The road less travelled: How the European invesment bank’s climate roadmap 2021-2025 can lead it to become the climate bank

INTRODUCTION

Climate change considerations have been present at the EIB for over ten years now. Initially, the Bank’s climate action was centered on the energy sector, for which the Bank set a loan volume target for re-newable energy. Then, a climate action target for financing climate change mit-igation and adaptation projects was set at 25% of the EIB’s entire portfolio, and eventually, in 2015, the EIB adopted its first Climate Strategy, with the aim of be-ing aligned with the Paris Agreement by 2020. Simultaneously, the EIB continued financing projects that were manifestly detrimental to the climate, such as gas pipelines, LNG terminals and several air-port expansions.

The idea to create a European Climate Bank was first put forward by France’s President Macron and then picked up in 2019 by Ursula von der Leyen, the fresh-ly nominated president of the European Commission, who wanted to transform the EIB into a European climate bank as a part of the European Green Deal, a strategy for turning the EU into a mod-ern, resource-efficient, decarbonised and competitive economy. A response came immediately from the chief of EIB, who announced the Bank had already become ‘a global Climate Bank, a global Green Bank, and a global Oceans Bank’.1Following this proclamation, the Bank committed to turn into a ‘climate bank’ and expand the share of climate-related activities in its portfolio to 50% over the next few years.

In order to deliver on this promise, the EIB is currently working on developing the Climate Bank Roadmap 2021 – 2025. Now, while the COVID-19 pandemic is ongoing, there are voices that question the value and meaning of the EU’s decarbonisation agenda and call for the suspension of the European Green Deal. The EIB’s plan for an ambitious Climate Bank Roadmap may also be at risk.

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However, keeping climate action and en-vironmental sustainability at the heart of economic recovery is the only way we can prevent further economic and financial burdens from being added on top of the huge debt with which we will finance our recovery. As there is no doubt that climate change will unfortunately progress, we must not charge future generations twice by leaving them environmental degrada-tion issues to deal with.

This report summarises the EIB’s under-takings on the road towards becoming the EU’s Climate Bank. It presents our findings on the implementation of the EIB’s 2015 Climate Strategy and looks at the results of the Bank’s climate action in the EU and enlargement countries. It also puts forward recommendations to the Bank which will be presented as Bankwatch’s contribution to the devel-opment of a new climate strategy. The research undertaken for this publication was based on climate action data dis-closed by the EIB on the basis of requests for information.

1. TOWARDS THE EUROPEAN UNION’S CLIMATE BANK

1.1 From the EIB Climate Strategy 2015 to the EIB Climate Bank Roadmap 2021-2025

The EIB’s Climate Strategy was first adopt-ed in September 2015 by its Board of Direc-tors following an internal evaluation of the Bank’s Climate Action by the Operations Evaluation unit and public consultations.

The aim of the Strategy –

‘Mobilising finance for the transition to a low-carbon and climate-resilient economy’ – was to describe the Bank’s future direc-tion and development of its climate action. Although the Bank had already been car-rying out its climate action programme to finance climate change mitigation and ad-aptation for years, it had become evident and expected that a more comprehensive approach for mainstreaming climate con-siderations across all bank operations should be developed to adequately respond to the climate change challenge. With this Source: EIB Strategy, the EIB aimed to be aligned with the Paris Agreement by 2020.

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Alongside the climate action target for financing climate change mitigation and adaptation projects, set at 25% of the EIB’s entire portfolio, it had also developed oth-er technical tools for climate proofing such as a carbon footprint assessment, Emis-sion Performance Standard for electricity production and shadow carbon price.

In the adopted Strategy, the EIB focused on three strategic areas for which several action plans were developed to strength-en the implementation of the strategy by the end of 2020 and address the foregoing weaknesses of its climate action (see the figure)

Unfortunately, the EIB did not offer an evaluation of the Climate Strategy and the Action Plans to allow for the better informed development of a new Climate Bank Roadmap 2021-2025. A publicly avail-able evaluation could have given more insight into the internal achievements, updated processes, climate mainstream-ing and climate proofing tools, as well as indicated the areas which still require improvements. Only some Action Plans could be observed from outside, as many of them aimed at improving internal pro-cesses, due diligence and analysis.

Under the Action Plans, efforts have been made to improve internal coordination in the Bank, cooperation with other multilat-eral development banks, identification of market opportunities for climate action, development of climate action pipelines in new sectors, enhancement of advisory services and many other initiatives. The Bank could have reported on the progress in the implementation of the Action Plans and the impact of this work on its Climate Action performance to allow for identifi-cation of areas where the Bank made the biggest contribution to member states’ cli-mate and energy targets.

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Read more at https://bankwatch.org/wp-content/uploads/2020/05/2020-04_EIB_Climate_Action_06_d.pdf