Ethiopia Unveils Strategic Initiative to Green Its Financial System and Drive Sustainable Investment

This article is published in association with European Investment Bank.

• EIB Greening Financial Systems Programme to work with the National Bank of Ethiopia and Commercial banks to enhance technical understanding of climate risks, enhance climate finance and develop Ethiopian green taxonomy 
• Ethiopia latest country to join pioneering climate resilience initiative backed by Germany

The Greening Financial Systems Programme was officially launched in Ethiopia today by Ethiopian and international partners at the Ethiopia Finance Forum.

This transformative initiative aims to strengthen the resilience of Ethiopia’s financial sector to climate change by embedding climate risk into regulatory frameworks, advancing climate-related disclosures, and supporting the financing of sustainable projects across the country.

The National Bank of Ethiopia: Driving the green finance agenda

At the heart of this initiative is the National Bank of Ethiopia (NBE), which is spearheading efforts to integrate climate considerations into the core of the financial sector. Recognizing the growing risks climate change poses to financial stability, the NBE is undertaking a strategic reform to align Ethiopia’s financial system with national climate objectives and international sustainability standards.

Demonstrating its strong institutional commitment, the NBE has established a high-level internal oversight and coordination team to guide the implementation, monitor progress, and ensure effective follow-up of the GFS Programme. This team brings together senior experts from across the Bank to oversee integration of climate risk considerations into supervisory frameworks and to coordinate with stakeholders on the development of green finance tools.

The GFS Programme will support the NBE in:

• Integrating climate-related financial risks into its supervisory and regulatory frameworks.
• Enhancing climate risk management capabilities across the financial sector.
• Developing a climate risk disclosure and reporting framework aligned with international best practices.
• Strengthening institutional capacity through tailored training programs and technical support.
• Coordinating the development of a National Green Taxonomy that will guide financial institutions and investors on what constitutes environmentally sustainable economic activities.

“The financial sector has a critical role to play in mobilising the significant finance required for Ethiopia’s transition to a climate-resilient, green economy. The Greening Financial Systems initiative will enhance our capacity to guide the sector in adapting to a changing climate and unlocking green investment opportunities,” said H.E. Mamo E. Mihretu, Governor of the National Bank of Ethiopia.

The technical assistance agreements were signed during the forum by Mr. Solomon Desta, Vice Governor for Financial Institutions at the National Bank of Ethiopia, and Ms. Leyla Traoré, Head of the EIB Representation to Ethiopia and the African Union. The event was attended by the German Ambassador to Ethiopia and the African Union, the EU Ambassador to Ethiopia, and representatives from the Ministry of Finance of Ethiopia.

The EIB is delighted to welcome Ethiopia to the Greening Financial Systems Programme. By supporting the National Bank of Ethiopia, we are building an enabling environment that will unlock vital climate action and green investments, contributing to Ethiopia’s ambitious climate goals,” said Ambroise Fayolle, Vice President of the European Investment Bank.

Funded by Germany through the International Climate Initiative (IKI), and implemented by the EIB, the GFS Programme in Ethiopia forms part of a broader international initiative that also includes Albania, Armenia, Georgia, Kenya, Nigeria, North Macedonia, and Rwanda.

Strengthening financial institutions for climate resilience

Beyond regulatory enhancements, the programme also supports Ethiopian commercial banks and financial institutions to build green finance capabilities. This includes:

• Developing green lending portfolios.
• Improving internal climate risk assessments.
• Introducing climate-sensitive credit evaluation frameworks.
• Facilitating access to green finance instruments and capacity-building workshops.

By complementing the regulatory improvements led by the NBE, this support aims to mobilize private finance for environmentally sustainable investments, helping banks identify viable green projects and reduce exposure to climate-related risks.

Laying the foundation for a national green taxonomy

A key priority under the NBE’s leadership is the development of Ethiopia’s first National Green Taxonomy, a classification system that will define which economic activities and investments are considered sustainable and climate aligned. The taxonomy will:

• Provide clarity and consistency in green investment classification.
• Serve as a reference for financial institutions, regulators, and investors.
• Support the alignment of domestic practices with international ESG and sustainability standards.

This process will be accompanied by consultations with stakeholders and the preparation of reporting guidelines for the taxonomy’s application across the financial sector.

Ethiopia is among the countries most vulnerable to climate change, with growing risks from extreme weather, drought, and food insecurity. These risks pose serious threats to the economy and the stability of the financial system.

The National Bank of Ethiopia’s proactive leadership and institutional commitment—in collaboration with the EIB and international partners—underscores a bold national effort to build climate resilience. Through the GFS Programme, Ethiopia is positioning its financial system to not only manage risks but also seize green investment opportunities that contribute to long-term, sustainable economic growth.

“Germany is proud to support Ethiopia’s efforts to green its financial system through the International Climate Initiative. The IKI Fund is one of the key instruments of the German Federal Government for international climate action to support strategies for countries that seek to achieve the green transformation. Strengthening financial resilience and unlocking green investment is crucial for Ethiopia’s sustainable future.” said H.E. Jens Hanefeld, German Ambassador to Ethiopia.

This programme underscores the close partnership between the European Union and Ethiopia in addressing the urgent challenge of climate change. By strengthening the financial sector’s capacity to manage climate risks and finance green projects, we are jointly advancing sustainable development and building resilience,” added H.E. Mrs. Sofie From-Emmesberger, EU Ambassador to Ethiopia.

Background information

About EIB Global

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives.

EIB Global is the EIB Group’s specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner of Global Gateway. We aim to support €100 billion of investment by the end of 2027 — around one-third of the overall target of this EU initiative. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society. EIB Global brings the EIB Group closer to people, companies and institutions through our offices across the world. High-quality, up-to-date photos of our headquarters for media use are available here.

More information about the Greening Financial Systems (GFS) technical assistance programme is here.