II. Greening in practice

2.1. GREENING AND THE INTERVENTION CYCLE

2.1.1. Overview

The integration of environment and climate change in EU cooperation must start as early as possible and be carried forward throughout the intervention cycle. The later the greening efforts start, the more limited the opportunities for transformational change will be.

This section indicates the entry points for the integration of environment and climate change in the different phases of the intervention cycle[11]. It indicates the greening measures/actions that should be taken, and the tools available. Although this section is common to all implementation modalities, greening opportunities specific to budget support and investments (blended finance and budgetary guarantees) are developed in sections 2.2 and 2.3 of the toolbox.

The greening of EU cooperation should be a driving force starting from the early stages of policy dialogue that informs multi-annual programming, through to the definition of priority areas and objectives for each programme, the identification and formulation of flagships, Team Europe Initiatives, investment pipelines, and individual actions and investments, their implementation and monitoring, and up to the evaluation phase.

Figure 4. Overview of key greening entry points and tools in the intervention cycle

2.1.2. Greening EU cooperation: obligations and the green lens approach

Effective greening of EU cooperation involves compliance with mandatory requirements and the implementation of the green lens approach.

Greening EU cooperation mandatory requirements include:

• Comply with the national environmental legislation and international obligations.
• Avoid excluded activities under Art. 29 of the NDICI-Global Europe regulation.
• Ensure compatibility with the recipient country's Nationally Determined Contribution (NDC).
• Avoid activities that cause significant adverse effects on the environment or the climate:

>   Apply the environmental & climate risk screening to all activities.

>   As determined by the screening, prepare environmental (and social) impact assessments, Strategic Environmental Assessments, or other relevant assessments, and ensure the implementation of the necessary measures to avoid, prevent or reduce and, if possible, off-set the significant adverse effects on the environment and climate.

The green lens approach reminds us to always look at the environmental and climate change aspects and implications of the actions and decisions we are taking. The green lens approach has three dimensions:

1. Promoting a positive agenda by always seek opportunities to make positive contributions to environmental and climate objectives, including to the climate and biodiversity spending targets.
2. Consider the double materiality of actions proposed by:

>   Systematically taking into account how the proposed actions could have significant adverse impacts on the environment and the climate, and taking measures to mitigate them in line with the mitigation hierarchy[12] – this implies compliance with the DNH principle.

>   Systematically taking into account how environmental degradation and climate change can affect the sustainability and effectiveness of the proposed actions (e.g. accelerated siltation of dams due to land degradation).

Under the 'green lens' approach, all actions and decisions must take into consideration opportunities and risks to contribute to an environmentally sustainable, low carbon and climate resilient development

The greening of EU cooperation does not stop where the intervention cycle ends. The Commission must lead by example. Efforts should also be made to green EU delegations and project management (see section 2.5).

OVERVIEW OF KEY GREENING TOOLS

(a detailed description is given in Annex 1 on Greening Tools)

2.1.3. Greening programming

Background

The greening of programming focuses on the policy dialogue and preparation of the programming documents (multi-annual indicative programmes (MIP) and their mid-term review (MTR) under the NDICI- Global Europe, and IPA III programming framework’s strategic responses prepared by each IPA III beneficiary), as well as the related joint programming documents and Team Europe Initiatives.

Entry points for programming

    Policy dialogue: include environment, climate change and DRR in policy engagement with partners, including governments, civil society and other stakeholders

Greening the policy dialogue implies promoting EU values and objectives for a green and just trans- formation; it can be supported by coordinated action with like-minded partners and sustained with an evidence base. The promotion of mutual priorities and support for partner country in advancing national commitments, policies and strategies on environment, climate action and DRR must be on the agenda.

    Analyse the country (or regional) environmental and climate change context

As part of the programming cycle – and preferably before programming starts – the EU Delegation should prepare an analysis of the country’s (or the region’s) environmental and climate change context, and lessons of past and present EU cooperation as it relates to environment and climate change (including mainstreaming). The analysis covers the country’s key environmental and climate-related challenges and opportunities, the way they are addressed in the national/regional development plans and other policies, and their implications for future EU cooperation and policy dialogue. This assessment informs the evaluation of the national policy documents on which the programming will be based, as well as the policy dialogue and the preparation of the EU response (e.g. the MIP) and its implementation. The assessment should be based, to the extent possible, on existing analyses and data.

Details on the Country Environmental Profile (CEP) can be found in Annex 1 on Greening Tools, including links to a repository of CEPs and REPs.

Where possible, the CEP/REP should be undertaken as a joint exercise with national and other development partners. Annex 3 provides model ToR for a CEP.

The country’s Risk Management Framework Plus (RMF+) also provides insight into environment- and climate-related issues that affect structural/cyclical risks in the country. Further details and guidance on the environment and climate aspects of the RMF+ can be found in Annex 15.

    Align the programming document with environment, climate and DRR objectives

In aligning programming with key environment, climate change and DRR objectives (shared by both the EU and the partner country/region), the EU should consider prioritising sectors where its support can contribute to a transformational change towards environmentally sustainable, climate resilient and low-carbon development. These sectors often offer opportunities for the EU to add value by bringing in experience and expertise. Environment and climate change can be considered as priority areas in their own right, but should be considered in all cases in the EU response strategy as cross-cutting issues influencing interventions across all areas.

When programming, environment and climate change can be considered priority areas of support, but in all cases they must be integrated as cross-cutting issues across all areas

The programming documents should maximise opportunities for positive contributions to climate and nature, and ensure they adhere to the DNH principle. Wherever relevant, the objectives, expected results and indicators should address environmental and climate change concerns.

Wherever feasible, the EU should consider including a component to support the partner country’s efforts to green its policies and investments, in particular in the MIP priority sectors/areas: the tools developed by the Poverty-Environment Action programme, notably the interactive handbook can be useful to strengthen environment and climate change integration in national policies, planning and budgeting.

Sustainability, equity and inclusion must go hand in hand: a ‘leave no one behind’ approach shall foster the synergies between environmental and social responses

    Consider, where relevant, a Strategic Environmental Assessment

The EU should systematically consider supporting Strategic Environmental Assessments of sectoral plans and programmes when EU support is envisaged to sectors that include substantial climate and environmental risks/opportunities or that are central to the green transition, as SEAs are useful to inform both the partner’s policy design and the EU’s support programme. If this is the case, the preparation of an SEA should already be considered in the MIP. This will facilitate the mobilisation of financial resources at an earlier stage and lead to a more effective process with a higher impact on the greening of sector policies/strategies and associated EU support programmes. Climate and environmental sensitive sectors include notably: agriculture, rural development, energy, water, transport, private sector development, urban development, tourism.

    Include indicators in the programming document that capture key environmental and climate change concerns

Including indicators in programming documents to assess country progress towards environmental, climate and DRR objectives and the green transition is critical to ensure effective environment and climate integration.

