Green financing in CEE

Yes.

Green Finance Alliance: The Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology launched the Green Finance Alliance, an initiative aimed at establishing a sustainable financial market in Austria. Its members are financial institutions who aim to achieve climate neutrality by 2050.

No.

There is no local initiative by the Bulgarian regulator of the banking sector – the Bulgarian National Bank. Nevertheless, the Bulgarian Development Bank, whose sole owner is the Bulgarian state, aims to help small and medium-sized enterprises in this aspect, as the Strategy of the Bulgarian Development Bank for the 2021-2023 period envisages 20 % of the new loans to be green (compliant with ESG) - https://bbr.bg/en/news-bbr/bdb-will-help-small-companies-green-transition/

No (at this point).

There is no "green bank" initiative by the Croatian National Bank (the CNB) yet. However, at the start of November 2021, the CNB made a public "Climate Pledge" in which (given its mandate, instruments and resources) it declared its determination to strengthen its catalytic role in fostering climate transition in Croatia. In that respect, the goals of the CNB include: (i) building and enhancing its staff's skills and knowledge on the impact of climate change on the CNB's main goals; (ii) developing and subsequently implementing its own climate strategy and allocating adequate resources to address climate-related and environmental risks in different policy areas, especially in the area of financial stability, supervision, research, monetary operations and foreign reserves management; (iii) incorporating climate-related and environmental risks into supervisory expectations in line with the ECB's Guide on climate-related and environmental risks; (iv) engaging in regular open dialogue with credit institutions in order to encourage them to incorporate climate-related and environmental risks into their risk management frameworks and decision-making processes; (v) supporting the establishment of a workstream within the Vienna Initiative charged with exploring how it can assist credit institutions in adapting to climate transition and transforming economies in line with European climate goals; and (vi) formulating an action plan by the end of 2022, aimed at reducing its own carbon footprint in line with the Paris Agreement objective of limiting global warming to 1.5 degrees Celsius. This last action plan was not yet published, presumably because Croatia is entering the eurozone in 2023 and the CNB is converging its policies with the ECB.

Yes. 

In the first quarter of 2021, 16 members of the Czech Bank Association signed a Sustainable Finance Memorandum. The Memorandum binds the members to minimise the impacts of their operations on the environment, to continue to digitise and transition to paperless procedures, to cooperate with public authorities, to exit loan portfolios associated with production that is excessively harmful to the environment or human health or to offer services and green finance products (obligations, mortgages or loans) contributing to sustainability.

Yes.

In April 2021, the Hungarian National Bank issued a Green Recommendation to encourage Hungarian credit institutions to modify their operations towards sustainability, including strategy making, corporate governance, risk management, etc.

No.

The Polish legislation does not define a "green bank", but there are numerous governmental projects in which the presence of a bank is important. An example of such a project is the "Clean Air Programme" created by the Ministry of Climate and Environment. Banks were invited to apply to participate in the programme, which resulted in the launch of a new banking pathway entitled "Green Bank". "Clean Air Credit". The project concerns subsidies for the replacement of heat sources up to a certain amount for owners of single-family houses and dwellings in municipalities that fall under the so-called anti-smog law. 

No.

Apart from the EU initiatives, no specific Romanian green bank initiatives exist.

No. 

So far, there have been no "green bank" initiatives in Serbia.
However, in 2021, the National Bank of Serbia (NBS) became a member of the global Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The NBS has declared its support for scaling up green finance in Serbia and for transitioning toward a sustainable economy. Meanwhile, major commercial banks in Serbia have sustainability and green financing high on their agenda, evidenced by ever-growing volumes of green and sustainability-linked lending in Serbia.

Yes.

In October 2021, six members of the Slovak Bank Association signed a Sustainable Finance Memorandum that binds members to actively cooperate with the competent authorities to implement standards and procedures for achieving energy efficiency targets for buildings within the meaning of the European Green Deal, to apply sustainability principles in their business activities and relationships, to initiate the creation of a sector standard for ESG certification of corporate clients, and to offer services and green financial products, investment products or loans contributing to sustainability so that sustainable finance is accessible.

