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✅ Understand the applicable environmental standards and safeguards of the Lead Financial Institution (LFI). In the case of environment and climate risk screening and assessment, verify that the requirements are aligned to those under the EU EIA Directive^[37^28]. If not aligned, the application of stricter standards can be requested from the LFI. If intermediary financial institutions will be involved, enquire about the standards and safeguards that will be applied and how the LFI is ensuring their quality, possibly by supporting the intermediary institutions to build their capacities and upgrade their standards.

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✅ Understand the environment and climate risks of the project^[38^29]. Make sure the LFI clearly indicates the environment and climate risk category of the project, and whether an Environmental Impact Assessment (EIA), and/or a Climate Risk Assessment (CRA)^[39^30] are required.

Request the LFI to provide a summary of the findings of any EIA or CRA that was prepared, including the key risks identified and how they are addressed in the project design and monitoring framework. In the case of EIB, this information should be contained in the Environmental & Social Data Sheet.

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The INTPA-NEAR tool for the screening of investment project pipelines (Annex 13) can be used to get an initial appreciation of the potential environmental and climate-related risks.

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• Ensure that the OECD DAC Rio markers and the policy markers for aid to environment and DRR are correctly scored. Please refer to Annex 2 for guidance on the use of the Rio markers.
• If climate change mitigation, climate change adaptation, biodiversity, environment or combating desertification are indicated as ‘significant’ or ‘principal’ objectives:
  • The issues in relation to the relevant themes should be described in the context. This is particularly important when claiming contributions to climate change adaptation, as the climate vulnerability context that will be addressed should be clearly indicated.
  • The description of the intervention, the results framework and the activities must clearly show that the themes concerned are addressed to a significant extent.
• If climate change mitigation is a principal objective, check the qualification and quantification of the expected CO₂eq emissions reductions.
• The context must indicate the alignment to environmental and climate policies - such as the European Green Deal -, and consistency with the DNSH principle.
• If relevant, environmental and climate risks should be indicated in the risk assessment.
• If the EU support has an environmental additionality, this must be indicated. Remember that completion of mandatory requirements, such as an Environmental Impact Assessment, does not constitute an additionality.
• The monitoring, reporting and evaluation must ensure the implementation of any environmental and/or climate risk management plans.
• Review and identify possible missed opportunities to enhance positive contributions to environment and climate, such as synergies for biodiversity and climate co-benefits, and alternatives.

Considerations related to contracting, monitoring and evaluations, including due diligence provisions, are common to both blended finance and budgetary guarantees, and are described in section 2.3.4.

References