The Global Europe results framework (GERF)[13] should be used to the extent possible, complemented by other ad hoc indicators that may be necessary; these include thematic indicators based on a set of sector-specific results chains. In relation to its Green Deal strategic priority, the GERF proposes nine indicators to monitor progress at country level (GERF level 1- impact[14]) and 10 additional indicators for progress at action level (GERF level 2 – outcome and output[15]), covering SDGs 2 (zero hunger), 7 (energy), 11 (cities), 12 (responsible consumption and production), 13 (climate change), 14 (life under water) and 15 (life on land). These indicators should be used in the programming document, whenever relevant.

    Update ambition in the mid-term review

The evolution of the country context and the progress made at implementation level can lead to the need for programme amendments at the mid-term stage.

The mid-term review (MTR) is an opportunity to verify if EU support at country level is on track to achieve its environmental, climate and green transition objectives by the end of the MFF period. The results of the MTR should be discussed, and necessary changes integrated to enhance EU environmental and climate performance.

2.1.4. Annual action planning: greening identification

Background

Identification requires a good understanding of the relevant political, institutional, economic, social and environmental context; it must show a clear articulation of the action’s intervention logic with initial (draft) result indicators. At this stage, sufficient elements of the actions proposed are known that can allow the application of the environment & climate risk screening.

Entry points for identification

    Address environment and climate change concerns in the different analyses leading to the design of the action

The identification of an action involves different types of studies and analyses (including context, public policy, feasibility, stakeholders, problem, risks)[16]. Environment and climate change should be an integral component of these analyses. For example, how does environmental degradation and climate change affect the sector issues that will be addressed by the action? How will stakeholders related to environ- mental and climate issues be consulted and involved in the design of the action?

    Involve the environment and climate change thematic units in the co-creation process

Co-creation is about working together with relevant staff from the outset (e.g. relevant thematic colleagues being contacted as early as possible), so as to gather all necessary expertise and know-how for the effective development and implementation of actions and policies.[17]

In the case of INTPA, the SSC Fiche indicates the members of the country cooperation team (CCT), the region cooperation team (RCT) or the thematic cooperation team (TCT) that will be involved in the formulation of the action. The thematic units on environment and climate change[18] should be indicated as part of the co-creation teams.

Under IPA III, and according to the IPA III Programming Guidelines, identification is the first phase of programming during which potential actions are discussed with internal stakeholders, the Commission (EU Delegation, DG NEAR, other Commission services), external stakeholders (civil society organisations, other donors, etc.) and potentially external experts (e.g. such as experts from the NEAR Greening Facility).

In the case of NEAR, the thematic unit in charge of environment and climate change[19] should be consulted during identification.

    Avoid excluded activities

In line with Art. 29 on activities that are excluded from financing (see NDICI-GE and IPA III regulations: green highlights):

      Ensure the action does not include support to fossil fuels. More generally, common sense should apply to activities related (even indirectly) to the fossil fuels sector, considering EU reputational risks.

      Check the beneficiary country’s NDC and ensure that the action is not in conflict. Ensuring compliance with Article 29 requires reviewing the beneficiary country’s NDC to determine any conflicts with the action proposed. NDCs can be found in the NDC Registry.

      Identify activities with potential significant adverse impacts on the environment, including biodiversity, the climate or climate resilience, determined through the environment & climate risk screening procedure (see below) and avoid them by exploring alternatives. For unavoidable high-risk activities, ensure appropriate measures to avoid, prevent, reduce and/or offset adverse effects of these activities are identified through an Environmental Impact Assessment (EIA) and/or a Climate Risk Assessment (CRA), and spelled-out in an Environmental Management Plan (EMP), reflected in the action’s design, and integrated in the project’s monitoring system.

    Maximise positive contributions

When initiating the identification, identify opportunities and areas to support green transformative action.

Almost all areas/sectors can contribute positively to sustainability, but some offer more opportunities:

• Energy: support to the energy transition, renewable energy and energy efficiency.
• Agriculture, forestry and other land use: agro-ecological and climate smart agriculture, carbon sequestration, avoidance of deforestation, sustainable land management, biodiversity and ecosystem restoration.
• Water management: integrated water resources management, water pollution control, water use efficiency, nature-based solutions for flood management or water purification.
• Green and circular economy: sustainable and circular industries, green business development, promoting resource efficiency and circularity in value chains and sustainable chemicals management.
• Urban development: sustainable and smart mobility, low carbon buildings, waste management, climate-resilient cities, nature-based solutions in infrastructures, green areas, sustainable lifestyles, nature-based solutions.
• Migration: building climate resilience and environmental sustainability of displacement-affected communities, tackling environmental and climate change drivers of migration.
• Transport: smart and sustainable mobility, public transport, shift to low-carbon transport, nature-based solutions for transport infrastructures. Support to aviation and road sectors should be carefully assessed and justified before starting the design of the programme.
• Digital: digital applications for the green transition, green data centres, risk information platforms.
• Governance: environmental and ocean governance, natural resource governance, addressing IUU fishing, illegal logging, poaching, wildlife trafficking.
• Human development: build resilient communities, promote green education through policy, curric- ula, learning, teacher training and green schools; develop ‘one health’ approaches, sustainable life- styles, developing skills for green jobs through TVET and health sector preparedness to climate change; strengthen higher education, research and innovation to provide local knowledge and skills to support all societal sectors in the green transition.

      Ensure that the problem analysis and the stakeholder review identify environment and climate change-related issues. This may imply involving environment and climate stakeholders in the problem analysis.

      Identify options and pathways that will contribute to the green transition through nature- and climate-positive impacts and outcomes. The Quick Tips for the integration of environment and climate change under different sectors provide inspiration and guidance to this effect.

      Seek opportunities to contribute to the implementation of the country’s NDC, national adaptation plan and long-term low greenhouse gas emission development strategies under the Paris Agreement, National Biodiversity Strategy and Action Plan (NBSAP) under the Convention on Biological Diversity and supported by National Biodiversity Finance Plans[20], or action plans under the UN Convention on Combating Desertification, and Sendai Framework targets.

    Identify environment/climate risks and apply the ‘do no harm’ principle

From an environment and climate change perspective, the principles of ‘do no harm’ and ‘leaving no one behind’ imply that actions should not have any significant adverse impacts on the environment or on climate[21].

The mandatory environment & climate risk screening helps identify high risk actions that should be either excluded or subject to a dedicated impact assessment (Strategic Environmental Assessment – SEA, Environmental Impact Assessment – EIA, and/or Climate Risk Assessment – CRA), which will help identify the appropriate measures, including alternative options, to avoid, mitigate, offset or compensate adverse impacts on environment or the climate. In the case of impact assessments, these tools inform the decision-making process and, if the impacts on the environment are considered unacceptable, it may be decided not to support the project in question.

