#1Globalfields GCF Readiness Armenia Green Finance Roadmap for Armenia ARM SWISSBANK PRIVATE & INVESTMENT BANKING GREEN CLIMATE FUND#2Session Structure Section 1 Introduction to report Section 2 Recommendations Section 3 Roadmap Approach Section 4 The Importance of the Roadmap Section 5 Close Globalfields 2#3Globalfields Section 1 Introduction to report 3#4Supporting green finance and sustainable business Globalfields Globalfields (www.Globalfields.co.uk) is a woman-led company established in 2018 in the United Kingdom by Marta Simonetti. We are a boutique consultancy specializing in climate finance, supporting development partners and countries in scaling up financial flows to address the climate crisis by investing in climate change mitigation and their resilience. Globalfields provides consulting, advisory and training services for private and public companies, governments and individuals worldwide in support of their collective efforts towards 'green' economic growth and sustainable business development. We work at the intersection of climate and finance, and our team has international expertise at senior level in: Institutional expertise in the organizations of the global climate finance architecture; Climate and environmental finance; Governance and environmental law; Fund structuring and business/financial model development for climate action; Benchmarking and MRV for Environmental, Social and Governance and GHG reporting; and Climate finance tracking and indexing against the Sustainable Development Goals (SDGs).#5Globalfields International Lead Andreas Biermann Andreas is a climate finance and mitigation professional with extensive technical expertise, a wide experience and a focus on climate change and climate finance. With a long track record in managing the development of GCF and GEF projects for EBRD, followed by two years as Deputy Director for Mitigation at the Green Climate Fund he is widely recognised for his ability to work with governments and development partners in bringing green and sustainable finance to the fore, delivering real environmental change through the provision of new financing options. During his career, Andreas has worked with numerous governments and multilateral agencies across the world and in very diverse country contexts with a strong focus on the transition region. Andreas is currently an MSc candidate at the School of Oriental and African Studies in London (UK). His thesis project focuses on the interaction between climate and national development policies in Armenia LINKEDIN https://www.linkedin.com/in/andreasbiermann/ 5#6Globalfields National Lead Tigran Sukiasyan Tigran is an experienced project manager, mentor, fundraiser and capacity building expert with 20 years experience (at domestic and international level) in developing, implementing and monitoring projects with major donor agencies, international organizations and climate funds, including the Green Climate Fund, Adaptation Fund, and the United Nations Development Programme (UNDP). He is currently focusing on issues of climate resilience and green finance through number of engagements aimed at structuring collaboration frameworks, identification of projects and proposal development. Since 2018 he has been part of critical assignments leading essential work with private sector entities to identify support priorities and projects, providing mentorship and executive trainings to civil servants responsible for project formulation in the climate domain. Based in Yerevan, Tigran is collaborating with Globalfields for the expansion of green banking support in the eastern Europe, the Caucasus and Central Asia. LINKEDIN https://www.linkedin.com/in/tigransukiasyan/ 6#7Report overview Globalfields Report is aiming to: ☐ Provide concise background to sustainable finance in Armenia, embedding the recommendations in sectoral needs in line with the overall development pathway. ☐ Provide clear and actionable steps to be taken to deliver a working and appropriate sustainable finance framework for Armenia in a meaningful timeframe ☐ Provide an overview of the timelines in which these actions could be implemented, including sequencing 7#8Globalfields Section 2 Recommendations 8#9Globalfields Recommendation Overview The recommendations are grouped in four pillars and together cover: ☐ Short-/Medium term actions required to deliver a sustainable finance framework, including positive actions to be taken now, and medium-term actions such as capacity building. ☐ Engagement with donors and key partners ☐ Regulatory actions ☐ Capacity building actions All of these will need to be delivered to achieve the desired outcomes. 