Investing in Sustainable Development from Morocco to Mongolia

It may surprise many Canadians to learn that they own 3.4% of a multi-lateral development bank responsible for contributing to the development of market economies across South Eastern, Eastern and Central Europe, the Caucasus, the Baltic States, and Central Asia.  The bank is called the European Bank for Reconstruction and Development and the Canadian taxpayers’ investment currently stands at well over 1.5 billion Canadian dollars.

The EBRD was established in 1991 in the aftermath of the collapse of the Soviet bloc to facilitate ‘market-oriented economies and the promotion of private and entrepreneurial initiative’.   And – uniquely for a development bank – the EBRD may only invest in countries ‘committed to and applying the principles of multi-party democracy’.  In the last two decades EBRD has invested in more than three and a half thousand projects in its countries of operation and, more recently, the southern and eastern Mediterranean.  The bank’s average investment is around €25m and since 1991 it has invested a cumulative total of nearly €80bn, leveraging another €150bn from other investors.

The so called ‘transition’ mandate of the ERBD remains central to the mission of the bank.  But in the mid 2000s many voices suggested that given the apparently unstoppable momentum of market liberalisation east of the European Union, the work of the bank was done and so perhaps it should be wound down.  Then came the global financial shocks of 2008, and  – in late 2011 – the commencement of the Arab Spring.  As a result, the bank’s owners (including the Federal Government of Canada) decided to renew their commitment to protecting and growing market-based economies in the East and indeed to start exploring what role should be played by the bank in Egypt, Jordan, Morocco and Tunisia.  Consequently total investments rose from 22 billion Euros to €35bn between 2008 and 2012.

Today, the Canadian delegation to EBRD oversees Canada’s €1.16bn investment (part of a shared project portfolio of  €11.5bn) and also represents the interests of three recipient countries: Jordon, Morocco and Tunisia.  Most of the Canadian cash is in Russia, Romania and Ukraine with joint Canada-EBRD investments of €1.71bn in industry, commerce and agribusiness, €1.45bn in energy, €670m in infrastructure and €130m in financial institutions.

Why does all this matter?

First of all it is interesting to note that last year Canadian technical and management consultants won more than CAD $1.5 million in contracts with the EBRD, including in the fields of clean energy development and small business advice and entrepreneurship training.

Second, many of the 34 countries in the EBRD’s areas of operation are potential future export markets for Canadian goods and services.  And some are especially interesting from a Cape Breton and Nova Scotia perspective given the coal industry legacy issues we have successfully dealt with, and the shared interests we have in clean technology, from green mining to renewable energy.  According to a report last year from Roland Berger,[1] Latvia and Slovenia are in the world’s top 10 countries for the percentage of their economies in clean tech.  Both have received significant financing from EBRD for energy related projects.  The Czech Republic no longer receives EBRD support but is in 6th place in the clean tech league table, just behind South Korea.

Third, EBRD is fast becoming a leading player in shaping public policy on sustainable development and climate change in the former Soviet bloc and elsewhere.  Totalling €10 billion investment since 2006, the bank’s Sustainable Energy Initiative is now responsible for savings of 50 million tonnes CO2 per annum.

And finally, EBRD is an institution that shares Canadian policy objectives on promoting international development and international cooperation through a trade and investment lens.  I would even go as far as to say that at least as well as any multilateral development bank that Canada supports, EBRD shares broader Canadian values of promoting democracy, good governance and sustainable development.  This may perhaps have something to do with our shared European cultural heritage and the founding principles of the Bank.

I have become more familiar with the work of the EBRD in recent years through sitting on its Environmental and Social Advisory Council, admirably supported by a highly professional and effective Environment and Sustainability Department.  In our recent meeting in London I had the pleasure of meeting EBRD’s new President (Sir) Suma Chakrabarti, a former top civil servant in the UK.  I have no doubt that under his leadership EBRD will become an even more powerful force for shared policy objectives with Canada.  The integration of sustainability considerations into investment decision-making and the new strategic direction of the Bank makes it a powerful partner for Canada and our longer term interests.  These interests include trade and consulting opportunities in a region where clean tech will become increasingly relevant.  They also include important policy related interests, especially as we now represent three of the new countries of operation in the Middle East.   So I hope that alongside the ongoing commitment of the Department of Finance, in the future DFAIT/CIDA may increase engagement on policy dialogues and technical cooperation.

And of course I am hoping that with CBU’s growing authority and influence in questions of international development and sustainable energy, including our strong indigenous peoples perspective, we will also explore new relationships in a region with such diverse challenges and opportunities.  Working with our friends in Federal and Provincial agencies, the Verschuren Centre for Sustainability in Energy and the Environment and LearnCorp International should both have Eastern and Central Europe and Central Asia firmly in their sights.

David Wheeler

President and Vice-Chancellor

[1] Arnoud van der Slot and Ward van den Berg (2012). Clean Economy, Living Planet.  The race to the top of the global cleantech market.  Roland Berger.