The environment & climate risk screening allows to identify areas of potential impact that should be ad- dressed in the design of the action, even if a dedicated tool (SEA, EIA and/or CRA) is not required. All actions must avoid harmful impacts on the environment and climate, in line with the DNH principle.

    Assess the environmental and climate vulnerability of the action and identify options to ensure its resilience

The effectiveness and sustainability of the action can be compromised by climate change and environmental degradation processes that are often beyond the control of the action. These risks must be understood, and the action designed to be climate-proof and resilient to relevant environmental degradation processes. Climate Risk Assessment (CRA) is a useful tool to address climate-proofing; if a full-fledged CRA is not necessary, the CRA screening will be useful to identify climate risks and climate-proofing opportunities.

Project vulnerability from environmental degradation should also be examined, and relevant measures foreseen for the action. For example, promoting sustainable land management in the upper watershed to reduce the risk of accelerated siltation of a dam, working with industry in the project area to curb water pollution.

Adaptation to climate change and disaster risk reduction may also be closely linked, climate change being increasingly a driver of disaster risk. The common ground between adaptation and DRR[22] should entice building climate resilience through a disaster risk reduction lens, i.e. by preventing and reducing risks, reducing hazard exposure and vulnerability to disasters, and increasing preparedness for response and recovery[23].

    Assess indicative contributions to the climate and biodiversity spending targets

The identification should provide a first indication of the contributions to the climate and biodiversity spending targets. Application of the Rio markers must be done carefully as it is the basis for the EU to report climate finance to the OECD; if not applied consistently, this may lead to reputational risks for the EU.

Financial contributions indicated during identification are indicative and must be validated in the related action documents. For further details on the definitions and eligibility criteria for the Rio markers, refer to Annex 2.

2.1.5. Greening formulation

Background

The action document should concretely and explicitly integrate environment, climate change and DRR into the action design, in particular in the definition of the objectives, outcomes, outputs, activities and/or indicators.

Entry points for formulation

    Build on the greening steps from identification

      Seek further opportunities to maximise positive contributions to environmental sustainability, biodiversity, climate resilience and low carbon development. The Quick Tips for the integration of environment and climate change can be used as inspiration to identify options to enhance positive contributions.

      Ensure climate proofing of the project and integrate measures to address its vulnerability to environmental degradation processes that can affect its effectiveness and sustainability.

      Avoid excluded activities under Article 29 of the NDICI-Global Europe Regulation (see section above on Identification) and ensure compliance with the national environmental and climate legislation.

      Wherever relevant, integrate environment and climate change concerns and objectives in the definition of the objectives, outcomes, outputs, activities and/or indicators; and ensure that the proposed implementation modalities/implementers will be conducive to their implementation.

      Ensure that formulation of the action is informed by meaningful consultations with key environment and climate stakeholders.

      Mobilise specific expertise to address environment and climate change opportunities and risks and foresee specific attention to these matters during milestones of the design process.

      Ensure that the design of the action respects the DNH principle. Refer to the corresponding section under Identification for more details.

      Involve the thematic units on environment and climate change in DG INTPA or DG NEAR as part of the co-creation process[24].

    Finalise the screening process

The results of the environment & climate risk screening must be summarised in the mainstreaming section of the action document and annex f3 to the action document[25] must provide the rationale for the risk category and for whether or not an SEA, an EIA and/or a CRA is required. The questionnaire in Annex f3 must also indicate the opportunities to minimise environment and climate risks, and maximise opportunities to contribute to environmental sustainability, climate resilience and low-carbon develop- ment, even in the case that an SEA, EIA and/or a CRA is not required.

For actions with a potentially high environment- or climate- risk[26], it is recommended to engage partners and key stakeholders in the screening process. Annex 5 on Sources to understand the environment and climate change context can be useful to apply the screening.

      If the screening indicates that an EIA, SEA or CRA is necessary, ensure sufficient financial resources are available for their preparation. These can be from the action’s budget or from other sources such as ‘Support Measures’ or a ‘Cooperation Facility’ potentially available at EUD level.

    (If relevant) finalise any required environmental or climate assessments

Ideally, the environment & climate risk screening should be undertaken during identification, or even programming, in which case it is good practice to complete any required assessments in time to inform the formulation of the action. However, these assessments can take time to complete and there is a possibility that they may not be ready by the time the funds have to be committed.

If an EIA is required for a particular project/activity under national legislation, its completion will be mandatory before development consent can be given.

Early completion is also particularly relevant for SEA, which should inform the design of a budget support programme. The SEA approach should be adapted to the stage at which the formulation of the national/ sector strategy in question is at. Ideally SEAs should be an integral component of the policy making/ planning process, although often they will be prepared on the basis of an already advanced or even a final version. This is why it is encouraged to identify the need for an SEA as early as possible, even from the programming phase.

    Develop specific green measures and indicators

      Identify options to minimise the action’s adverse impacts on the environment and climate, which should be integrated into the design of the action independently on whether an SEA, EIA and/or CRA are required. The Quick Tips provide concrete ideas.

      Identify climate-proofing measures and other measures necessary to address the potential impact of environmental degradation processes on the project.

      Identify indicators to measure progress on the achievement of positive environmental and climate objectives, and ensure the effectiveness of adverse impact mitigation measures. In the latter case, and for high-risk activities, these indicators will be provided by the Environmental Management Plan (EMP) and/or the Climate Risk Management Plan (CRMP).

    Score policy and Rio markers

      Score the policy markers for aid to environment and DRR, as well as the Rio markers as either ‘principal objective’, ‘significant objective’ or ‘not targeted’. Refer to the OECD DAC eligibility criteria and guidance available to ensure the correct use of the markers. A compilation of guidance material on the relevant markers can be found here.

      Remember to consult the thematic units dealing with environment and climate change early in the design and at the latest as part of the quality review processes.

    Ensure partners’ processes are aligned

When it comes to the environment & climate risk screening and ensuring the adherence to do the DNH principle, partner organisations can apply their own processes and safeguards, as long as they are not less stringent than the EU’s screening procedure described in this toolbox. Please keep in mind that partner organisations are not pillar-assessed for their environmental and climate safeguards and standards.

      Enquire about the environmental policies and safeguards used by the selected implementing partners to ensure alignment with the minimum requirements defined in this toolbox. Assistance can be obtained from the thematic units and their support facilities to this effect.

2.1.6. Greening implementation

Background

It is during implementation that all the previous efforts to ensure a good integration of environment and climate change need to be put into practice. It is an obligation of the implementing partners to ensure strict compliance with the country’s environment and climate legislation at all stages of implementation. The measures proposed below seek to go beyond this obligation.

