EIB president warns against 'box-ticking' on climate investments

LUXEMBOURG — As the European Investment Bank prepares to take a leading role in the European Green Deal, EIB President Werner Hoyer has warned against a “box-ticking” approach to climate investments.

While arguing that EIB has been “the largest climate action lender for the past 25 years … [which is] something we can be very proud of,” he acknowledged that the way climate investments are measured can sometimes be misleading.

“When you talk about the mobilization of our industrial forces by supporting SMEs, then you must make sure that these SMEs don’t undermine our climate objectives. On the other hand, climate policy is a huge business opportunity, also for SMEs. So [it is important that we] produce synergies before these dimensions and do not produce dichotomies,” he told Devex at his office in Luxembourg.

In EIB’s own methodology, this is “sometimes overlooked because we have people who like to tick boxes and put projects into boxes and say, ‘Well, this is 100% climate action and 0% innovation,’” Hoyer said. “What a nonsense!”

Civil society organizations have criticized EIB over its approach to climate investments. For example, the bank counted 100% of a loan to upgrade the Istanbul subway system as climate-related.

“I think we need to take this criticism seriously,” Hoyer said. “I don’t think we need to fundamentally change our methodology, but we have to be very vigilant there.”

After green bonds were introduced a decade ago, so-called greenwashing began “immediately,” he said. “There was too much of a temptation for many institutions to say, ‘I want to tap the markets with the green label as well.’”

Hoyer added that for EIB now, “when our engineers put a green stamp on a project, then the investor knows there is accountability behind that, transparency, and reliability.”

Asked about criticism of the EIB spending too little on climate adaptation compared with mitigation and whether this spending should be increased, Hoyer replied, “absolutely.” A spokesperson noted this would form part of EIB’s new climate and energy strategy.

“Adaptation projects need a huge intellectual input, mainly scientific and engineering input,” Hoyer said, arguing that EIB has strong in-house expertise in this area.

In December, European Commission President Ursula von der Leyen announced plans for Europe to be “the first climate neutral continent” by 2050. The European Green Deal includes plans for a Just Transition Mechanism that will “draw on sources of funding from the EU budget as well as the EIB group to leverage the necessary private and public resources.”

At the time, Hoyer said that von der Leyen’s plan amounted to a request for EIB to become the “financial engine” of Europe’s leadership on climate action.

In November, the EIB board agreed on a new energy-lending policy — ending all support for fossil fuel energy projects by the end of 2021 — and set more ambitious climate-spending targets.

The bank sought to “unlock” €1 trillion ($1.1 trillion) in climate and sustainability investments from 2021 to 2030 and to spend 50% of its total financing on climate and the environment starting in 2025.