As concern for environmental protection has grown among advanced industrial countries over the past decade, international organizations (IOs) have been called upon by member states to address environmental issues in their activities. This dissertation investigates the adoption of new environmental policies by an important set of IOs – multilateral development banks (MDBs) – and the extent to which these policies make a difference to project formation, implementation, and environmental improvement in recipient countries. I am interested in what happens when an institution is told to do something new, and that new task may conflict with its traditional role. The dissertation is a comparative study of three MDBs – the European Bank for Reconstruction and Development, European Investment Bank, and the World Bank – with respect to: the politics behind their adoption of new environmental mandates; the ways in which those mandates have been operationalized in the banks’ procedures and loan portfolios; and the impact their work has on environmental policy reform in recipient countries. I focus on the activities of these banks in Central and Eastern Europe, the region of the world where trade-offs between economic development and environmental management priorities are most striking, and where the banks are among the top regional donors. These MDBs have similar environmental mandates, dominant shareholders, institutional structures and project cycle processes, but there is significant variation in how they have interpreted and carried out their environmental strategies, and the impact of these strategies on recipient countries. Theoretically, the dissertation is informed by and will contribute to work seeking to explain chance within international institutions. On a policy level, I hope to contribute to debates on how to improve the performance of these international organizations.