In April, the European Parliament (EP) discussed and voted on its annual report on the control of the financial activities of the European Investment Bank (EIB) Group for 2024. The report welcomes the “EU Climate Bank’s” problematic shift away from prioritising climate action toward de-risking corporate profitability and expanding its military investments. Across the parliamentary debate, climate was ranking low in the agenda: the dominant language was not decarbonisation, but “competitiveness”, “economic security”, and above all, “security and defence”. Whereas some statements in the report are contradictory, there are also some positive points such as the Bank’s potential to support affordable housing and social infrastructure more generally, while also clearly pointing out the need to enforce an external and democratic control of the Bank’s growing operations.
Don’t disturb the market with public money… Unless it’s a big company with so much profits it doesn’t care about investing in things we need
The report rightly recalls that the “EIB financing must provide clear EU added value and demonstrate measurable results in terms of genuine additionality”, and then goes on claiming that it must also target “projects that the private sector alone would not finance, or would only finance under less favourable conditions.” One would assume that this implies that especially large corporations that have ample profits and access to funding on financial markets, should not receive EIB support because they have sufficient own or other resources to finance projects.
However, the EP report then makes a U turn along the lines of the ongoing broader EU policy shift to secure corporate profitability under the guise of supporting competitiveness, stating that the EIB should continue “to support large EU companies in securing investment capital for major projects and research and development initiatives”. In other words, public money should be used to subsidise big corporates for their alleged role in enhancing the EU’s “global competitiveness and economic sovereignty”, with no mention of the need to ensure affordability and widespread access to basic needs as a condition to receive public support. While paying lip service to increasing investments into the European economy, the report turns a blind eye on increasing evidence showing how net profits accumulated by those same companies have been put into shareholders’ pockets at the expense of productive investments. It’s as if in principle the EP report wants to defend the idea that public money should not stand in the way of the market and private investments, but in practice abandons this idea to support big corporate players who are unwilling to make productive investments in the hope that de-risking some projects for them will have the miraculous side effect of making the EU more competitive in the global economy. A trend which reflects what Counter Balance and other critical voices have warned about for years.
Demanding transparency and scrutiny after having dismantled the tools to deliver it
Other contradictions can be spotted in the report. On the one hand, it consistently called on the Bank to increase its transparency, provide relevant indicators allowing for a proper impact assessment of the Bank’s investments in terms of overall benefits for the whole economy as well as for specific sectors. It also relies on the European Court of Auditors (ECA)’s conclusions on the lack of meaningful scrutiny and accountability over the implementation of EU budgetary guarantees, namely the European Fund for Strategic Investments (EFSI) and InvestEU. Yet, it does so without mentioning the heavy consequences that the Omnibus II has in terms of watering down the reporting obligations and indicators which de facto undermine sound impact assessments to be carried out. How do the calls for enhanced transparency and more meaningful involvement of the EP’s scrutiny role reconcile with the removal of all obligations to collect the data necessary to ensure accurate, high-quality monitoring? No answer is given in the report.
Geopolitical control and migration enforcement with a humanitarian flavor
On EIB Global, the bank’s development financing arm operating outside of EU countries, the report delivers a mixed message. It uncritically supports the EIB’s key role in the self-interested geopolitical and EU commercial agenda embedded in the Global Gateway strategy, and also calling for the Bank to expand its involvement in “migration management” cooperation agreements with non-EU countries, which de facto means supporting the deportation of sans-papier and people on the move. Nonetheless, it still asks for more respect for human rights, mentions the need to finance highly essential public services outside of the EU and finally calls for increased accountability and more transparency in EIB Global’s operations.
Climate Bank or greenwashed pipedreams?