Entry points for implementation

    Complete environmental and climate impact/risk assessments

If an SEA, EIA and/or CRA were required, these should be completed in time to inform formulation; this is especially the case for SEA, which should inform the eligibility assessment for budget support and the design of budget support programmes.

In some cases, these assessments are prepared only during the action’s implementation. This can be the case for EIAs and CRAs concerning specific interventions that will be developed during implementation and which, if required under national legislation, must be submitted to the competent authority for development consent.

    Ensure the contract/agreement for implementation fully reflects the environment and climate ambition of the action

The environment and climate ambition spelled out in the action document must be reflected in the contractual documents and agreements, in particular the detailed project description and logframe, including a description of what is expected from the implementing partners on these aspects. Safeguards and provisions necessary to ensure compliance with the national legislation and the DNH principle need to be put in place.

    Encourage green procurement and the integration of environment and climate change in calls for proposals and technological choices

Opting for green and low carbon technologies and approaches in the implementation of the action provides further opportunities to maximise positive impacts. Implementing partners should be systematically encouraged to use green procurement and include environmental sustainability and climate change criteria in the contract’s implementation. Refer to Annex 11 on Greening Procurement.

Implementing partners should be systematically encouraged to include environmental sustainability criteria in calls for proposals (CfP). Refer to Annex 10 on Greening Calls for Proposals.

    Ensure environment and climate change are integrated in project monitoring

The monitoring should include a focus on the achievement of environmental and climate-related outputs and outcomes and possible unintended negative impacts. Monitoring not only offers an opportunity to realign the project/programme in case the information collected shows unsatisfactory performance, but it also allows to identify new opportunities to enhance environmental and climate performance by ensuring that the action:

• delivers its expected contributions to environmental sustainability, climate resilience and low-carbon development in an effective and efficient manner;
• does not create unexpected environmental impacts that could have been avoided;
• minimises residual impacts, restores the damaged environment and implements any agreed offsets and nature-positive actions;
• does not support maladaptation or unsustainable practices, create, or increase climate vulnerability;
• is not jeopardised by climate change or environmental degradation;
• monitors risks related to the above and undertakes appropriate remedial action as necessary;
• is not infringing domestic environmental laws and regulations.

Include environment and climate indicators to ensure that the action effectively delivers on its intentions and takes corrective measures

Environmental and climate indicators in the action’s monitoring system should be related to environmental status, pressure factors, environmental effects and response measures (see DPSIR framework in Annex 9). Response measures potentially include those implemented by the action, interpreted in light of EU pre-identified indicators (GERF indicators). EIAs, CRAs and EMPs can also be used as tools to identify relevant environmental and climate indicators for the action.

• Selecting an indicator implies that sources of environmental and climate information should be available, at least at project level (notably, when the indicator is not part of a national data system).
• It may be useful to determine threshold criteria which trigger the consideration of remedial action[27]. Remedial action can be undertaken at the planning and/or implementation level.

The monitoring system should also be designed to foresee dialogue on potential contributions of the action to environmental and climate impacts. The availability of quality data can substantially improve learning regarding the relationship between the intervention, the environment and climate change.

Annex 9 presents additional guidance on indicators.

Environment and climate change can be reflected in the result-oriented monitoring (ROM) reviews. For example, they can be used to tackle potential design weaknesses (e.g. to strengthen climate or environmental integration in the intervention monitoring system); give external advice on specific shortcomings and needs (e.g. related to the improvement of climate resilience or disaster risk management, the protection of biodiversity and ecosystem services, or addressing equal access to natural resources); support lessons learnt and the design of future actions.

ROM review questions under the eight monitoring criteria with a focus on environment, climate change and disaster risk reduction are found mainly under the sustainability criteria and cross-cutting issues[28]. Yet the ROM handbook also relates the effectiveness criteria to environmental and climate issues^[29]. Notably, the review should consider the influence of the intervention on the partner’s environmental policies. It should also consider the intervention’s unintended positive or negative environmental and climate impacts.

    Implement the Environmental Management Plan (EMP) and Climate Risk Management Plan (CRMP)

If an EIA and/or a CRA were completed for the project/action, it must be ensured that the corresponding Environmental Management Plan (EMP) and/or Climate Risk Management Plan (CRMP) are reflected in the relevant contractual documents, as well as in the project/programme monitoring system. The EMP and CRMP specify measures to avoid, mitigate or compensate adverse impacts on the environment and climate, and to manage climate risks. They specify how these will be monitored to verify their implementation and effectiveness.

National partners and implementing organisations are responsible for monitoring compliance with the EMP and CRMP. During the support period, EU Delegations receive monitoring reports, and thus have an opportunity to provide additional support to strengthen national monitoring systems. Once support operations have stopped, the EU Delegation is (in principle) no longer party to the compliance monitoring of environmental and climate-related conditions. Consequently, it is crucial that the national partner’s capacity to monitor is built during the implementation period.

    When implementing a Strategic Environmental Assessment (SEA)

If an SEA was completed for the sector strategy that will be supported and/or for the corresponding EU support programme, the SEA recommendations can be taken up in the delegation’s policy dialogue with the partner government.

If the action will support the development or updating of a sector strategy in an environmentally sensitive sector (see Annex 4), an SEA should be foreseen as one of the activities, in which case the SEA will be prepared during implementation.

    Score markers at contract level

A DAC form must be completed at the level of contracts. This includes the aid to environment and DRR policy markers as well as the four Rio markers. Unless there are specific reasons to score the markers otherwise, the marker scores at contract level should be aligned to those of the decision.

Guidance on policy and Rio markers is available in Annex 2.

2.1.7. Greening evaluation

Background

Mid-term and final evaluations of projects and programmes should be encouraged to assess the environmental outputs/outcomes/impacts, provide elements to improve their environmental performance (in the case of mid-term evaluations) and draw lessons from a climate and environmental perspective.

Evaluations can be helpful in different ways. In the case of a mid-term evaluation, its results should be discussed with stakeholders and necessary changes integrated in the programme/project to enhance its environmental and climate change performance.

A final evaluation usually provides lessons regarding environmental and climate change performance which should be drawn and disseminated to inform the design of future programmes and projects.

Wherever feasible, evaluation results should also inform environmental and climate-related policy dialogues.

Entry points for greening evaluation

    Prepare evaluation terms of reference with a green scope

An evaluation typically focuses on performance against the DAC criteria, including relevance, efficiency, effectiveness, impact and sustainability and lessons learnt, with the view to improve the implementation, inform the preparation of future projects and programmes and ensure accountability. The assessment of the performance of EU actions may also include coherence and EU added value.

Environmental and climate issues can be included in the evaluation scope through the lens of each of its criteria.

      To define the green scope of the evaluation, perform a preliminary and internal review of the design, ambition, and constraints of the action from an environmental and climate change perspective.

