Executive Summary

This guide serves as a practical toolkit for export credit agencies (ECAs) and their respective governments helping them to formulate and implement policies for aligning export finance with the Paris Climate Agreement. It summarises best practices from extensive research and stakeholder engagement on ECAs’ Paris alignment in twelve countries conducted by Perspectives Climate Research since 2020. Following the development of a dedicated methodology for ‘Aligning Export Credit Agencies with the Paris Alignment’ (Shishlov et al., 2021), Perspectives Climate Research conducted a series of country case studies helping derive key lessons and best practices that informed the development of this guide. The table below summarises these best practices and can serve as a ‘Paris alignment checkbox’ for ECAs and their respective governments.

To tick these boxes, we synthesize below the best practices of ECAs for Paris alignment under each of the five dimensions. Section 3 of this guide provides further details on each of them.

The best practice in terms of transparency is the energy finance reporting by Export Finance for Future (E3F). E3F is an inter-ministerial coalition, founded by Denmark, France, Germany, the Netherlands, Spain, Sweden and the UK. Finland, Italy and Belgium joined the coalition later. All E3F members have communicated their National Approaches to the implementation of the COP26 Statement on International Public Support for the Clean Energy Transition (CETP) since 2022 (OCI, 2024a). E3F has thus already helped to promote and support a shift in investment patterns towards climate-neutral and climate-resilient export projects (E3F, 2022, 2023b). Importantly, E3F countries make transparent all energy finance figures thus allowing the assessment of trends and the impacts of export-related climate and energy policies (E3F, 2023). The reporting includes data disaggregated by energy source and different stages of the value chain. From 2024 onwards, it will expand the scope of the reporting to other transactions such as transportation, manufacturing, and hydrogen (E3F, 2023b). E3F reporting can be used as a blueprint by other OECD and non-OECD countries on aggregate level reporting. This reporting should be further enhanced by providing project-level finance data as done, for example, by the Export-Import Bank of the US (US-EXIM) since 1993, besides emissions (scope 3) reporting (since 1999; US-EXIM, 2024).

The best practice in this dimension is the introduction of comprehensive fossil fuel (coal, oil and gas) energy sector exclusion policies, which was first pioneered by UK Export Finance (UKEF). UKEF “[had] a history of support for oil and gas projects” (UK House of Commons, 2021), but in 2021 committed to ending new support for the fossil fuel energy sector overseas (e.g., UKEF, 2024) in line with a UK government-wide policy ending support for the fossil fuel energy sector from March 2020. UKEF, as a ministerial government department strategically aligned with the Department for Business and Trade (formerly Department for International Trade) had to subsequently adhere to this policy. These changes were preceded by the government-wide Green Finance Strategy (UK Government, 2019). UKEF’s fossil fuel exclusion was thus a gradual process based on political decisions and pressure from civil society. ECAs within and beyond the OECD that have not implemented comprehensive fossil fuel exclusion policies should therefore consider the UK experience and start (or accelerate) building green project pipelines to enable phasing out all fossil fuel support and contribute to the just energy transition.

The best practice in terms of climate change mitigation beyond fossil fuel exclusions is Finland’s comprehensive portfolio decarbonisation strategy. Finland’s ECA Finnvera (2024) reported its financed (scope 3) emissions of all outstanding commitments (domestic and export) per sector and portfolio GHG intensity in tCO₂e/EUR for the first time in 2023. Full disclosure on and monitoring of portfolio GHG intensity is crucial to ensure greater public accountability. Following the lead of UKEF which already has in place sectoral targets for 85% of its scope 3 emissions, Finnvera aims to develop its long-term emissions pathways. They will be based on Finnvera’s emission intensity calculations, using a ‘Sectoral Decarbonisation Approach’ that allows the ECA to set intensity-based sector-specific targets and monitoring (Schmidt et al., 2024). All ECAs should follow this best practice and – together with fossil fuel exclusion policies – also set absolute sectoral decarbonisation targets, starting with their biggest sector(s) of support. For example, in the shipping sector they may start by signing the Poseidon Principles, an initiative aimed at decarbonising the sector well before 2050. Like Finnvera, ECAs should not stop there and define GHG reduction targets for all emission-relevant sectors in line with 1.5 °C pathways.

The best practice in the climate finance dimension is demonstrated by Denmark’s ECA EIFO. It is the leading ECA in the financing of renewable energy (RE), with wind energy making up 67% of its total financial portfolio. Admittedly, EIFO enjoys advantages due to the structure of Denmark’s economy and favourable RE conditions. Indeed, Ørsted and Vestas Wind Systems – two global leaders in offshore wind and turbine manufacturing – are both located in Denmark. This incentivises Denmark’s ECA to focus on wind energy financing to safeguard its leading position in RE, which is also strongly supported politically (Weber et al., 2024). EIFO (previously EKF), for over three decades, gained significant experience with RE finance. The ECA has already participated in the financing of 40 GW of wind energy projects, and a third of all installed offshore wind energy capacity outside of China. EIFO concluded its first wind power deal in 1998, and wind energy has made up a major share of its portfolio for over a decade now. Besides structural advantages, EIFO also has a unique mandate among ECAs to support social return by contributing to a sustainable and green transition. EIFO’s creation through a merger of three state funds – Vækstfonden (The Growth Fund), Eksport Kredit Fonden (EKF, Denmark’s ECA) and the Danish Green Investment Fund – offered the possibility to give EIFO an even stronger sustainability profile than its predecessor. This stronger focus on climate and sustainability is reflected in EIFO's work on developing incentive schemes such as sustainability-linked finance, to decarbonise all high-emission sectors, not only energy. While most countries may not enjoy similar structural advantages, they should start considering amending the mandates of their ECA, incentivising sustainable investments and securing economic benefits from the green transition.

The Swedish government and its ECAs – EKN and SEK – have been leading engagement for aligning export finance with the Paris Agreement for years, internationally, regionally and nationally. Swedish ECAs’ (pro-)active roles include chairing the Berne Union’s Climate Working Group by EKN and their role as founding members of the Net Zero Export Credit Agencies Alliance (NZECA). Sweden is a member of the E3F, the Powering Past Coal Alliance, and the Beyond Oil and Gas Alliance (BOGA). All ECAs and country governments should consider joining these groups, to “drive the transition away from fossil fuels in energy systems [by 2050]” (UNFCCC, 2023). At home, Sweden aims to align export finance with the Paris Agreement via its Fossil Free Sweden initiative which includes a dedicated finance strategy for fossil-free competitiveness in Sweden and abroad. The ‘Team Sweden’ (of which EKN and SEK are members) publicly promotes Sweden’s climate and sustainability ambitions. Regular meetings with exporters and banks occur, and public conversations on likely impacts on job and sales losses of fossil fuel phase-out policies have already been held (Schmidt et al., 2024a). All countries with a broad ecosystem of experts and export governance should consider strengthening their domestic coordination via such ‘export teams’.

The table below summarises ECA best practices for Paris Alignment and provides country examples.