The European Investment Bank is transforming to become a real climate bank
Member states have given the green light to the European Investment Bank to transform itself into a climate bank. Initiated last year with the phasing out of fossil fuels, this strategy is continuing this year with the objective of aligning all of the bank’s activities with the Paris Agreement. It will no longer be able to finance certain projects such as airport extensions.
This time, it’s done ! The European Investment Bank (EIB) announced last year that it wanted to become the leading climate bank, but it still lacked the approval of the Member States, its shareholders. During the last management committee, they unanimously approved the new strategy of the public institution and its roadmap to become a climate bank. The EIB, the financial arm of the European Union, finances nearly 60 billion euros of projects each year, either directly from large companies, or from SMEs through financing agreements with traditional commercial banks, or even public projects and infrastructures.
This new roadmap should enable the EIB to fully align its activities with the objectives of the Paris Agreement and to contain global warming below 2 degrees by the end of the century. In November 2019, the management committee had already approved the decision to no longer finance fossil fuel projects. The roadmap this time goes a little further by detailing how the bank wants to transform.
One of the key measures in the bank’s new plan will be to scrutinize all funding grants for global warming. The EIB will include criteria relating to the climate in its decisions, which will lead it to no longer finance projects such as airport extensions, extensions of agricultural activities in natural areas and factories that consume too much fossil energy.
1000 billion euros for the climate
At the same time, the EIB wants to increase its share of its climate finance. By 2025, they should represent at least 50% of the total, or 30 billion euros annually. At the end of 2019, it had already planned a doubling of the share of this funding, to reach 25%. It therefore continues its momentum.
In total, the public bank plans to generate 1 trillion euros in climate investments by the end of the decade. During 2021, it should in particular publish a new transport financing policy. It will also help finance the transition of member countries most dependent on fossil fuels, such as Poland, by supporting the just transition mechanism of the European Commission. This device aims to finance projects to mitigate the social impact of phasing out fossil fuels, it will be fully unveiled in the course of next year.
“The EIB Group will be the first public development bank to be aligned with the Paris Agreement“, welcomes Ambroise Fayolle, vice-president of the bank. This new strategy is presented only a few days after the” Common finance “summit which brought together more than 450 public banks in the world. At the end of the event, António Guterres, the UN Secretary General, had precisely urged these institutions to green their activities, by encouraging them to become CO2 neutral by 2050 and to contribute to achieving the Sustainable Development Goals (SDGs) by 2030. The EIB therefore seems to have taken a step ahead.
Arnaud Dumas, @ ADumas5