This can be done through reviewing the following questions:

o    To what extent did the initial action identify potential harmful impacts on the environment, climate and vulnerability to climate change, or opportunities for positive impacts? Which mechanisms were foreseen for implementation to address these issues?

o    In the action’s context, are there environmental and climate-related risks and constraints that may jeopardise the intended achievements of EU support? How were these considered at design and implementation level?

o    Did the action intend to bring about a meaningful contribution (well-defined, evidence-based, constructive, measurable) to environmental and climate objectives? Did it support opportunities for longer-term benefits for the transformation to a green and circular economy?

o    Using the above, what is the potential for lessons learnt? Notably, which elements related to environmental or climate issues can contribute to the ongoing policy dialogue and potentially enhance the commitment of stakeholders?

          Include relevant environmental and climate-related issues in the evaluation questions.

Click here for examples of potentially relevant evaluation questions.

In the requirements section, the ToR should stipulate that the evaluation team demonstrates proficiency in environmental, climate and/or disaster risk reduction in the related sector and/or country.

    Review the quality of the evaluation

The evaluation manager is the person with the responsibility to supervise the methodological quality of the evaluation, including how well the evaluation addresses project performance over environmental and climate issues and disaster risk reduction, when relevant.

The following questions can be helpful in this process:

• Does the evaluation consider the environment in all its dimensions: climate change, pollution and human health, biodiversity, land, soil, water, air and climate, material assets, cultural heritage and landscape, as well as the interactions between these elements?
• Do all evaluation stages (inception, desk and field phases, final report) give an account of how the action interacted with the environment and considered climate change, analysing and justifying the choices made in the light of the issues identified in the area concerned?
• Is the evaluation’s analysis proportionate to the environmental and climate risks, including the sensitivity of the area likely to be affected, the scale and nature of the interventions and their foreseeable impact on the environment?
• Are the proposed methods for data collection and subsequent analysis of environmental and climate performance well-conceived?
• Will the evaluation lead to concrete and relevant recommendations to improve the environmental and climate related impacts of on-going interventions and to findings that will help improve future decision-making e.g. by considering how the design of a project could be optimised to minimise or avoid negative environmental impacts?

To ensure a smooth follow-up, it is good practice for the evaluation manager to mobilise the evaluation reference group to obtain feedback on how the evaluation is considering climate and environmental performance.

2.2. GREENING BUDGET SUPPORT

2.2.1. Background to greening budget support[30]

Budget support operations provide assistance to implement either national sustainable development policies (in the form of general budget support, under either SDG Contracts or state and resilience building contracts – SRBC) or a sector strategy (in the form of sector reform performance contracts - SRPC). They foster ownership, support policy reforms, focus on results, build capacities and are the anchor for policy dialogue. The funds are transferred to the national treasury and these are managed according to national financial management systems. Thus, budget support also offers unique opportunities for environmental and climate change integration in national development and economic governance or in specific sectors, starting with the greening of the country’s policies, indicator frameworks, fiscal policies, public finance management, and domestic revenue mobilisation systems.

Budget support can also finance the implementation of national or sub-national climate change and environmental strategies, policies and plans. This is notably because:

• Environmental and climate change policies can only be meaningfully implemented through a whole-of-government approach. To address the urgent climate change and environmental challenges, green priorities must be at the heart of development strategies and incorporated into medium-term planning and annual budget allocation decisions.
• Budget support can strengthen the integration of environment and climate change in the partner country’s public finance management (PFM) systems. PFM ensures that the government respects aggregate fiscal discipline, does an adequate allocation of resources, delivers public services efficiently, and that public policies are implemented as intended and achieve their objectives in a transparent manner. PFM reforms are supported through various instruments, stand-alone projects, budget support, policy dialogue and through specialised agencies such as the IMF and the World Bank.
• Positive results in green public finance at international level have led to a growing interest in greening PFM systems. They are associated with a stronger public response to environmental challenges and the prevention and reduction of risks towards resilience, increase coherence in green public investments by making the case for a green economy, and can foster better access to green finance. See Annex 12 on greening PFM.
• There is a high potential to foster partner countries’ fiscal reforms to include green finance tools. Instruments such as environmental taxation allow for countries’ environmental challenges to be addressed, while encouraging sustainable consumption and production, and generating financial resources to decrease dependency on external financial aid.

2.2.2. Main entry points in greening budget support operations

    Apply the environment & climate risk screening and determine the need for a Strategic Environmental Assessment

In the context of budget support, the screening:

• determines the need for dedicated studies to ensure that implementation of the supported development policy/strategy will not result in significant adverse impacts to the environment and climate (do no harm);
• can provide elements for the completion or update of the risk management framework plus (RMF+).

In all cases, it is required to:

      Verify that the action does not imply the support to any of the activities excluded under Art. 29 of the NDICI-Global Europe regulation. See box here.

When launching a budget support operation, undertaking an SEA is strongly encouraged!

An SEA will help assess the first eligibility criterion for budget support from an environment and climate change perspective, namely ensuring a credible and relevant national/sector policy.

An SEA’s findings can be useful in other phases of the budget support cycle. An SEA can:

• identify environment and climate change elements to be integrated in the policy dialogue;
• suggest environment and climate related indicators to be included in the performance assessment framework;
• provide recommendations for support measures to help address e.g. shortcomings in environmental/climate change capacities and regulatory frameworks.

To learn more about why an SEA is relevant to budget support, click here. An SEA ToR template can be found in Annex 6.

          Determine the need for a Strategic Environmental Assessment (SEA) and justify the decision.

    Analyse the budget support eligibility criteria from a green perspective

A country may be considered eligible for budget support when there is:

• a credible and relevant sector policy, which supports[31] sustainable and inclusive growth;
• a stable macroeconomic framework or policies aiming to maintain/restore macroeconomic stability;
• a programme to improve public finance management, including domestic revenue mobilisation. To learn more about greening PFM click here;
• transparency and oversight of the budget.

Each of the criteria can be used to identify entry points for greening the budget support operation. For instance, by identifying the macro-economic risks of not addressing climate risks or environmental degradation e.g. storms, floods, droughts, water contamination, air pollution (macroeconomic framework); by greening public budgeting processes (PFM); or by supporting the reporting on the use of national environmental and climate budgets (transparency and oversight).

Use Annex 14 to identify key entry points for environmental and climate integration when assessing the budget support eligibility criteria.

    Make use of budget support general conditions to formulate green performance indicators

A key lever in the promotion of policy shifts, reforms and results lies in the monitoring of performance indicators, upon which the release of variable tranches is conditioned. Performance indicators come in addition to the general conditions applying to all disbursements and mirroring the four eligibility criteria. The general conditions of budget support allow for policy dialogue on the policy as a whole, with all the related reforms and expected results. They also allow for dialogue on the country’s macroeconomic and fiscal policies as much as PFM/DRM systems and fiscal transparency (for instance, addressing harmful subsidies and fostering transparency on their impact, or promoting green budgeting or sustainable procurement). Variable tranche disbursements add an extra layer of performance incentive with a limited number of specific indicators.