6#10Sustainable Finance Roadmap - Recommendations Globalfields 1. Shaping a favourable policy framework 2. Scaling up green finance flows 3. Establishing an ESG Framework Initial Actions Revision of the GCF Country Program to enable 1) scaled-up climate finance flows 1) Establishing/formalizing Green 1) Finance Task Force (under CBA) 2) Development and adoption of a 2) Green Bond framework for Armenia Development of favorable regulations for renewable energy developers and PPPs 3) Development and adoption of a green 3) taxonomy 4) Development of a carbon pricing regime Supporting the development of green projects for 2) financing Development and adoption of 1) a harmonized ESG framework for the financial sector in Armenia Establishment of ESG market 2) standards 3) 4. Addressing capacity constraints Enhance understanding of international green finance frameworks and issues in the private sector Enhance structuring capacity for PPPs Enhance carbon market operating capacity Parallel Actions 1) Creation of an integrated MRV 1) framework linking projects to 2) national inventory reporting Structured engagement with climate funds Creation of a dedicated fund to support green investments 1) Strengthen regulations to monitor and enforce and develop the ESG framework 1) 2) Strengthening of data collection to 3) Deepening MDB/DFI partnerships more clearly identify potential 4) Supporting establishment of dedicated private 3) actions and vulnerabilities green finance institutions (e.g., leasing companies, private equity funds, crowdfunding platforms) Develop capacity for establishing and maintaining complex MRV systems in public and private sectors Comprehensive ESG and gender training for public/private sector 10#11Globalfields Section 3 | Roadmap Approach 11#12Approach Overview The approach is presented by pillar and aims to provide clear and implementable steps for each of the recommendations: ☐ Specific nature of the decision. ☐ Follow-up ☐ Timeframe for the action ☐ Who is responsible for the action ☐ Who are the stakeholders that need to be involved This should be seen as flexible guidance. Globalfields 12#13Sustainable Finance Roadmap - Approach Area of Intervention Initial action Follow up Action Pillar 1. – Policy Framework Timeline Establishing/ formalizing Green Finance Task Force (under CBA) Development and adoption of a Green Bond framework for Armenia Executive order on formalization of the Task Force is issued by regulator Engagement with other transition economies on their experience with green bond issuance • Establishment of thematic Working Groups; Quarterly meetings of the Task Force; Adoption of best practices and implementation of lessons learnt Definition of a Green Bond framework 2022 for establishment in 2022 2022 for issuance in 2023 Development and adoption of a green taxonomy Executive order to develop taxonomy to be approved and applied by the regulator Development of a carbon pricing regime Creation of an integrated MRV framework linking projects to national inventory reporting Strengthening of data collection to more clearly identify potential actions and vulnerabilities Executive order to develop carbon pricing to be approved and applied by the relevant government department Project launch for upgraded MRV system, also in response to UNFCCC ETF Establishment of clear processes under which data can be collected and communicated to direct actions. • . • . Globalfields Responsible entities Ministry of Finance CBA Identification of priority sectors for the taxonomy. Consultation with finance and key priority sectors on taxonomy structure Identify priority sectors/emitters to come under the regime Consultation with private sector on likely impact Consultation with public on use of revenue generated Consultation with private sector (finance and real) on scope of reporting Training of MRV specialists Consultation with private sector (finance and real) on of reporting scope Training of MRV specialists 2022 for implementation in 2023 2023 for implementation in 2025 2022 for • Ministry of Finance CBA Ministry of Finance CBA Ministry of Environment Line ministries (e.g., infrastructure, agriculture) Ministry of Finance Ministry of Environment Line ministries (e.g., infrastructure, agriculture) operationalization by Ministry of Environment 2024 2023 onwards Ministry of Environment Line ministries (e.g., infrastructure, agriculture)#14Sustainable Finance Roadmap - Approach Revision of the GCF Country Program to enable scaled-up climate finance flows Development of favorable regulations for renewable energy developers and PPPs Supporting the development of green projects for financing Structured engagement with climate funds Pillar 2. Scaling up Green Finance Flows Engagement with GCF CPD to revise country program in advance of GCF-2 replenishment