The EIB, the financial arm of the European Union, is currently being showcased as a climate leader during the global climate conference COP26 in Glasgow. Although progress has been made in recent years, many challenges still remain.
While its recently approved Climate Bank Roadmap is an important step forward, the EIB is not yet aligned with the objectives of the Paris Agreement. The paper highlights some of the core risks of greenwashing that the Bank is facing. These include:
- A still incomplete ban on fossil fuels: While the EIB can be rightfully applauded for deciding to stop its support of most fossil fuels back in 2019 - and for being at the heart of a new initiative calling to stop public funding for fossil fuels -, its energy policy still leaves the door open for the financing of fossil gas through the backdoor.
- Investing in the transport of the past: EIB’s transport operations are not yet aligned with the objectives of the Paris Agreement. Despite the ongoing review of its Transport Policy, the Bank is still planning to continue financing Liquefied Natural Gas and motorway expansions.
- Blank cheque to polluters: The new Paris Alignment Counterparties framework (the “PATH Framework”) presented at COP26 is an improvement compared to current practices at the EIB, since the Bank will now require high-emitting companies to have decarbonisation plans in place. However, some important loopholes remain, enabling the EIB to still finance fossil fuel companies and commercial banks that are still investing in climaticide projects.
- Business as usual in the bio-economy and agriculture sector: The EIB’s current safeguards remain insufficient to prevent projects that worsen the climate crisis or harm biodiversity. In particular, the Bank does not have explicit restrictions for industrial farming and the burning of forest biomass for energy.
- Banking on nature: The EIB operations and financial instruments risk contributing to the financialization of nature at the detriment of communities and their control over their territories.
Xavier Sol, Director at Counter Balance says “Despite progress in the last years, there is still serious homework to be done for the Bank to become a more sustainable and accountable institution and not fall into the trap of greenwashing. Recent announcements made at the COP26 make for a very rosy picture, but the reality is rather different. For instance, the EIB decided not to put any real requirements on the commercial banks it finances. This means that more than one-third of the EIB financing can go to banks fuelling the climate crisis..”
Clara Bourgin, Policy and Advocacy Officer at Counter Balance says “If the EIB is serious about becoming the “EU Climate Bank”, it needs to ensure its projects do not result in additional damage to people and the environment. The EIB is not yet a “climate leader”. More ambition from the Bank is needed to make sure it truly aligns with the objectives of the Paris Agreement.”