If there are key environmental or climate change issues related to the policy/strategy being supported, addressing them should be considered a key aim, and thus be addressed in the overall dialogue/monitoring around budget support general conditions and reflected specifically in the performance indicators.

When selecting environmental and climate indicators in the context of budget support, consider:

• making use of an SEA to get recommendations on environmental or climate change related issues that could be integrated in the policy performance assessment framework;
• when possible, using indicators from the country’s statistical or monitoring and evaluation systems e.g. the national measuring, reporting and verification (MRV) system for climate action or the NBSAP indicators;
• using the sector performance assessment framework to identify how environmental and climate change issues and opportunities can influence the sector’s performance. Ensure they are reflected in the performance indicators;
• giving preference to indicators at induced output or outcome level e.g. volume of inputs used in agricultural production, water bodies achieving sustainable abstraction criteria, municipal waste recycling rates[32];
• considering the current capacities to gather and report relevant environmental or climate information, at both institutional and private level e.g. the quantification of greenhouse gas emissions at sector level should be based on valid international protocols and are often more credible if public and private parties are involved.

Any other performance indicators need to be checked to ensure they will not promote undesired negative impacts on the environment or climate, or exacerbate vulnerability to climate change (e.g. indicators such as ‘tonnes of pesticides imported’ should be avoided, as they are related to the use of environmentally harmful substances or activities).

    Green the policy dialogue in the context of budget support

Budget support operations involve policy dialogue to agree on the reforms or development results to which it can contribute; an assessment of the progress achieved against the general conditions and the use of performance indicators; financial transfers to the treasury account of the partner country contingent on results; and capacity development support. All of these aspects can be geared towards optimising environmental and climate change objectives and aligning to the ‘do no harm’ principle.

To ensure a whole-of-government perspective, it is essential to involve central ministries including finance and planning, which are central to PFM, as well as line ministries (e.g. ministry of environment) and other national institutions (e.g. for audit and transparency), including when the budget support is targeting the implementation of environmental and climate change strategies.

Check the section 2.4 on Greening the policy dialogue for further insight.

    Define complementary support measures for green objectives

Complementary support is an essential component of budget support, taking the form of studies, capacity development and short- or long-term technical assistance, feeding into policy dialogue.

To strengthen the environment and climate-related capacity of partner institutions and systems, complementary support may combine some of the following activities.

Studies

• Promote analytical and participatory approaches that aim to better integrate environmental considerations into policies, plans and programmes, such as a Strategic Environmental Assessment (SEA). Depending on the context also consider the use of tools such as climate vulnerability and risk assessment, or an economic valuation of environmental and climate integration.
• Promote the regular use of PFM diagnostic tools with their dedicated modules addressing climate/environmental aspects (for instance, public expenditure and financial accountability (PEFA Climate), methodology for assessing procurement systems (MAPS) for sustainable procurement, Climate-PIMA on public investment management). See Annex 12 for more details.
• Support institutional self-assessments, including in line ministries, to review their governance set-up and existing practices on green budgeting, and identify areas for improvement. For instance, identify the implications of integrating climate‐related measures in policies, strategies and programmes on the revenue as well as the expenditure sides of a budget. These can then be applied in a medium-term expenditure framework (MTEF), or a medium-term revenue strategy (MTRS).

Capacity development

• Address knowledge gaps and develop guidance allowing decision makers to assess benefits of environmental and climate change proposals, including when engaging with other stakeholders comprising local actors and civil society.
• Support national capacities for the identification of revenue and expenditure relevant for climate or environmental objectives in specific sectors, building on national budgetary classifications, or other applicable methodologies (notably, the EU taxonomy or regional/national taxonomies).
• Develop training and capacity-building of government officials (e.g. accountants, budget analysts and auditors) and/or budget officers and planners in procedures and techniques for preparing green budgets and subsequently monitoring and reporting on fiscal outcomes and fiscal risks.
• Consider complementary capacity development to actors able to channel finance towards a green transition, in the view of accessing additional finance, including from private sources. This could include, for instance, trainings on how to invest in green spaces and natural infrastructure, on the definition and management of green/blue bonds and carbon markets, or on how to improve financial support to policies with green objectives e.g. an inclusive and sustainable blue economy.

Technical assistance

• Deploy short or long-term technical assistance contributing the development of policy and regulation supportive of environmental and climate action.
• Provide technical assistance to PFM institutions covering the development and effective use of guidelines and templates for greening PFM systems, including taxation (e.g. reduce tax benefits with adverse environmental effects, promote tax exemptions and duty waivers that stimulate the consumption of green products and services over polluting ones), procurement (e.g. promoting greener technical specifications and award criteria) or public investment management (e.g. mainstreaming sustainability principles in investment screening, management and monitoring).
• Promote the exchange of good practices between actors in green PFM systems, external audits that address environmental and climate concerns and parliamentary oversight, also with peer/neighbour countries or through peer-to-peer partnerships with EU administrations (e.g. twinning/TAIEX).
• Considering that monitoring and evaluation in budget support can go beyond the use of performance indicators, provide support to data systems to:

1.           track or record progress in terms of environmental sustainability and climate action, including in the implementation of reforms to improve green PFM;
2.           promote good practices and innovation at sector level (e.g. limiting environmental degradation, improving natural resource management);
3.           improve information for decision-making on green investments;
4.           build evidence for future policy making.

More details on complementary support measures and tools for greening the budget support are available in Annex 14.

2.3. GREENING INVESTMENTS

2.3.1. Background to greening investments

The Global Gateway is a key 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. It has become a cornerstone of EU cooperation that is largely implemented through support to investments in the form of blended finance and budgetary guarantees. The Global Gateway aims to invest in developing infrastructures that are clean, climate resilient and aligned with pathways towards net zero emissions; it also promotes the implementation of the G20 Principles for Quality Infrastructure Investments .

Under the NDICI-Global Europe, the European Fund for Sustainable Development Plus (EFSD+) provides an umbrella for both blended finance and budgetary guarantee operations in EU external actions, and thus the framework to implement the Global Gateway. Environmental sustainability, climate resilience and low carbon development are key elements of the EFSD+ (as per Art. 31.2 of the NDICI-Global Europe Regulation). Investments need to align to the DNH principle of the NDICI-Global Europe Regulation as well as to the Global Gateway’s ‘green and clean’ principle.

The EU contribution to an investment should result in an additionality, which can be environmental, and which is expected to go beyond regulatory obligations[33]. The preparation of Environmental Impact Assessments cannot be considered an additionality as it is a legal requirement in most cases.  