This broader shift also severely undermines the Bank’s claim to be the “European Climate Bank.” Between 2022 and 2024, the EIB lent €10 billion to fossil fuels-linked institutions, while simultaneously increasing its role in military financing. Instead of clearly prioritising renewable energy production, the fastest and safest path away from fossil dependency, the report calls on the EIB to apply the so-called “technological neutrality”, which opens the door to costly and environmentally questionable solutions such as carbon capture and storage (CCS) and nuclear energy. Nuclear energy, in particular, remains vulnerable to geopolitical supply chain risks through the dependence to uranium access. At a time where the ongoing conflict in the Middle East and the resulting surge in energy prices, it becomes more important than ever to pursue the green transition by pursuing solutions which decarbonise the energy provision, reduce resource use, are cost efficient and reduce vulnerability to the breakdown of supply chains.
The Parliament tastes blood, now they also want guns and ammunition
Furthermore, the report explicitly calls on the Bank to further expand the scope of eligible military investments to finally include weapons and ammunition, as well as increasing investments in border control. The EIB’s rapidly scaling role in military financing creates an economic incentive to fuel the current arms race and armed conflict itself. At the same time, the EIB is lending millions to arms manufacturers and counting it as climate action, despite extensive existing studies documenting the military’s vast carbon footprint.
Amid the damage, a few cracks of public interest
On another unexpected note, the EP has some short, but positive wording on social investments. Even though an earlier draft of the report wanted to largely discredit the EIB’s role in financing of affordable housing, the final report welcomes the Bank’s role in this respect, including referring to the need to finance social infrastructure and essential services more broadly as part of its role to implement the European Pillar of Social Rights. As the report rightly points out, these investments are fully aligned with the Bank’s mandate.
As the EIB’s balance sheet grows, it’s undemocratic governance comes to the surface
Finally, the EP report rightly devotes a lot of attention to the lack of adequate democratic oversight and control of the EIB Group. The report points out that no external supervisor or auditor is currently overseeing the Group’s whole portfolio. The ECA is mandated to overview operations which are supported by guarantees from the EU budget (such as via InvestEU inside the EU or EFSD+ outside the EU), but more than 75 percent of the Group’s operations are financed by its own resources, meaning they remain substantially unsupervised. This has always been the case, but while the Bank’s role is expanding, its balance sheet is growing, more complex financial products are being used, transparency is weak, and the ethical framework “suboptimal” (as the report put it), the lack of supervision seems to be grasping more and more the political attention. The EP thus calls for “a Treaty change to allow the ECA to have full and unrestricted access to all EIB operations to align democratic accountability with the growing role and size of the EIB”.
On that same note, the report also reiterates the EP’s concerns about the bankruptcy of Northvolt, a Swedish Electric Vehicles (EV) battery producer that received a €942 million loan from the EIB shortly before failing. The company’s bankruptcy exposed the extent to which vast amounts of public money can be channelled into highly risky corporate projects with weak democratic oversight, questionable due diligence, and limited transparency. The EP thus calls for the disclosure of the Bank’s own risk assessment of the project as well as for the adequate improvement of decision-making procedures when it comes to similar large-scale projects. The EP also recommends the Bank to increase its scrutiny for concentration of risk around single large projects and clients.
The EP also paid attention to the conflicts of interests in the management committee of the Bank, as 5 vice presidents since 2019 have been involved in revolving doors situations and calls for various measures such a stronger enforcement of the code of conduct and stricter cooling-off periods for EIB vice-presidents.
The EIB Group can be a public bank that finances life – climate action, public services, social justice, and just transformation – or it can continue drifting toward becoming a vehicle for corporate subsidy, militarisation, and geoeconomic competition. While the report encourages many of the problematic trends going on at the Bank and lays bare some of the contradictions in the EU’s agenda, there are also some elements that could improve the functioning of the Bank, such as its supervision and increasing democratic control. However, we also have to acknowledge that the non binding nature of the EP report itself is part of the weak democratic control embedded in the current functioning of Europe’s public bank.
Despite the parliament’s state of confusion, we should never forget. The EIB runs on tax payer money. We own it! The Bank should put people’s interests first and have a democratic governance system. Getting some of these points implemented will depend on the political will of the people in – and outside institutions advocating for them, instead of just relying on existing institutional procedures.