitted written reports. The feedback from