The European Bank for Reconstruction and Development (EBRD) and Allianz Group’s trade credit insurer Euler Hermes SA/NV have signed a master risk participation agreement to support investments in green bonds.
As a result, Euler Hermes, through its UK branch, has taken on half the risk in an existing EBRD loan to a financial institution in Serbia.
Moreover, the company has committed to invest the payments it receives from the EBRD through interest premiums on this agreement in green bonds, which is a condition of every deal made under the agreement.
This undertaking complies with the conditions of Euler Hermes’ Green2Green Single Risk, a solution launched in November 2020 and dedicated to supporting green projects.
Isabelle Girardet, global head of transactional cover and investment solutions at Euler Hermes, commented: “The reinvestment of premiums into green bonds provides our clients with recognition for contributing to the green economy, as well as tangible results for each party involved.”
Across its countries and regions, the EBRD intends to raise the proportion of its annual business volume invested in green projects to more than 50% by 2025.
Furthermore, the EBRD’s Green Economy Financing Facility has reached thousands of families across the six countries of the western Balkans, providing financing to local banks for lending to households to invest in green technologies and solutions.
Euler Hermes identifies with this environmentally-friendly approach, not only through this agreement but also in its more general business outlook.
The company is the first credit insurer to have included (from 2020) ESG risks in its country risk ratings.
Ludovic Subran, chief economist of the Allianz Group and Euler Hermes Group, commented: “Our new country risk rating methodology aims to capture companies’ vulnerabilities related to climate change and social unrest.”
This agreement is the latest manifestation of Euler Hermes’ commitment to the green economy. Going forward, deals of this nature are almost certain to grow significantly as business lends its support to achieving carbon neutrality in the long term.