Sitemap

Blue Finance, Ready To Make Waves In Central And Eastern Europe

As the world recovers from the devastating impacts of the COVID-19 pandemic, putting climate at the heart of development is fundamental to creating a resilient and equitable growth map. While climate mitigation finance or “green” markets have grown exponentially, efforts are now underway to launch and scale climate adaptation finance, especially related to “blue” assets. Given that the oceans and water related economy is expected to reach $3 trillion by 2030, innovative financing solutions such as blue finance can play a key role in Central and Eastern Europe (CEE).

With increased interest from investors, financial institutions, and issuers globally, blue finance is an emerging area in climate finance. As part of this financial instrument, investments are used to finance or refinance activities that can help protect oceans or improve water management. Specifically, blue bonds and blue loans earmark funds exclusively for ocean-friendly projects and to protect critical clean water resources.

Asia, which produces more than 80 percent of the world’s marine-plastic waste, has been at the forefront of the blue economy. Companies focus on expanding their plastics recycling and waste-management capabilities, using marine and coastal resources sustainably, diverting plastic waste from landfills and oceans, tackling marine pollution, and preserving clean water resources.

In CEE, the blue economy is still in its infancy, but there are many opportunities. In the context of the region, focusing beyond the traditional ocean sectors (for example, fisheries) and accelerating investments in land-based and water-related sectors is key. Sectors like agriculture, river pollution, and on-land plastics management can have a massive impact on water resources and cleanliness of our seas and oceans.

As the region aims for a strong economic recovery, facilitating capital for regional banks to provide loans to businesses for blue projects can help strengthen the blue ecosystem. Some of the areas that blue finance can support include water conservation, water management activities, smart drip irrigation, aquaculture, and seafood processing, among others.

Romania is a case in point in the region. To comply with all the European Union requirements relating to the water and wastewater sectors, it will have to invest about €15 billion by 2027. Out of this, at least €3 billion could be provided by private sector financiers. With its water management issues and high vulnerability to droughts, Romania has big needs for blue finance, and blue opportunities are developing across areas—rehabilitation of water supply measures for households and hydroponic urban farming, among others.

These needs represent good business opportunities for banks, especially because compliance with the water-related Sustainable Development Goals is becoming increasingly important for small and medium enterprises (SMEs) in developing countries. For instance, the European Commission’s new strategy for sustainable textile addresses heavy impact on water use, among others. In this context, helping clients to identify and address relevant challenges will enable banks to maintain and grow their SME portfolio.

Further, municipal water infrastructure—supply and sanitation—are the main investment gaps in the region, an opportunity for local banks to provide financing through small-scale public-private partnerships, for example.

Good news is that the blue transformation has started in Europe. Banca Transilvania SA—the largest bank in Romania—recently received a €100 million loan from IFC to support sustainable use of water. An inaugural project in Europe, this investment in blue finance is the first blue funding project by a financial institution in the region. This will help the bank extend loans to smaller businesses and use the proceeds to finance blue projects in Romania.

Water surfing

To ride the blue economy “wave,” financial institutions in the region need to understand their role and how they can support their clients. In CEE, mobilizing finance to help companies and starting a dialogue with commercial partners in the blue sector could facilitate financing in the land-based sectors. Banks also need to understand the challenges that companies face in terms of financing, in particular the challenges their clients may face in identifying what they have to do; and the importance of structuring the financing to meet the recently introduced international blue finance guidelines and simply avoid re-financing issues under blue terms.

Despite the challenges, banks should seize — and invest in — the opportunity. Advising their clients on blue investment opportunities requires specialized know-how and those banks that move first will be able to acquire the ropes faster, building a competitive advantage. Over time, as they demonstrate competence, both the market and regulators will have improved confidence in this sector.

Creating Ripples

Our research suggests that in the next five years, the potential for small and mid-size private sector investments in blue finance—the ones that financial institutions could finance—is around €11-16 billion in five countries, including Romania, Croatia, Poland, Serbia, and Georgia. This includes only municipal and industrial opportunities while excluding major government-led infrastructure initiatives.

Building on this potential, scaling up blue investments will be crucial for the region. As the private sector steps up to create an enabling industry with new opportunities, it will be key to ensuring food security, jobs, and a seamless transition to net zero.

Vittorio Di Bello, Regional Head of Industry for Financial Institutions in Europe, IFC , Photo: shutterstock

Related Articles

Euro At Its Lowest Level Against Dollar In The Last Two Decades

The value of the dollar recorded a strong growth in the world markets since the American central bank (Fed) has again increased interest rates,...

