Key climate action highlights of the EU contribution to the Paris summit for a new global financing pact
In line with the call from the Paris Summit for a New Global Financing Pact, the European Investment Bank (EIB) has committed to intensify its support for the Global South and to join innovative mechanisms to accelerate a just transition in developing countries.
The EIB has also agreed with the European Commission to strengthen their existing cooperation on most initiatives carried out around the globe as Team Europe under the EU’s Global Gateway investment strategy. The aim is to boost investment in key sectors such as energy transition and healthcare and to develop new tools to support low- and middle-income countries in tackling the effects of climate change.
The two institutions will work together to help address existing and potential debt problems and enable vulnerable countries to implement ambitious climate action. EIB Global is the dedicated branch to the EIB Group outside the EU.
EIB President Werner Hoyer said: “The European Investment Bank has come to Paris with concrete proposals. We will work on pilot projects to integrate climate resilient debt clauses in our finance contracts. We are an active partner in the IMF’s Resilience and Sustainability Trust. We will support the Just Energy Transition Partnership with Senegal as part of the EU offer. We are excited to be the lead institution for the Global Green Bond Initiative. And because all the Sustainability Development Goals are connected, we have joined the new WHO-led investment platform for Primary health care. These announcements reflect the full commitment of the EIB as the EU Bank to advance global development and partnerships.”
EIB Vice President Ambroise Fayolle, responsible for climate action and development added: “Global challenges are increasing the pressure on the most vulnerable countries, who are also the ones suffering the most from the impacts of climate change. As we approach the mid-way point of the 2030 Sustainable Development Agenda, we must step up our support for those on the frontline of climate change. Our collaboration and the tools we are developing with the European Commission are directly aligned with the aims of this summit in Paris and are designed to allow our partners address the intertwined challenges of development and climate change.”
European Commissioner for International Partnerships Jutta Urpilainen said: “Low- and middle-income countries are particularly hard hit by climate change. We are collectively off track from achieving the Sustainable Development Goals by 2030 and inequalities are on the rise. As the world’s largest provider of public climate finance, the EU and its Member States are fully committed to supporting their international partners and working multilaterally towards the objectives set out by the Paris Summit. The tools we are developing with the EIB will provide partner countries with necessary flexibility in financing and encourage green Global Gateway investments to bridge the investment gap.”
EIB supported initiatives more in detail
Climate resilient debt clauses and longer tenor sovereign loans
Our commitments represent a key element in the EU’s response to the call from the Bridgetown Initiative, championed by Prime Minister Mottley of Barbados, which urges decisive action to reform the global financial architecture and tackle debt vulnerabilities, including through climate resilient debt clauses. These clauses embedded in finance contracts will offer debt deferral in cases of certain defined emergencies caused by climate change and natural catastrophes in vulnerable countries. They may concern severe extreme weather shock (tropical storms, droughts, floods, landslides) or natural hazard (tsunami or earthquake).
This will be implemented through pilot projects in Least Developed Countries (LDC) and Small Island Developing States (SIDS).
The clauses provide sovereign borrowers with the option, subject to conditions, to defer debt-service for a limited period and repay those amounts as part of future amortisation instalments, within the original life of the loan.
The EIB will also offer longer tenor sovereign loans guaranteed by the European Commission, where justified by concessionality needs. These could extend the tenor up to 30 years and the grace period up to 10 years, potentially even going beyond the project’s economic life.
Lead institution for the Global Green Bond Initiative announced by Commission President von der Leyen at the Paris Summit
Together with many European Development Finance Institutions, the European Commission and the United Nations, we are creating a one-billion-euro investment fund to support partner countries in their green transition – and mobilise fifteen to twenty billion of green investments over its lifetime. Green bonds are an effective way to attract private sector funding.
Rwanda
Barbados
Senegal
Primary Health Care with WHO
Background
Global Gateway is the European strategy to boost smart, clean and secure links in digital, energy and transport sectors, and to strengthen health, education and research systems across the world. Through a ‘Team Europe approach’, Global Gateway brings together the EU, its Member States and their financial and development institutions to mobilise the private sector to leverage investments for a transformational impact. It aims to mobilise up to €300 billion in investments by 2027. Global Gateway is fully aligned with the UN’s Agenda 2030 and its Sustainable Development Goals, as well as the Paris Agreement.
