| An EIB is an innovative and alternative financial tool designed to foster social innovation practices in the public sector. As such, EIBs are financial models designed with a focus on environmental interventions, whereby public agencies work together with private capital and nonprofit organizations to fund costeffective solutions. The public entity pays a return to investors only if the intervention meets or exceeds previously agreed-upon performance targets or outcomes. EIBs differ from green bonds with respect to the fact that an EIB is a pay-forperformance (or pay-by-results) tool, in which the payment is based on realized measured benefits, whereas green bonds fund a project based only on planned actions. Therefore, EIBs are characterized by a direct linkage of environmental-tofinancial benefits. An EIB (Environmental Impact Bond) is a variant of an SIB (Social Impact Bond) both of which are included in the broader category of IBs (Impact Bonds). Source: Trotta (2024), Brand et al. (2021) |
Environmental Impact Bond (EIB)