phase Market survey of developers and financing institutions to identify and prioritize barriers to renewables and green PPPs Identification of priority projects across key sectors (energy, Infrastructure, agriculture) Systematically assess potential for climate fund contributions to green finance agenda in Armenia Executive order to establish such a fund and/or expand the role of an existing institution to cover this Creation of a dedicated fund to support responsibility to be approved and applied by the green investments relevant government department 2022 for Continued exchange with GCF and partners on potential for projects in line with Armenia's green conclusion in development agenda 2023 Implementation of a systematic process to remove 2022 ongoing barriers Updating on at least annual basis Linking of project list to DFI/Climate Fund pipelines Advancing Green Procurement Principles Identify priority projects from the roadmap and investment pipeline for support by climate funds Consultation with public and private sector on pipeline Identification of dedicated revenue streams to 2025 2022 ongoing to 2030 2022 ongoing to 2030 2022 for implementation in 2024 • Globalfields Ministry of Environment NDA Armenia's DAES Ministry of Finance Ministry of Energy) Ministry of Environment Line ministries (e.g., infrastructure, agriculture) Ministry of Environment NDA Armenia's DAES Ministry of Finance Ministry of Environment Line ministries (e.g., infrastructure, agriculture) Deepening MDB/DFI partnerships Supporting establishment of green finance institutions (e.g., leasing companies, private equity funds, crowdfunding platforms) Appoint dedicated focal points in line ministries for engagement with DFI counterparts Defining regulatory and policy requirements to establish green finance institutions Structuring Fund of Funds for finance projects green Establish enabling regulatory and policy framework for equity/debt crowdfunding Closely work with MDBs/DFIs on definition of country priorities and strategies Establishment of a Fund of Funds with Initial funding provided by the Government and co-investments by the private sector/DFIs/Climate Funds; Supporting green-focused start-up environment by e.g., investing in accelerator programmes 2022 ongoing to 2030 Ministry of Finance Line ministries (e.g., infrastructure, agriculture) 2023 for operationalizati on in 2024 Ministry of Finance CBA#15Globalfields Sustainable Finance Roadmap - Approach Development and adoption Establishment of mandatory of a harmonized ESG framework for the financial sector in Armenia standards for banks and UCOS to be applied across financial sector eventually Pillar 3. ESG Framework ― Consultation with private sector (finance and real) on scope of reporting Training of ESG specialists Defining ESG regulatory framework for stock exchange Establishment of market standards for ESG Enhance carbon market operating capacity Strengthen regulations to monitor and enforce and develop the ESG framework Identifying the preferred ESG framework for Armenia Assessing capacity, process and data requirements for carbon market operations compliant with EU requirements Assessing capacity, process and data requirements for ESG monitoring Establishing compulsory market standards for banks and UCOS Introducing voluntary ESG ranking approach Introducing a green Insurance scheme Industry consultation on required skills for carbon market operations in Armenia Training of finance sector carbon market specialists IT procurement to support the system Industry consultation on mandatory standards for ESG in Armenia Training of finance sector ESG specialists IT procurement to support the system 2023 for operational ization in 2023 2023 for operational ization in 2024 2023 for operational ization in 2025 . Ministry of Finance Ministry of Environment CBA Ministry of Finance Ministry of Environment CBA Ministry of Finance Ministry of Environment Ministry of 2023 for operational ization in Finance 2024 Ministry of Environment CBA 15#16Sustainable Finance Roadmap - Approach Enhance understanding of international green finance frameworks and issues in the private sector Enhance structuring capacity for PPPs Pillar 4. – Addressing Capacity Constraints Identify gaps and capacities in the private sector in regards to international best practice in green finance Assess gaps in regulation and capacity for PPPs at sector level • Encourage private sector participation in international frameworks Design and implement training activities and rewards Design and implement training activities and rewards 2023 ongoing to 2025 2022 to 2024 Develop capacity for establishing and maintaining complex MRV systems in public and private sectors Assess gaps in MRV capacity