Impact Finance

EIB and European Commission Launches Advisory Service to Help Cities Plan Investments

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On November 28, 2017, the European Investment Bank (“EIB“) and the European Commission launched UBRIS (for “Urban Investment Support“), an urban advisory service with the goal of assisting cities in member states in accessing finance.  UBRIS will help design, plan and implement investment strategies and projects, including providing technical and financial advice.

Cities can apply for UBRIS assistance at the European Investment and Advisory Hub.  Eligibility criteria note that URBIS will prioritize cities seeking support related to a sustainable urban strategy with a view of developing, financing and implementing urban investment programs and that advice should be given on sustainable urban investments, in particular smart, green and socially inclusive investments.

According to press releases of the European Commission and the EIB, UBRIS will help with the following:

  • Improve a city’s investment strategy by giving advice in strategic planning, prioritizing and optimizing of investment programs and projects.
  • Bring projects and investment programs to a bankable stage, including by providing analysis on demand or support in financial structuring and by reviewing draft grant applications.
  • Explore opportunities for financing under the European Fund for Strategic Investments and/or the Cohesion Policy funds.
  • Support the preparation work for investment platforms and facilities combining funds, liaise with financial intermediaries and set up implementation arrangements for these facilities.
  • Develop financing approaches aiming at alleviating the burden on municipal debt and at helping municipal companies and private urban service providers access funding.

UBRIS will initially use EIB advisory and project services and focus on selected assignments.  The EIB and the European Commission will assess the initial work in the second half of 2018 and may consider additional resources at that time.

The EIB and European Commission press releases announcing UBRIS are available here and here.

European Commission Launches Consultation on Investors’ and Managers’ Duties Regarding Sustainability

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On November 13, 2017, the European Commission launched a public consultation on institutional investors’ and asset managers’ duties regarding environmental and social sustainability.  The consultation is open for responses until January 22, 2018.

The consultation is in response to a recommendation in the EU High-Level Expert Group on sustainable finance interim report published in July 2017.  The interim report recommended that the Commission clarify that fiduciary duties of institutional investors and asset manages explicitly integrate material environmental, social and governance factors and long-term sustainability.  The Consultation Document notes that the Commission has commenced an impact assessment process assessing how such a clarification of institutional investors’ and asset managers’ duties regarding sustainability could contribute to a more efficient allocation of capital and sustainable and inclusive growth.

The consultation seeks evidence from “all citizens and organizations” of how clarifications or amendments to investor duties can contribute to more efficient allocation of capital and to more sustainable and inclusive growth; of how to ensure that end investors and beneficiaries have the right information to help them make sustainable choices; and from leading responsible investors on their strategies for considering environmental, social and governance issues.  Further information about the consultation, including how to respond, is available here.

OECD Development Assistance Committee Adopts Blended Finance Principles

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The Development Assistance Committee (“DAC”) of the Organisation for Economic Co-operation and Development (“OECD”) has adopted policy guidance on the use of blended finance for development.

The guidance includes five nonbinding principles, which are described in Annex 1 to the DAC High Level Communiqué: October 31, 2017, which was published after a DAC convention on October 30 and 31, 2017. The five principles are referred to in the Communiqué as The OECD DAC Blended Finance Principles for Unlocking Commercial Finance for the SDGs. The principles are: (1) anchor blended finance use to a development rationale; (2) design blended finance to increase the mobilization of commercial finance; (3) tailor blended finance to local context; (4) focus on effective partnering for blended finance; and (5) monitor blended finance for transparency and results. The Communiqué provides additional detail with respect to each principle, including how each principle can be implemented.

In a separate publication, the OECD previously defined blended finance as “the strategic use of development finance for the mobilization of additional finance towards sustainable development in developing countries.”

The Communiqué also provided guidance on how aid can be spent on refugees arriving in transit or host countries, including a list of aid-eligible and noneligible expenditures.

The Communiqué is available here.

FMO and Shell Foundation to Create Fund to Provide Capital to Social Entrepreneurs

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On October 24, 2017, the Dutch development bank FMO announced that FMO and the Shell Foundation, in cooperation with the U.K. Department for International Development, will cocreate a fund to provide growth capital to social entrepreneurs.

According to a press release by FMO, FMO and the Shell Foundation signed a Memorandum of Understanding agreeing to cooperate in the field of access to energy in Sub-Saharan Africa and India. This will include investing in financial institutions with specific goals of increasing access to finance, reducing inequality, and promoting green financing and agribusiness. The growth capital fund is planned to launch in the first quarter of 2018.

The press release is available here.