EIB leadership on climate finance, EIB Global, and what's next

While climate action and sustainable development goals are overshadowed by COVID-19 and war in Ukraine, the European Investment Bank is committed to both issues, with a special focus on climate finance, according to EIB President Werner Hoyer. “When it comes to alternative energies, to renewables, to energy efficiency, it’s high time to speed up now and not slow down. We are resolved to do that with or without the pandemic, with or without the war in Ukraine,” Hoyer told Devex in Washington, D.C. Friday. The European Investment Bank, which has made significant pledges on climate, is in the midst of building up its development branch EIB Global and faces the challenges of a world in crisis. EIB President Werner Hoyer and EIB Vice-President Ambroise Fayolle sat down with Devex to discuss these issues and more. This conversation has been edited for length and clarity. The bank recently pledged to triple its spending on adaptation. How do you plan to achieve that? Will it be more than a labeling exercise? Fayolle: We were very active for a long time in climate action but mostly mitigation. We are not a bank that was so much active on adaptation. And so what we have decided to do is to look at all the projects we do on climate, looking at should we, could we include a part on adaptation. And that's why I'm pretty optimistic the way that we are going to deliver on this commitment. What is going to be the center of our discussions in the months ahead also is the concept of just transition. The energy transition is key. If you want to be successful, you need to leave no one behind. A key issue emerging in the climate conversation is around investing in natural gas in Africa and whether MDBs [multilateral development banks] should finance those projects. Africans have expressed concerns about the double standard where those projects aren’t financed in their countries even as some of the world’s biggest emitters accelerate fossil fuel investments, particularly in the wake of the Ukraine war. Should MDBs finance gas projects on the African continent? Hoyer: We're very skeptical on this because, as I said before, behind the need to strengthen and support transition energies is, in most cases, the idea and to make this solution perpetuous. We are a long-term financier, so we should also have a long-term strategy. And that means that we must bring the latest technologies, some of it still in the making in our labs … to Latin America, to Africa, to other places as soon as possible. But of course, I see that for transition, at least we will use gas in Europe ourselves, how can I keep the Africans from doing it? But then again, it's a question. Does it take multilateral financial institutions to finance? We need to refinance on the capital markets. EIB needs up to $100 billion per year on the international capital markets. This requires the confidence of the investors. [Environmental, social, and governance factors are] more and more important. [BlackRock CEO] Larry Fink made it crystal clear in his famous CEO letter that the private investors don't want to sit on stranded assets one day. And how should we? Do you think that Russia should remain a member of the European Bank for Reconstruction and Development? Hoyer: I hesitate to give advice to my colleague at EBRD because it’s difficult enough because [EBRD President Odile Renaud-Basso is] now realizing how difficult it is to run a shop with such diverse shareholders. We, on the other hand, realize what kind of advantage it is that we are clear-cut. EIB is EU only. EBRD is a particularly valuable instrument in such a situation that we have now. I was present in the early ‘90s when EBRD was put on track. The idea was to have an institution that helps the financing of the transformation of Soviet centrally planned economies into market economies of the West. I think EBRD should stick to that destination or destiny. On the original question, it is crystal clear we must not allow Russia to block or determine the direction of travel and whether this leads to an exclusion of the country from certain bodies or even just a freezing of their activities is a different story that others must answer. “ If you want to be successful, you need to leave no one behind.” --— European Investment Bank President Werner Hoyer The Post-Cotonou Agreement, which covers legal, political, and economic relations between the EU and 79 countries from the Organisation of African, Caribbean and Pacific States has been stalled, in part due to objections from Hungary. Some of EIB's external lending mandates came through the original Cotonou Agreement, how does that affect EIB’s work? Hoyer: I could now begin to whine and shed tears here because the Cotonou Agreement and its external lending mandate have served us very well. But it has been abandoned and there are new instruments in place and we need to get used to them. It encourages us even more to go outside and be an instrument of European foreign and development policies in that context, and of course, of climate policy. This is why we are increasing our activities outside of the European Union, but we have to be very mindful of the different positions of the 27 member states on this. What can you tell me about the search for the head of EIB Global? When can we expect a decision and what are you looking for? Hoyer: That position is enormous. So it's a difficult choice to be made and I think within the next two or three months, we'll have it done. As you can imagine, different profiles are attractive for that job. On the other hand, the acting, the deputy managing director [Markus Berndt], he's a perfect banker. So from that point of view, I would like to see a couple of other more strategic capacities delivered. But I'm impressed by the quality of people who are applying for that job. President Hoyer, your term is over at the end of 2023, what are your goals until then? And what do you plan to do next? Hoyer: The transformation towards the external arm, the financial arm of EU external policies has not been completed. That's our big ambition when it comes to EIB Global. It wasn't easy to set it up, but we now have it and we're going to further develop and strengthen it. And this is my ambition for the next almost two years. And what comes afterwards? I'm not too much interested in gardening, so I will try to do something serious. Whether the governors ask me to continue for a while or not is something that is out of my decision making