No.

Apart from the EU initiatives, no specific Slovenian green bank initiatives exist.

Yes.

Austrian Green Investment Pioneers Programme: The Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology implemented the Austrian Green Investment Pioneers Programme as a part of the klimaaktiv climate protection initiative. Participants gain support when looking for financing for their climate-relevant business ideas in the area of renewable energy, energy efficiency, mobility and agriculture/bioeconomy. Lenders are encouraged to participate as financiers in the network.

No.

There is no local legal or regulatory incentive related to financing green projects, e.g. related to interest premiums or capital reliefs

No.

There are no regulatory, financial or legal incentives specifically to finance green projects by lending. However, credit institutions in Croatia have broadened potential credit lines to green projects, raising awareness of the Corporate Sustainability Reporting Directive and obligations provided therein. 

No.

There are no regulations or incentives issued by the Czech legislator or the Czech National Bank. Some banks provide EKO loans and help with submission of applications to the New Green Savings subsidy programme. However, those banks are not in any way officially connected to the programme.

Yes.

Hungarian banks can apply a significantly reduced capital requirement for loans financing the purchase and construction of energy-efficient properties. It also covers solar power plants, sustainable agriculture, energy efficiency and electromobility. The capital discount is 5 % or 7 % of each eligible gross exposure, which reduces the Pillar II capital requirements of the participating institution.

 
The Green Home Programme was launched during the summer of 2021 by the Hungarian National Bank. Under this programme, the MNB provides refinancing to banks financing the construction and purchase of green homes. 

Yes.

As a rule, the state does not offer any legal or financial benefits to the banks. The government, however, tries to direct and motivate society to pay more and more attention to environmental issues. For several years now, the Institute for Responsible Finance and the UN Global Compact Network Poland, together with the Ministry of Finance and the Ministry of Funds and Regional Policy, have been creating a project called "Green Finance", a report that outlines the goals and challenges of green finance. Its main objective is to outline the situation of sustainable development in Polish society and in the economy, urging banks and defining the goals they should meet. It is not only a statement by government bodies, but also representatives of the biggest Polish banks (e.g. PKO Bank Polski and mBank) have included their views on the situation of "green finance". Although the state does not offer specific benefits to the banks, the banks themselves are accommodating in terms of lowering interest rates on green loans (e.g. loans for building a house with documented low energy consumption) or offering a better margin. This is an increasingly common practice in the banking market and more and more banks are opting for such measures (e.g. Credit Agricole or PKO BP).

Yes and No.

While there are no specific financial incentives to financing green projects by lending, there are legal/regulatory requirements for credit institutions to develop and comply with an appropriate credit risk strategy which should address environment, social and governance risks, among others.
Furthermore, the National Bank of Romania (NBR) is closely monitoring the financing of green projects on the Romanian market and in 2020 became a member of the Network for Greening the Financial System (NGFS). The NGFS aims to improve the analytical framework and management of climate-related and environmental risks and to increase the role of the financial system in financing the transition toward a sustainable economy. To this end, the NGFS defines and promotes best practices to be implemented within and outside membership of the NGFS and conducts or commissions analytical work on green finance.
Finally, most Romanian credit institutions have added in their agenda and are actively marketing ESG-related projects, while the market has seen an increase in actually implemented/financed green investments.

No.

Not at present.
The significant impetus is expected to come under the ambitious Green Agenda for the Western Balkans and various EU-supported financing instruments yet to be employed in the region.
Currently, the multilateral development banks – such as EBRD through its Western Balkans Sustainable Financing Facility, Green Economy Financing Facility, and similar programmes – are supporting commercial banks in Serbia by granting them funds to be lent and invested in energy efficiency and renewable energy projects.

No.

