European bank chief considers transition as world recovers


LONDON: Odile Renaud-Basso, the first female president of the European Development Bank, hopes to restore EBRD’s green investment targets while tackling equality at work as economies hit by COVID-19 recover.

Before chairing his first EBRD annual meeting this week, in an interview with AFP, Renaud-Basso also highlighted the rapid digitization of the workplace that affects the bank’s investment regions as well as his own institution.

Former director of the French Treasury, Renaud-Basso took over in November as head of the European Bank for Reconstruction and Development – founded in 1991 to help the countries of the former Soviet bloc to switch to a market economy.

The lender, whose shareholders include nearly 70 countries, has grown to invest in 38 emerging economies spanning Central and Eastern Europe, Central Asia, the Middle East and North Africa.

“On average, 2020 was less negative than expected” in the EBRD’s investment countries, Renaud-Basso told AFP.

This year, the EBRD is forecasting “much better than expected” economic growth in its investment countries, after most economies contracted last year due to the pandemic crisis, she said.

The bank is due to publish its latest forecast on Tuesday.

Renaud-Basso underlined the rebounds in manufacturing and industrial production, as well as the positive impact of rising commodity prices for better than expected prospects.

But “great uncertainties remain”, countries dependent on tourism, especially Tunisia, hard hit by travel restrictions linked to COVID-19.

Elsewhere, “Lebanon remains very difficult after minus 25% of GDP in 2020, so this has a huge impact on the average.”

A political crisis has left the country without a functioning government since the last one resigned after a massive explosion killed dozens and destroyed swathes of Beirut in August 2020.

The EBRD last year invested a record 11 billion euros ($ 13.4 billion) in emerging economies, to help counter the fallout from the coronavirus crisis.

This represents an increase of 10% compared to 2019.

GREEN TARGET

Accustomed to transition projects, the EBRD is targeting 2025 as the year in which more than half of its investments will be devoted to green projects.

“We were very close to this target in 2019, but with the crisis, the figure fell” to less than 30% last year, said the head of the bank.

“The goal is to increase again (to) 40% in 2021.”

Renaud-Basso noted that “it is quite difficult to have this level of private sector investment” in green projects compared to large public infrastructure projects funded by governments.

But the EBRD is moving forward and seeking to fully align itself with the goals of the Paris Agreement by the end of next year.

“This means scrutinizing all of our projects, all of our activities, including (that) our investments comply with the Paris Agreement.

“This is a big step forward … It will have huge implications for our activities and the way we interact with countries,” she insisted.

The 2015 Paris climate agreement aims to limit the rise in global temperatures to less than two degrees Celsius from pre-industrial levels and continue efforts to drop to 1.5 degrees Celsius.

Experts believe this can only be achieved if the world reaches net zero carbon emissions by 2050.

EQUALITY ISSUES

Renaud-Basso also wants to address the impact COVID-19 has had on women and young workers.

“One of the major themes emerging from the crisis is equal opportunities and gender equality.

She underlined how women have been “particularly affected” by the blockades due to their increased role in the service and hospitality sectors.

“One of the goals of an institution like the EBRD is to help countries that meet this challenge.

When lending to other banks, the EBRD will have “a strategy to focus funding on women entrepreneurs or young entrepreneurs,” Renaud-Basso said.

She added that “the impact of the pandemic on young people has also been very dramatic (…) it is something that must be taken into account”.

DIGITIZATION

The head of the EBRD also wants the bank to “better support” the digital transformations of countries caused by the pandemic.

“The COVID-19 crisis has dramatically accelerated the digitization of economies and we are seeing it everywhere,” she said.

As for the bank itself, Renaud-Basso envisions a hybrid way of working, in which staff would work in the office three days a week and two at home.

But if the “distant world … has many advantages, it is not a panacea. There are also some disadvantages in terms of collective work, of brainstorming capacity”.


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