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[24]. 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)[25] 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[26] translate international commitments[27] 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.
|
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.
[24] The Blending Guidelines provides clarifications on additionality of EU support in blending operations.
[25] The lead financial institution is the pillar-assessed IFI which carries the project and gets into contractual arrangements with the EU. Other IFIs may be involved as co-investors.
[26] The European Sustainable Finance Strategy (ESFS), including the EU Taxonomy for sustainable activities, the Sustainable Finance Disclosures Regulation (SFDR), and the upcoming Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).
[27] Including the 2030 Agenda for Sustainable Development (2015), Agenda 2063, the Addis Ababa Action Agenda (2015), the Paris Agreement on Climate Change (2015), the Sendai Framework for Disaster Risk Reduction (2015-2030), and the UN Security Council Resolution 2282 (2016) on sustaining peace and the Global Biodiversity Framework (2021).
2.2.2. Main entry points in greening budget support operations |