European Bank for Reconstruction and Development (EBRD)

Performance evidence

Overview

Established in 1991, the European Bank for Reconstruction and Development (EBRD) has a unique mandate to “foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in […] countries committed to and applying the principles of multiparty democracy, pluralism and market economics.” EBRD is the only DFI to engage both the public and private sectors with a predominant focus on private sector investment.

EBRD was initially established to help build a new post-Communist Central and Eastern Europe and the former Soviet Union. Over time, EBRD’s regional operations have expanded to include Central Asia, Central Europe and the Baltic states, Cyprus and Greece, Eastern Europe and the Caucasus, Russia, South-Eastern Europe, Southern and Eastern Mediterranean, and Türkiye. Its approach to supporting transition has evolved over time to address emerging challenges. It now uses six transition qualities to conceptualise progress towards a well-functioning market economy: competitive, well-governed, green, inclusive, resilient and integrated.

Performance rating summary

EBRD organisational performance wheel — Organisational performance

EBRD results performance wheel — Results

Key findings

EBRD is uniquely positioned to deliver its mandate by promoting investment while working to remove policy, regulatory and institutional barriers. It has strengthened delivery on its unique comparative advantage by enhancing the integration of policy dialogue into its country operations and enhancing its field presence, facilitating a closer relationship with clients and more opportunity to support the removal of barriers to investment.

Support for cross-cutting issues has been strengthened, particularly for gender equality and Green Economy Transition (GET). The proportion of operations that support gender outcomes have increased six-fold since 2017. This support has been extended to Equality of Opportunity, addressing drivers of inequality across individuals, companies and markets. Support for GET has increased markedly; 75% of EBRD’s operations are at least partially “green” and its green finance ratio now exceeds 50%. EBRD has demonstrated leadership in scaling up Monitoring, Reporting and Verification (MRV) to report ex-post reduction on GHG emissions – moving from climate finance to climate results.

EBRD has a best-in-class framework for managing its capital adequacy and ensuring financial sustainability. EBRD’s Capital Adequacy Policy and Framework (CAP) have been strengthened over time, including a prudential buffer to absorb unexpected losses and a robust Investment Profitability Model (IPM) that identifies the risk-adjusted return of potential investments and implications for portfolio performance. Reverse stress testing helps ensure the Bank is sufficiently capitalised to withstand a “severe” (1 in 25 years) event while maintaining its “triple A” rating.

Mobilisation of Private Capital has expanded significantly under the Mobilisation Approach. Introduced in 2021, the Mobilisation Approach sought to double Annual Mobilised Investment (AMI) by at least € 2.5 billion per year, through expanding the use of existing products such as B loans, parallel loans and Unfunded Risk Participations (URPs). The Approach has contributed to growing EBRD’s AMI by 165% and Private indirect Mobilisation by 143%.

EBRD has made strong progress in updating its results architecture to reflect a renewed transition concept but there remains scope to better demonstrate its transition impact in countries. EBRD’s results and reporting systems at country level largely aggregate activities and outputs linked to operations, accompanied by a qualitative narrative. Country strategies should strike an appropriate balance between flexibility and selectivity, with a clear theory of change in supporting transition. Existing reporting demonstrates the alignment of activities to country needs, but more needs to be done to demonstrate how EBRD is contributing to transition outcomes in countries over time.

Strategic planning, budgeting and delivery management can be better positioned to promote organisational resilience. EBRD’s budget has primarily been driven by organisational activities and business units rather than thematic priorities. While this approach has been useful for controlling growth of expenditure, it has limited opportunities for results-based budgeting. Limited growth of the budget alongside an expanding portfolio has placed pressure on organisational resilience, including increased pressure on staff and unfunded strategies. Identifying clearer assumptions for resourcing activities and decentralising staff will become increasingly important as EBRD expands its geographic footprint.

EBRD can better position its “client-facing knowledge” as a strategic asset for accelerating transition impact. EBRD’s Technical Cooperation and advice plays an important role in supporting investment and transition impact in CoOs. EBRD currently implements numerous client-facing knowledge initiatives. However, EBRD lacks an overall strategy for the management of knowledge solutions as a strategic driver of transition, including tailored results management processes. Despite the introduction of a new prioritisation process, the governance of these activities remains largely steered by donor funds processes.

EBRD has faced challenges in providing a robust picture of the performance of its operations. It is now implementing a new approach to self-evaluation, complemented by impact and thematic assessments and strategic foresight to support learning. Going forward, it will be important to ensure that this new system reflects good practice, including the Evaluation Cooperation Group (ECG) Good Practice Standards. This system will require appropriate investment to ensure it is positioned to provide a comprehensive picture of performance to support both accountability and learning.