Infra Berlin brief: EBRD’s shadow carbon price and the ‘cost’ of sustainability

The Infrastructure Investor Network Global Summit heard how investors are pricing in sustainability.

On the opening panel of the ESG Forum at the Infrastructure Investor Network Global Summit, Matthew Jordan-Tank, director of sustainable infrastructure policy and project preparation at the EBRD, outlined some high standards, as the multilateral goes about ensuring its lending is 100 percent aligned with Paris Agreement goals.

“We are applying a shadow price of carbon of €60 per tonne [of CO2] today and rising to €300 per tonne by 2030,” Jordan-Tank told members. Projects need to make economic sense after clearing that threshold to get funding from the multilateral. When prompted, Jordan-Tank estimated about a third of proposed investments have fallen by the wayside since the shadow carbon price was introduced about a year ago.

There was a decent amount of soul searching on whether LPs were being asked to pay a premium for sustainability or if there was a genuine economic benefit to these goals. The debate mostly pointed to the latter, with Bethany Brantley, head of ESG for IPI Partners, a firm active in the data centre space, backing it up with some forceful reasoning: “We only lease to large tech companies that have high sustainability requirements, so we have no choice but to meet their standards. What we’ve told our LPs – including those that fall into the anti-ESG camp – is that if you don’t do it now, it’ll cost a lot more later. It’s not about altruism – there’s a clear business case for doing that.”