In the case of blending operations and budgetary guarantees it is the environmental and social standards and safeguards of the lead financial institution (LFI)[34] that are applicable. However, ensuring the integration of environment and climate change remains an obligation for the Commission, and inadequate attention to these elements can also pose a significant reputational risk for the organisation.

Although FIs that act as Lead FIs are pillar-assessed, for the time being the pillar assessment does not assess their environmental and social systems, standards and safeguards.

Recent European policies and legislation on sustainable finance[35] translate international commitments[36] into a framework for European FIs to integrate the sustainability objectives and upgrade their environmental policies and systems. Most of them have pledged for net zero strategies, and the CBD COP15 Decision on Resource Mobilisation calls for alignment of their portfolios with goals and targets of the Global Biodiversity Framework. Nevertheless, integrating recent pledges and regulation in investment processes and cascading implementation of sustainability strategies down to the projects on the ground is complex. Additionally, not all EU partner FIs fall under the European regulations.

In addition to promoting sustainable finance, environment and climate change must be integrated in all EU supported investments, irrespective of the form of support

Click here for ideas on how the use of blending and guarantees can be geared to support environmental and climate objectives.

The entry points for the EU to integrate environment and climate change in blended finance and guarantees are very similar, although the processes are different. In all cases it is essential that environment and climate change concerns are addressed upstream in the process, as early as possible, and that these remain a constant element throughout the whole cycle.

2.3.2. Main entry points in greening blended finance

     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^[37]. 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.

     Understand the environment and climate risks of the project[38]. 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] 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.

If considered necessary, request the full assessment reports for their review, which should be shared by the LFI as early as possible. It is pertinent to recall that EIA-related documents (especially the EIA report) must be publicly available. In case of doubts, check the quality of these documents; INTPA and NEAR thematic units in HQ can provide support.

If the EIA has not yet been prepared, and if the EIA ToR are open for comments, think of promoting ambition beyond the minimum requirements, for example asking for the potential for nature-based solutions to be explored as part of the project’s design. Other relevant document that should be shared (if available) include biodiversity management plans and environmental management plans to avoid, minimise, restore or offset negative impacts.

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.

It may be the case that the first knowledge of a project comes with the blending application submitted ahead of the TAM meeting. In this case the considerations highlighted above (ascertaining the quality of the applicable environmental safeguards and standards, and understanding the environmental and climate risks of the project) should be addressed. Approval may be given conditioned to the satisfactory response to any environment or climate-related concerns identified.

In addition to the points already highlighted, the feedback provided at the TAM meeting must be based on a review of the blending application that should pay particular attention to the following elements:

• 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:

o    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.

o    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.

2.3.3. Main entry points in greening budgetary guarantees

Although most elements are common, the entry points for the greening of budgetary guarantees are slightly different for the cases of EIB and open architecture guarantees. The differences are highlighted below.

     Include environment and climate change in the dialogue with the financial institutions. Please refer to the point on green dialogue with financial institutions in the section 2.3.2 on blended finance above.

      Contribute to the investment pipelines. In dialogue with finance institutions and national partners, proactively identify investment opportunities that contribute to the green transition.

     Review of Proposed Investment Programmes (PIP) (relevant for open architecture guarantees). The applications for PIPs must be reviewed from an environment and climate change integration perspective, both to maximise positive contributions and to ensure compliance with the DNH principle. Although not strictly corresponding, the orientations to review an application for blended finance can also be used to review a PIP application.

     Screen investment pipelines from an environment and climate change integration perspective.

The screening of investment pipelines tool allows to assess investments based on their expected contributions to the green transition and their environmental and climate risks; it provides guidance on aspects that can be addressed in the dialogue with finance partners – including the regular pipeline review meetings - and in the review of more detailed applications.

       Understand the applicable environmental standards and safeguards of the LFI. Please refer to the section 2.3.2 on blending operations. The EIB environmental and social standards can be consulted here.

     Understand the environment and climate risks of the project. Please refer to the section 2.3.2 on blending operations. In the case of EIB guarantees, the review of the pipelines will already provide an initial orientation of priorities and concerns that can be further examined when more information on the project is made available.

      Review of applications and Art. 19 consultations. Please refer to the section 2.3.2 on blending operations. In the case of EIB the Article 19 consultations offer an additional entry point, where the Commission can give a positive opinion, a positive opinion with comments (to which EIB must respond) or a negative opinion. If a project is non-compliant with Art. 29 of the NDICI-Global Europe Regulation, or significant and unacceptable adverse impacts on the environment are expected, a negative opinion should be given. A positive opinion with comments should be given if there are significant environment or climate-related concerns that need to be clarified.

2.3.4. Greening the contracting and monitoring of investments

Contracting and monitoring are under the responsibility of the lead financial institution. Nevertheless, the Commission and EU Delegations must ensure that the greening opportunities and environmental risk mitigation and management measures are effectively implemented and monitored.

      Ensure that the guarantee and blending agreements address key environmental and climate change concerns. The environmental standards and safeguards applicable to the project should be stipulated. 

The guarantee and blending agreements with the different lead FIs should include a clause to ensure environmental objectives will be implemented by the different financial partners along the investment chain.

The use of green procurement should be promoted, in which case the applicable green procurement procedures and criteria should be referred to in the guarantee/blending agreement.

      Ensure adequate environment and climate impact mitigation and risk management measures. Make sure that recommendations from the EIA and/or CRA are integrated in the project design, and that the Environmental Management Plan (EMP) (or Environmental and Social Management Plan – ESMP) are reflected in the project’s monitoring framework.

Guarantee and blending agreements should indicate the key findings of any EIA or CRA that were prepared, and the environmental and climate risk management measures that must be implemented. These may be specified in a separate document annexed to the agreement (e.g. the Environmental and Social Data Sheet in the case of EIB).

      Monitoring. Depending on the environmental and climate risks of the project, the Commission/EU Delegation may decide to follow-up more closely on the implementation of the project and its EMP. This can take place by accompanying monitoring missions organised by the Lead FI or a ROM (for blending). In any case, it is recommended that delegations check the monitoring reports prepared by the LFI.

If financial intermediaries are involved, it is recommended that technical assistance is provided by the lead FI to enhance their environmental and social systems and standards. It would be in the interest of the Commission to be kept informed of its implementation by the LFI.

2.3.5. Greening evaluations: learning from greening of blending and guarantees

      Use the opportunities offered by evaluations to measure the effectiveness and efficiency of environment and climate change integration into investments. Some questions that can be addressed in mid-term and final evaluations include, inter alia:

o    Were the environmental and climate risk mitigation measures identified at the start effective at preventing adverse impacts on the environment and managing climate risks?

o    Did the investment effectively contribute to the environment and/or climate objectives it claimed? Which were the main environmental impacts? Key success factors?

