The Association of European Development Finance Institutions (EDFI) this week committed to immediately stopping new coal and fuel oil financing.
The 15 European bilateral development finance institutions (DFIs) that make up the association will also end other fossil fuel financing by 2030 at the latest. In the meantime, funds for fossil fuels will be restricted to projects that are in line with the Paris agreement such as some investments in gas-fired power generation.
The EDFI members together have USD 50 billion (EUR 42bn) under management in emerging and frontier markets. They have provided EUR 8 billion for climate finance in low- and middle-income countries over the past five years. The group includes CDC - the UK’s development finance institution, DEG - the German development finance institution wholly owned by KfW, FMO - the Dutch development bank and Proparco - the French development finance institution.
All new financing by EDFI members will be brought in line with the goals of Paris agreement by 2022 and the institutions will work to move their investment portfolios to net-zero emissions by 2050 at the latest.
"DFIs are diverse institutions that will follow different paths and use their best efforts to implement these commitments, with some institutions going even further in certain areas and others needing more time for implementation," said EDFI chief executive Soren Peter Andreasen.
EDFI said its announcement comes at an important time. "Now, in the lead-up to COP 26, and as countries around the world strive to achieve a sustainable recovery from the Covid-19 pandemic, it is more important than ever that European DFIs set a collective example for investors in developing markets."
(USD 1.0 = EUR 0.841)
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