for sector level Design and implement training activities and rewards 2023 ongoing to 2025 Comprehensive ESG and gender training for public/private sector Assess gaps in MRV capacity for sector level Design and implement training activities and rewards 2023 ongoing to 2025 • Globalfields Ministry of Environment Ministry of Finance CBA Ministry of Finance Ministry of Environment Line ministries Ministry of Environment Statistical Committee of Armenia Ministry of Environment Ministry of Labour and Social Affairs 16#17Sustainable Finance Roadmap - Timeline Globalfields No Measure 2022 2023 2024 2025 2026 2027 2028 2029 2030 1.1 Establishing/ formalizing Green Finance Task Force (under CBA) 1.2 Development and adoption of a Green Bond framework for Armenia 1.3 Development and adoption of a green taxonomy 1.4 Development of a carbon pricing regime 1.5 1.6 Creation of an integrated MRV framework linking projects to national inventory reporting Strengthening of data collection to more clearly identify potential actions and vulnerabilities 17#18Sustainable Finance Roadmap - Timeline No Measure 2.1 Revision of the GCF Country Program to enable scaled-up climate finance flows 2.2 Development of favorable regulations for renewable energy developers and PPPs 2.3 Supporting the development of green projects for financing 2.4 Structured engagement with climate funds 2.5 Creation of a dedicated fund to support green investments 2.6 Deepening MDB/DFI partnerships 2.7 Supporting establishment of green finance institutions (e.g., leasing companies, private equity funds, crowdfunding platforms) Globalfields 2022 2023 2024 2025 2026 2027 2028 2029 2030 18#19Globalfields Sustainable Finance Roadmap - Timeline No 3.1 3.2 Measure Development and adoption of a harmonized ESG framework for the financial sector in Armenia Establishment of market standards for ESG 2022 2023 2024 2025 2026 2027 2028 2029 2030 N 3.3 3.4 No Enhance carbon market operating capacity Strengthen regulations to monitor and enforce and develop the ESG framework Measure 2022 2023 2024 2025 2026 2027 2028 2029 2030 4.1 Enhance understanding of international green finance frameworks and issues in public sector 4.2 Enhance structuring capacity for PPPs 4.3 Develop capacity for establishing and 4.4 maintaining complex MRV systems in public and private sectors Comprehensive ESG and gender training for public/private sector#20Sustainable Finance Roadmap - Stakeholders Organization Ministry of Agriculture Ministry of Economy Ministry of Energy Pillar 1. – Policy Framework Definition of policies in the sector of "clean energy" Definition of Economic policies for "green" sectors Definition of policies in the sector of "clean energy" Ministry of Environment (NDA) Coordination with the Inter-Agency Coordination Council 0 Ministry of Finance Ministry of High-Tech Industry Ministry of Labor and Social Affairs Ministry of Territorial Administration and Infrastructures Central Bank of Armenia Statistical Committee Promotion of the Green Procurement Principles Tech for Climate Policy Development Support gender-mainstreaming in definition of policies in the sector of green finance Definition of policies in the sector of "clean energy" ☐ Defining Taxonomy Defining policy and regulatory incentives □ Establishment/chairing of Green Finance Task Force Support the development of MRV processes and systems Pillar 2. Green Finance Flows Project identification Supporting development of projects and liaison with the NDA Project identification Liaison with climate funds ☐ Project identification Work with MDBs/DFIs on country assistance strategies □ Implementation support e.g. for green startup projects ☐ Project identification Project identification ☐ Supporting establishment of dedicated institutions (including Fund of Funds) Establishment of Green Bonds Framework Track green finance flows Pillar 3. - ESG Framework Legislative/regulatory support in adaptation challenges Economic analysis of impact of ESG ☐ Legislative/ regulatory support in identifying e.g. ESG standards and taxonomies ☐ Legislative/regulatory support in Globalfields Pillar 4. -Capacity Constraints Recipient of capacity building support □ Implementation of periodic screenings of private sector entities and proposing capacity building interventions ☐ Recipient of capacity building support Recipient of capacity building support ☐ Identification of training needs in public and private sector, specifically for MRV Liaison with the donors and climate funds to raise funding for trainings ☐ Recipient of capacity building support Recipient of capacity building support relation to digitalization, venture capital Recipient of capacity building support and start-ups, as we well as tech transfer