For the time being, there are no regulations or incentives issued by the Slovak legislator or the Slovak National Bank. Some banks offer eco-loans and eco-mortgages and there are a couple of projects ongoing that offer support for green projects (with a particular focus on housing), such as the Sustainable Energy Finance Facility in Slovakia (a sustainable energy financing facility developed by EBRD, which is co-funded by the Ministry of Environment of the Slovak Republic and the Ministry of Agriculture, Food and Environment of Spain and provides a credit line of up to EUR 100m to Slovak commercial banks) or the GreenDeal4Buildings (Horizon 2020)

Yes.

For the time being, there is no regulatory or legal incentive, but there is a financial incentive to financing green projects by lending in Slovenia. SID Bank (a development and export bank owned by the Republic of Slovenia) adopted the SID Green Bond Framework in November 2018 to issue green bonds to finance and/or refinance loans granted to projects in the fields of environment protection, ensuring proper waste management, proper consumption of natural resources, increasing investments in environment protection infrastructure, encouraging the use of renewable energy sources and encouraging efficient energy use. SID Bank funds eligible projects by granting loans, by other types of financings (e.g. purchase of receivables) or investing into green bonds.

Yes.

Vienna Stock Exchange ESG Segment: The Vienna Stock Exchange provides a market segment devoted exclusively to sustainable bonds: the Vienna ESG Segment. The admission principles are based on the International Capital Market Association's Principles.

No.

No.

There are no such instruments with respect to any encouragements or incentive towards green bonds. In that sense green bonds are heavily relied upon in the market in general and to the interest of investors. Only one green bond has been issued so far in Croatia and it has attracted great interest from investors. So new green bonds are to be expected in Croatia.

No.

Yes.

The MNB issued a guideline setting forth the main green bond standards, providing issuers with a to-dos list and stipulating the necessary documentation and reporting obligations. The Budapest Stock Exchange also supports the development of the green bond market by issuing ESG Reporting Guidelines presenting the content and format standards used internationally and providing practical help in preparing ESG reports. In addition, the MNB launched a Green Mortgage Bond Purchase Programme for the purchase of green-rated mortgage bonds to promote green housing lending.

Yes.

State bodies set certain targets in sustainability reports, e.g. "Green Finance" or the "Capital Market Development Strategy", which devote an entire chapter to sustainable finance. One of the most important pieces of legislation drawn up by the Ministry of Finance is the "Green Bond Framework", which mirrors the Green Bond Principles by ICMA on the Polish scene. It indicates the courses of action and the requirements to be met by banks.
The Warsaw Stock Exchange implements the Green Bond Principles by working with the International Finance Corporation and some law firms. As part of the Polish Green Bond Framework programme, the IFC offers free assistance in proper reporting, preparation of green bond documentation or training in this area.

Yes and No.

As previously mentioned, no specific Romanian financial incentives have been implemented. However, ESG projects are monitored and encouraged by the market in general and by NBR in particular, and several green bonds issuances have been implemented in Romania during the past two years.

Yes and No.

Green bonds are encouraged as part of a wider effort by the Government of Serbia to deepen Serbia's capital markets (which remain relatively shallow to date). Save for the general endorsement of green bonds under the Government's "Capital Market Development Strategy for the period 2021-2026", no concrete incentives have been presented yet.
A market segment that operates comparatively better is the sovereign bond market. In August 2021, the Government of Serbia issued the Green Bond Framework, applicable to sovereign bonds. In September 2021, the Republic of Serbia issued its first EUR 1bln green bond, for financing its green agenda.

No.

There is no incentive in terms of guidelines or interest premiums. Some banks have already issued green bonds.

Yes.

Currently, Slovenian legislation does not expressly encourage/incentivise the use of green bonds. However, SID Bank incentivises the use of green bonds by investing into eligible green projects which are in accordance with the SID Green Bond Framework.
Furthermore, the Treasury of the Republic of Slovenia adopted the Slovenian Sustainability Bond Framework (SSBF) in 2021 to fund government investments that contribute to Slovenia's environmental and social goals and promote the development of the domestic and international green bond market.

N/A

Austria has no national green bond principles in the narrower sense. Therefore, usually international guidelines are used, such as the Green Bond Principles published by the International Capital Market Association.