      Consider the organisation of an audit- in coordination with the LFI - in particular if there are high environmental and climate risks, to check the correct implementation of the applicable environmental and social safeguards and standards.

2.3.6. Seeking more effective greening of investments at national level: promoting upstream opportunities

      Promote the integration of environment and climate change in sector planning. Outside of the investments pipeline per se, it is encouraged to promote the integration of environment and climate change in government sector planning processes, so that future projects which are identified are aligned to environmentally-integrated sector plans and strategies. To this effect, Strategic Environmental Assessments (SEA) can be promoted jointly with other development partners.

      Promote the greening of investments through upstream green finance frameworks. The EU is engaged in promoting upstream financial frameworks and instruments to green financial systems in partner countries and financial institutions. Current initiatives include, inter alia, the promotion of green bonds, sustainable finance taxonomies and integrated national financial frameworks (INFF). Refer to Annex 16 on greening investments through upstream green finance frameworks for guidance on such opportunities.

2.4. GREENING POLICY DIALOGUE

2.4.1. Background to greening policy dialogue

Policy dialogue plays a critical role in the promotion of a green transformational change. Environment, climate change and the green transition should be standard features embedded in the policy dialogues involving the EU at country and regional level, in meetings with local authorities, in sector and in thematic working groups or donor coordination platforms. Such dialogues can also focus on environmental or climate issues on their own right.

2.4.2. Key measures to green the policy dialogue

    Dialogue throughout the cycle

Policy dialogue is at the centre of all phases in the intervention cycle and for all implementation modalities. It fuels the engagement with national partners and stakeholders and deepens understanding and insight into the links between the problem analysis, the state of the environment and climate change. Political economy insights can also help in understanding the drivers of and barriers to green action. Issues that are more difficult to address in specific actions or investments, or that are not politically palatable, may find a space in the policy dialogue.

Policy dialogue is particularly important during the preparation stages, including programming. It plays a critical role in the promotion of the environment and climate change mainstreaming agenda, including the promotion of a nature- and climate-positive development.

    Make use of relevant assessments to support green dialogue

Policy dialogue is most effective when backed up with evidence and information, such as data, studies and examples of previous experience.

Different tools and studies that provide insight into the links between environment, climate change and development can be useful to prepare and support a green policy dialogue. These include:

• The Country Environmental Profile, which objective is to inform programming from an environmental and climate change integration perspective.
• The Risk Management Framework plus, which provides insight into environment and climate-related risks to EU cooperation.
• Any Strategic Environmental Assessment (SEA) that may have been prepared (e.g. in the context of budget support), some of the recommendations to enhance the environmental and climate performance of the national/sector policy or strategy can be taken up in the policy dialogue.

    Apply a cross-sectoral approach

Policy dialogue offers an opportunity to convey/promote EU values and objectives, including on environment protection and climate change. It is also a way to build ownership of national partners of a sustainability and climate agenda, and the integration of all subtopics of environment and climate in all sectors of support. These dialogues should contribute to and complement existing policy dialogues of DG Environment and DG Climate Action.

    Engage with the government and key stakeholders, including civil society

It is important to include the relevant stakeholders – including civil society – in order to contribute to country-led greening efforts. The country situation analysis should inform this dialogue.

Key outputs of an inclusive policy dialogue are listed below.

• The relevant stakeholders and target groups, including civil society and youth organisations (including any youth boards established by EU delegations), are identified along with the most appropriate platforms and communication channels for advancing environment and climate change mainstreaming.
• Relevant information on climate change and environmental issues, and the efforts provided to address them, guides EU support throughout the cycle (from the selection of priority areas and alignment with green priorities during programming, to the identification and formulation of actions contributing to environmental and climate objectives, and the assessment of EU support from a green perspective).
• Communication channels are established to sources of information on current national practices, priorities and plans for the greening of development.
• Close coordination with the lead and like-minded development partners on environmental and climate change issues is established, in a Team Europe spirit.
• National partners, development cooperation partners and EU Delegation staff are familiar with EU thematic and geographical actions related to the integration of environment and climate change.
• National ownership of environment and climate change integration is consolidated and supported.

2.5. GREENING PROJECT AND OFFICE MANAGEMENT

Whilst the EU promotes a green and just transition in its external action, it should also lead by example. Nothing is more convincing when promoting transformational change than practising what we preach. Day-to-day operations, both in EU offices and in EU-funded projects, offer ample opportunities to minimise our environmental and climate footprint, by modifying our energy and water consumption, the way we travel, what we eat and the goods and services we buy. Engaging and raising the awareness of colleagues and implementing partners in green practices can have a multiplier effect, as these practices are incorporated into both EU operations and personal habits. Remember that small acts can have a big impact! These are the reasons underlying the Commission long-standing efforts to improve its environmental performance, notably through the implementation of its Eco Management and Audit Scheme (EMAS).

Quick Tips on greening project and office management are available in capacity4dev. The Quick Tips provides concrete tips for the greening of procurement, calls for proposal and tenders, missions, events and meetings, reports and deliverables, and office management, amongst others.

The new Guidelines on organising sustainable meetings and events at the Commission provide concrete guidance on this aspect, including a useful checklist.

More detailed recommendations for the greening of calls for proposals and of procurement are provided in Annex 9 (CfP) and Annex 10 (procurement).

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 Investments – greening opportunities

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⁽²⁾ OECD (2019), Aligning Development Co-operation and Climate Action: The Only Way Forward, The Development Dimension, OECD Publishing, Paris.

⁽³⁾ In 2024, OECD DAC members are working to develop a common understanding of an alignment with the GBF. See: Meeting of the OECD Council at Ministerial Level, Paris, 7-8 June 2023.

⁽⁴⁾ Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe.

^{(5) Regulation (EU) 2021/1529 of the European Parliament and of the Council of 15 September 2021 establishing the Instrument for Pre-Accession assistance (IPA III).}.

⁽⁶⁾ Art. 16 of the Annex to the Commission Decision of 31.3.2022 establishing a model for a financial framework partnership agreement between the Commission and the government of an IPA III beneficiary indicates that ‘IPA III assistance shall be implemented in accordance with Art. 9 of the IPA III Regulation and Chapter III of Title II of the NDICI Regulation’ (C(2022)1857 final).

⁽⁷⁾ Joint Communication to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank, The Global Gateway. JOIN/2021/30 final.

⁽⁸⁾ In concrete terms, and taking 2014-2020 funding as the baseline, this means that the NDICI-GE and IPA III contributions to biodiversity should collectively reach EUR 7 billion over 2021-2027.

⁽⁹⁾ As per Article 41.8 of the NDICI-Global Europe Regulation.

⁽¹⁰⁾ There are four Rio markers: Biodiversity, Combating Desertification, Climate Change Mitigation and Climate Change Adaptation.