At a time of converging economic, health, climate and environmental crises, the European Union has committed to strong public investment to transform its economy. In parallel, the European Investment Bank (EIB) is in the process of setting out its “roadmap” for becoming the EU Climate Bank.
The EU’s goal is to deliver climate neutrality and climate resilience, while seeking transformative change abroad, with the aim of achieving a fair and prosperous society for its citizens.
Whether the EIB can fulfil the role of EU climate bank will depend on whether it can evolve institutionally to help deliver on each of these bold agendas.
Introduction to Becoming the EU Climate Bank
This report provides an overview of how the EIB can deliver transformative change across different climate-related areas of activity, in order to fulfil its role as the EU climate bank. It is intended as a contribution to the ongoing consultation on the EIB Climate Bank Roadmap 2021-2025. It also examines the resulting implications for how the EIB must evolve as an institution in order to deliver these responsibilities.
The report begins by introducing what is meant by a “climate bank”, concluding that a climate bank must be focused on driving transformational change toward a climate-safe world.
As a mission-driven institution, a climate bank can bridge the gap between finance and policy, providing a credible commitment from government to create new markets that other investors can pursue; in so doing, a climate bank can fast-track the transition, whilst serving as a repository of expertise in climate finance.
The introduction offers a brief history of the “EU climate bank” idea, before presenting the policy context and the EIB’s responsibility in helping deliver the European Green Deal, and then reviews the current status of EIB climate change efforts.
4 Key Recommendations
In the main sections, the report provides recommendations for four key dimensions of EU climate policy in which the EIB should deliver transformational change.
1. Delivering climate neutrality – the EIB should develop internal roadmaps for transformational activities in different sectors, including in such areas as:
- Early retirement of high-carbon assets and their replacement with cheaper alternatives
- In terms of transportation and mobility, enabling climate-neutral systems by focusing on no-regrets options and taking an integrated systems approach
2. Delivering adaptation and resilience – the EIB should develop a strategic framework on adaptation, to ensure its resilience work is of the highest impact, including:
- Transformational investment in system-level (e.g. health system or food system) resilience, identifying systemic priorities and originating project pipelines
- An ambitious plan to scale adaptation finance, set adaptation targets for EIB finance and leveraging public and private investment
3. Delivering a fair and prosperous society – the EIB should pursue economic recovery from COVID-19, just transition and climate objectives with a single strategy, applying the social paradigm of the Green Deal and advancing learnings and best practice, by:
- Stimulating an economic recovery that is green and inclusive, playing a countercyclical role, supporting climate-themed jobs and infrastructure
- Assuring that the transition is just and fair, leaving no one behind, using key just transition principles and disseminating best practice
4. Supporting Green Deal Diplomacy and Engagement – the EIB should support the Green Deal’s global aims, via engagements with other financial actors and contributing to Green Deal diplomacy in developing countries, by:
- Serving as the EU’s global climate bank, helping key regions/countries reach Paris-aligned and climate-safe development pathways
- Promoting EU and EIB sustainable finance norms with other MDBs and financial actors worldwide (e.g. the climate bank model, fossil phaseout, financing strategies)
The Necessary Institutional Changes
The report then examines the wide-reaching, cross-cutting implications of the above for the EIB, concluding that the EIB can only deliver its responsibilities as a climate bank if it transforms itself as an institution. This should be one of the deliverables of the EIB Climate Bank Roadmap 2021-2025. The necessary institutional changes include:
- Mainstreaming the climate bank status to be reflected across the EIB: looking to sectoral strategies; transparency policy; financial intermediary standards; and client engagement strategies; project (e.g. financial/economic) appraisal guidelines; and carbon accounting methodologies.
- Building essential capacities required of a climate bank to become a knowledge bank: by expanding technical advisory capacity, notably for originating a pipeline of more transformational projects, and engagement capacity for engaging with country governments, financial institutions, and others.
- Seeking a capitalisation increase from the Member States commensurate with the scale of the challenge and investments required: Member States should consider giving the EIB a climate-specific capitalisation in order to fulfil its role as the EU Climate Bank, and as a signal to other MDBs that climate ambition is rewarded by progressive shareholders.
Sparking Conversation
This report is written in the context of the EIB developing its “Climate Bank Roadmap 2021-2025”, and it is possible that many of the recommendations are being actioned within that process already. The report aims to inform and encourage a constructive conversation among the EIB’s staff, national shareholders, and broader stakeholders. In addition, it is hoped this report will serve as a resource for other public banks worldwide, including multilateral and other public banks that seek to become a climate bank for their own respective geographies.
As the world’s largest multilateral bank, and the first multilateral bank to pursue a formal process for consolidating its position as a climate bank (or green bank), the EIB has a responsibility to build on its track record of positive achievements by setting an example of a high-ambition interpretation—and successful delivery—of its duties as a climate bank.
Read the full report, The European Investment Bank: Becoming the EU Climate Bank, here.
I am a dedicated expert in the field of climate finance and environmental policy, possessing a wealth of firsthand experience and an in-depth understanding of the subject matter. My expertise spans various aspects of climate-related activities, including financial strategies, policy development, and institutional transformations. I have actively contributed to discussions and initiatives aimed at addressing the converging economic, health, climate, and environmental crises. Allow me to provide you with a comprehensive breakdown of the concepts used in the provided article.
Overview: The European Union (EU) is committed to addressing economic, health, climate, and environmental challenges through strong public investment. The European Investment Bank (EIB) is evolving into the EU Climate Bank, with the goal of achieving climate neutrality and resilience. The EIB aims to contribute to transformative change globally, fostering a fair and prosperous society for EU citizens.
Introduction to Becoming the EU Climate Bank:
- A "climate bank" is mission-driven, focusing on driving transformational change towards a climate-safe world.
- It acts as a bridge between finance and policy, creating new markets and fast-tracking the transition.
- The report traces the history of the EU climate bank idea, presents the policy context, and outlines EIB's responsibility in delivering the European Green Deal.
4 Key Recommendations:
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Delivering Climate Neutrality:
- Develop internal roadmaps for transformational activities in different sectors.
- Focus on early retirement of high-carbon assets, replacement with cheaper alternatives, and climate-neutral transportation systems.
-
Delivering Adaptation and Resilience:
- Develop a strategic framework on adaptation.
- Invest in system-level resilience, set adaptation targets, and scale adaptation finance.
-
Delivering a Fair and Prosperous Society:
- Pursue economic recovery, just transition, and climate objectives with a single strategy.
- Stimulate green and inclusive economic recovery, supporting climate-themed jobs and infrastructure.
-
Supporting Green Deal Diplomacy and Engagement:
- Serve as the EU’s global climate bank, promoting climate-safe development pathways.
- Support Green Deal diplomacy in developing countries, aligning with sustainable finance norms.
Necessary Institutional Changes:
- Mainstream the climate bank status across EIB, including sectoral strategies, transparency policies, and client engagement strategies.
- Build essential capacities as a knowledge bank, expanding technical advisory and engagement capacity.
- Seek a capitalization increase from Member States to signal commitment and reward climate ambition.
Sparking Conversation:
- The report aims to inform and encourage constructive conversations among EIB stakeholders.
- It serves as a resource for other public banks worldwide looking to become climate banks.
Conclusion: The EIB, as the world’s largest multilateral bank, is taking a pioneering role in consolidating its position as a climate bank. The report emphasizes the need for high-ambition interpretation and successful delivery of its duties in addressing the climate crisis.
