The CEB and Climate Change

The climate crisis is increasingly exposing and exacerbating inequalities, as the groups most vulnerable to climate change are generally the least resilient to its economy-wide impacts and may bear a disproportionate burden in the transition to a low-carbon and resilient future.

Strategic Framework 2023-2027

To address climate considerations, as underlined in the Strategic Framework 2023-2027, the Bank is committed to (i) apply the climate-social nexus approach to social investment to achieve greater impact, with a focus on financing activities that enhance the climate resilience of vulnerable populations and support communities’ responses to climate-related and other disasters, and to (ii) align its activities with the Paris Agreement and ensure compatibility with climate goals.

In 2022, the CEB pursued its climate mitigation and adaptation activities, through the implementation of its Paris alignment roadmap, climate change due diligence and climate finance.

Aligning with the Paris Agreement

2022 was a critical year for the CEB’s commitment to align its activities with the goals of the Paris Agreement. To this end and following the endorsement of the CEB’s Paris alignment framework and roadmap by the Administrative Council in November 2021, the Bank has been focusing on the operationalisation of its commitment to align its activities with the goals of the Paris Agreement, with a dedicated cross-directorate structure that has been able to advance on the priority actions identified in the phased roadmap.

One of the main targets set by end 2022 was the alignment of the Bank’s new direct lending operations (i.e. operations with pre-defined use of proceeds and a known geographical location) as at January 2023 – to be extended to all new projects approved as at January 2024. This milestone was achieved through the preparation of an internal methodology, covering alignment with low carbon development goals (climate change mitigation) as well as climate resilience goals (climate change adaptation) of the Paris Agreement.

CEB_Paris_Alignment_Framework.pngThe framework developed by the CEB to align its activities with the Paris Agreement covers both its project financing and internal activities. Among its four key dimensions, the first dimension focuses on applying the do no significant harm principle to the financing of projects, in line with low-carbon and climate resilience goals. To keep upholding the CEB’s social mandate, the second dimension of the framework demands a focus on opportunities which simultaneously promote social inclusion and climate-related objectives. The third dimension addresses the alignment of internal activities and governance mechanisms and policies, and the fourth dimension aims to enhance transparency and reporting on climate-related topics.

Joint MDB Methodological Principles for Assessment of Paris Agreement Alignment of New operations

On June 19, 2023, the Multilateral Development Banks (MDBs), including the CEB, released their methodologies to align their activities with the goals of the Paris Agreement. These methodologies establish principles for assessing the MDBs’ operations with regards to climate mitigation and adaptation objectives, taking into account the unique contexts of each MDB. The Paris alignment assessments at the CEB are based on these joint MDB principles.

Since 2019, the MDBs have been collaborating to achieve this objective and will continue to work together to further develop and implement the methodologies, ensuring a consistent and coordinated approach across the MDBs in addressing climate change challenges.

Climate finance and GHG emissions

In 2022, the CEB’s technical staff performed climate change due diligence for all 36 newly approved projects, of which 14 included climate finance components and one included both mitigation and adaptation objectives. 

Climate action financing in 2022 represented 20% of the total volume of financing approved, up from 13% in 2021.

CEB climate finance: mitigation and adaptation in 2018-2022 (in million euros)CEB_climate_finance.png

For projects financed in 2022, the total volume of GHG emission reductions computed recorded an increase in GHG emission reductions compared to 2021.

Estimated greenhouse gas emissions for projects approved during 2018-2022 (in tonnes of CO2 eq. per year)GES_emissions.png

Environmental & Social Safeguards

The CEB’s Environmental and Social Safeguards Policy (ESSP) and Environmental and Social Safeguard Standards define the principles and requirements that projects and borrowers are expected to meet and outline the environmental and social due-diligence process that is applied to projects considered for CEB funding. 

This is ensured by the Environmental and Social Sustainability-Climate Change Unit, who screens, assesses and monitors the social and environmental risks and impacts of all projects financed by the Bank throughout the project cycle, as well as the actions of the Bank’s clients to manage risks and address impacts. In 2022, the CEB undertook preliminary screening at the pre-appraisal stage of all project proposals submitted to the Bank, and categorised all 36 operations approved throughout the year.

Climate risk management

In the risk management arena, the CEB developed in 2022 an approach and system to enhance the identification of physical climate risks at project/operation level, as well as an approach to score climate-related risks and adaptive capacities of sovereign counterparties – to be progressively extended to other types of borrowers than sovereigns, such as sub-sovereign authorities or financial institutions.

For more information, see the CEB’s TCFD Report.

The CEB’s own environmental footprint

Although most of the Bank’s environmental impact, both positive and negative, comes through its project financing activities, the CEB also supervises the environmental footprint resulting from the Bank’s internal operations including business travel, energy consumption or waste recycling at the Paris office. See the section on Internal Operations.

Related publications
  • CEB_ TCFD_2022_Cover.png
    Task Force on Climate-related Financial Disclosures (TCFD) Report 2022
    CEB’s first report presenting the Bank’s activities and objectives supporting a just and socially inclusive climate transition among its member states, in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Published: June 2023 Read
  • Cover Sustainability Report 2022
    Sustainability Report 2022
    Published: May 2023 Read
  • 2022_CEB_GRI_Report
    GRI Report for 2022
    Published: April 2023 Read