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2.3.2. Main entry points in greening blended finance

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✅ Engage in a green dialogue with the financial institutions. The dialogue with financial institutions held by DGs INTPA and NEAR, and EU Delegations must convey the importance that the Commission places on maximising opportunities to contribute to the green transition and ensuring compliance with the DNH and ‘green and clean’ principles. This dialogue can touch on any issues of concern, such as prioritisation of investments based on green criteria, the use of robust environmental safeguards/standards, and ensuring adequate environmental and climate risk monitoring and reporting provisions.

✅ 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^[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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As far as investments in micro, small and medium enterprises (MSMEs) are concerned, a tailored environmental and social management system at portfolio level to support the assessment of underlying sub-investments is highly recommended, and potentially to identify green projects opportunities. Support to MSMEs offers opportunities to prioritise initiatives that promote the transition to an environmentally sustainable, low-carbon and climate-resilient development; for example, business initiatives that will generate green jobs and implement the principles of a circular economy. The technical assistance linked to MSME programmes could also be geared towards promoting environmental disclosures (cf Carbon Disclosure Platform (CDP) and Task Force on Climate-related Financial Disclosures (TCDF) / Taskforce on Nature-related Financial Disclosures (TNFD) climate and biodiversity recommended disclosures), which could help address the external impacts of internal EU legislation such as the CSRD and the CSDDD.

✅ Understand the environment and climate risks of the project^[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)^[30] are required.

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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.

✅ Pre-TAM (Technical Assistance Meeting) review of applications. The TAM meeting should be used mainly to clarify any outstanding concerns to ensure the maximisation of opportunities and compliance with the ‘do no harm’ principle. If there are grounds to believe that the project does not comply with the DNH/DNSH and the ‘green and clean’ principles, or if the project is not compliant with Art. 29 (of the NDICI-Global Europe Regulation), the project should not be supported.

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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.

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References

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[28] [28]

^[28] Directive 2011/92/EU as amended by 2014/52/EU.

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[29] [29]

^[29] Applicable at preparation stage to investment agreements which relate to specific projects. In the case of investment agreements related to funds or portfolios, this might be rather applied during implementation..

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[30] [30]

^[30] These can also be in the form of an Environmental and Social Impact Assessment (ESIA) and/or a Climate Risk and Vulnerability Assessment (CRVA).

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