Ecolabel for Sustainable Financial Products: Already in 2004, the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology created an Ecolabel for Sustainable Financial Products (the first of its kind in Europe). Bonds can get a certification with the Austrian Ecolabel if projects financed via those bonds are pursuing climate projection, adaption to climate change, sustainable use and protection of water and marine resources, etc

No.

The EU Taxonomy Regulation is directly applicable in Bulgaria, but apart from that no other relevant domestic laws for green projects are in place.

No.

No.

Yes.

The first corporate green bond issuance took place in the summer of 2020 under the MNB's Bond Funding for Growth Scheme. This issuance of HUF 30bln marks the kick-off for the Hungarian corporate green bond market and has been followed by more green bonds issuances by several other companies. The issued bonds are all compliant with the corporate Green Bond Framework, which has been validated by external reviewers in line with international standards (Green Bond Principles). Therefore, the Hungarian GBP is equivalent to the 2014 ICMA (International Capital Market Association) Principles. Nevertheless, the Hungarian Green Bond Framework was introduced in May 2020. The Ministry of Finance in cooperation with the Government Debt Management Agency of Hungary has set-up a Steering Committee. The GBP include use of proceeds, overall investment eligibility, reporting of total inflows, management of inflows and impact reporting.

Yes.

The Green Bond Framework drafted by the Ministry of Finance addresses the key criteria recognised by the 2018 Green Bond Principles. These include the use of inflows in the form of budget allocations, grants or projects (including their evaluation and careful selection), management of inflows and detailed reporting, including the reporting of the total amount of allocated inflows, the balance of remaining funds and the translation of green projects from each qualified sector. The above criteria are also implemented in the strategies of Polish banks, e.g. BOŚ Bank, which has included ESG-related reporting (opportunity analysis and good governance) in its strategy.

No.

No specific Romanian legislation has been enacted. In practice, general EU-level guidelines are considered.

Yes.

The Green Bond Framework applicable to sovereign bonds is aligned with the Green Bond Principles (2021), published by the International Capital Market Association focusing on the use of proceeds, process of expenditure evaluation and selection, management of proceeds and reporting.

No.

Aside from the EU Taxonomy Regulation and general EU guidelines, Slovakia has not adopted any eligible criteria of green projects.

There is no legal act prescribing the criteria for green projects. However, the SID Green Bond Framework implements the ICMA GBP. For each issuance of SID green bonds, the use of proceeds, project evaluation and selection, management of proceeds, reporting and external review will be adopted in accordance with the SID Green Bond Framework.
Also, the SSBF Bond Framework has been prepared in accordance with the ICMA GBP, Social Bond Principles and Sustainability Bond Guidelines. It is based on four core components: (i) use of proceeds; (ii) project evaluation and selection process; (iii) management of proceeds; and (iv) reporting. It is also based on two key recommendations: framework publication and external review.

Austrian Climate and Energy Fund: In 2007, the Austrian Federal Government created the Climate and Energy Fund, which provides financial support to researchers and enterprises who are active in the sustainability sector. 

Austria's position on the EU Taxonomy Regulation: Austria supports the EU Taxonomy. However, the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology holds the view that technologies such as nuclear energy and fossil gas cannot be classified as green.

In several public occasions, the board of Hanfa (Croatian Financial Services Supervisory Agency), who as a regulator approves the green bond prospectus, stated that Hanfa is especially careful about potential greenwashing and warned potential issuers of green bonds to specifically elaborate all the green factors of the bonds.

Although Poland was the first country in the world to successfully issue green treasury bonds six years ago, this did not lead to significant growth in the market. The Ministry of Finance has made public statements about Poland's strong potential for green bonds, but roadblocks (in the form of limited funding for green projects) have been encountered every step of the way. The crucial point is that the Polish bond market is small when compared to Western European or Scandinavian countries, meaning there is a great deal of room for improvement. But it is also necessary to promote any educational initiatives that will help the economy reach the Western European level.