The Swiss Voted In A Referendum That Women Should Retire At 65

The Swiss voted by a narrow majority in a referendum to increase the retirement age for women to 65, and the vote was marked...

Giorgia Meloni Claims Victory To Become Italy’s First Female Prime Minister

According to the results published after the polls closed, the right-wing coalition led by the Brothers of Italy party, headed by Giorgio Meloni, is...

Leaders Of 44 Countries Invited To The First Meeting Of The European Political Community

Representatives of 44 countries have been invited to the first meeting of the European political community, which will be held on October 6 in...

European Gas Prices Likely To Fall Sharply This Winter, Says Goldman Sachs

EU countries’ efforts to avoid big shortages likely to ‘successfully solve’ Russian cuts, says bank. European countries can withstand Russia’s gas cuts this winter as...

Germany′s Government Agrees On €65 Billion Relief Package

The German government on Sunday unveiled a new aid package of 65 billion euros for citizens and businesses to cope with rising energy prices...

Digital Agenda For The Western Balkans And Eurointegration

5g Network Catalyst Of Regional Economic Integration

For development in the Western Balkans, it is important to follow the EU strategic framework for the digital agenda in the long term, while...

EU Split On Visa Ban For Russians

EU defense ministers are searching for a unified approach as to whether the bloc should ban Russian tourists. A visa agreement could be suspended. Ukraine President...

More...

Sakura Scholarships For 2022 Awarded 

The Embassy of Japan and Japan Tobacco International (JTI), for the eleventh year in a row, awarded five Sakura scholarships to students and researchers from...

MPC Properties Contribution To Decarbonization And A Healthier Ecosystem

MPC Properties has developed a socially responsible strategy in accordance with ESG goals (Environmental, Social, Governance) in order to achieve the well-being of the...

The Serbian Chamber Of Commerce To Open Its Office In Beijing

The President of the Serbian Chamber of Commerce (PKS), Marko Čadež, and the President of the Chinese company YiHai Group, Linda Wang, jointly emphasized...

Chinese Company Appoints Its First Virtual CEO

NetDragon, a Chinese company, has announce that Ms.Tang Yu, an Al-powered virtual humanoid robot, has been appointed as the Rotating CEO of its flagship...

News

Euro At Its Lowest Level Against Dollar In The Last Two Decades

The value of the dollar recorded a strong growth in the world markets since the American central bank (Fed)...

The Swiss Voted In A Referendum That Women Should Retire At 65

The Swiss voted by a narrow majority in a referendum to increase the retirement age for women to 65,...

Giorgia Meloni Claims Victory To Become Italy’s First Female Prime Minister

According to the results published after the polls closed, the right-wing coalition led by the Brothers of Italy party,...

Total Revenues Of Video Game Industry In Serbia Amounted To 125 Million Euros In 2021

The video game industry in Serbia employs 3,000 people who work in 130 gaming companies, with total revenues last...

Leaders Of 44 Countries Invited To The First Meeting Of The European Political Community

Representatives of 44 countries have been invited to the first meeting of the European political community, which will be...

Euro At Its Lowest Level Against Dollar In The Last Two Decades

The value of the dollar recorded a strong growth in the world markets since the American central bank (Fed)...

The Swiss Voted In A Referendum That Women Should Retire At 65

The Swiss voted by a narrow majority in a referendum to increase the retirement age for women to 65,...

Giorgia Meloni Claims Victory To Become Italy’s First Female Prime Minister

According to the results published after the polls closed, the right-wing coalition led by the Brothers of Italy party,...

Total Revenues Of Video Game Industry In Serbia Amounted To 125 Million Euros In 2021

The video game industry in Serbia employs 3,000 people who work in 130 gaming companies, with total revenues last...

Leaders Of 44 Countries Invited To The First Meeting Of The European Political Community

Representatives of 44 countries have been invited to the first meeting of the European political community, which will be...

Euro At Its Lowest Level Against Dollar In The Last Two Decades

The value of the dollar recorded a strong growth in the world markets since the American central bank (Fed)...

The Swiss Voted In A Referendum That Women Should Retire At 65

The Swiss voted by a narrow majority in a referendum to increase the retirement age for women to 65,...

Giorgia Meloni Claims Victory To Become Italy’s First Female Prime Minister

According to the results published after the polls closed, the right-wing coalition led by the Brothers of Italy party,...

Total Revenues Of Video Game Industry In Serbia Amounted To 125 Million Euros In 2021

The video game industry in Serbia employs 3,000 people who work in 130 gaming companies, with total revenues last...

Leaders Of 44 Countries Invited To The First Meeting Of The European Political Community

Representatives of 44 countries have been invited to the first meeting of the European political community, which will be...