Integration of gender in ESG frameworks □ Defining mandatory requirements for banks and UCOS ☐ Regulation of green finance and ESG Track ESG finance flows □ Support capacity building efforts ☐ Recipient of capacity building support Recipient of capacity building support □ Implementation of periodic screenings of financiers and proposing capacity building interventions □ Recipient of capacity building support ☐ Support capacity building efforts ☐ Recipient of capacity building support 20#21Sustainable Finance Roadmap - Stakeholders EU Climate Funds (AF, CIF, GCF, GEF, NAMA Facility) Donor organizations, MDBs and other international development partners Policy development support ㅁ Financing ☐ underlying ESG activities □ Structuring financial Coordination of instruments around host country programming with NDA, line country priorities ☐ Funding lending standards ☐ ministries implementation of projects Structuring financial Coordination of the Imposition of high-quality Imposition of high-quality lending standards MDBs (ADB, EBRD, EIB, KfW, WB/IFC) UN Agencies (UNDP, FAO, IFAD, UNEP etc.) mid-term country assistance strategies with relevant line ministries Provide international best practice input Implement policy development activities instruments around host country priorities ☐ Supporting implementation of projects Support project implementation with technical assistance Provide Globalfields Financing implementation of projects aimed at capacity advancement Financing implementation of projects aimed at capacity advancement Contribution to capacity building activities ☐ Financing implementation of projects aimed at capacity advancement □ Support capacity building activities international best practice input Support capacity building activities#22Sustainable Finance Roadmap - Stakeholders Globalfields Business angel networks, private equity funds, crowdfunding platforms Consulting Companies Representatives of companies operating in mitigation Representatives of companies operating in adaptation CSOs operating in the climate mitigation and adaptation domain Sectoral business associations Union of Banks Union of Universal Credit Organizations Communicate with the Government agencies on policy and regulatory constraints Private sector organizations Serve as innovative finance instruments Apply ESG standards and principles Contribution to capacity building activities Communicate with the Government agencies and support client private sector representatives Provision of the feedback on priorities and investment appetite Provision of the feedback on priorities and investment appetite Recipients of advisory support to target respective sources and prepare competitive investment proposals Recipients of advisory support to target respective sources and prepare competitive investment proposals Apply ESG standards and principles Recipients of capacity building support Apply ESG standards and principles Recipients of capacity building support Civil Society Organizations and Industry Associations ☐ Supporting enabling policy Development of grassroots projects In grassroots projects, apply ESG standards and principles ☐ ☐ and regulatory environment formulation Liaise between CBA and commercial banks on the issues across 4 pillars Liaise between CBA and commercial banks on the issues across 4 pillars Contribution to capacity building Recipients of capacity building support activities Assisting delivery of capacity enhancement projects 22 22#23Globalfields Section 4 The Importance of the Roadmap 23#24Globalfields Why do we need a roadmap? Finance is a crucial enabling tool for the energy transition and sustainability as a whole, but it struggles to transform itself for a number of reasons, which are interconnected: ☐ Lack of regulatory guidance and certainty; ☐ Lack of internal and external (borrower, regulator) capacity; ☐ Lack of transparency on competitor actions; ☐ Lack of an eco-system of supportive service and capital providers. This is a complex set of challenges that needs to be addressed holistically. 24 24#25Globalfields The Roadmap's contribution At its most basic level, the roadmap will provide a level of security to financial institutions and companies servicing them in a number of directions by creating: ☐ Clarity: ☐ of what is expected when, by whom; □ about when major changes to regulatory frameworks can be expected; ☐ Certainty: ☐ that investment in staff and capacity in green finance will not be wasted; ☐ that demand for finance will come; green ☐ that competitors will not be able to take undue advantage by not engaging with the This should lead financial institutions in Armenia to be able to plan and invest for a green future. green agenda; 25#26Globalfields Section 5 Close 26