The European Investment Bank revealed on Wednesday that it will begin looking at the broader activities of the companies and institutions that it lends to and not just the individual projects they support.
The supranational had this year announced that it would lend only to projects aligned with the Paris agreement. On Wednesday it went further, saying that it would not finance any projects from companies that are not intending to cut their emissions or are otherwise expanding their carbon-emitting activites.
Ambroise Fayolle, EIB’s vice president who oversees the bank’s climate finance action, said: “As the climate bank, it’s not tenable for us to support, for example, a coal mining company installing solar panels to improve its mining activity.”
The EIB says it is the first multilateral development bank to extend this Paris alignment requirement to its counterparties.
An EIB spokesperson added that the requirement will not mean an automatic blacklist for non-Paris aligned companies, but that the EIB would offer advice and technical support to aid the company in developing a decarbonisation plan.
EIB president Werner Hoyer said that exceptions could be made to allow the EIB to support uniquely innovative projects with the potential to make big impacts in decarbonisation — perhaps a reference to the EIB’s role in the Catalyst partnership with the EU Commission and Bill Gates’s Breakthrough Energy company, which will seek to scale innovative projects in sustainable aviation fuel, clean hydrogen, direct air carbon capture and long-term energy storage.
Hoyer highlighted that this exclusion would not be used to allow companies to continue their activities without regard for climate action.
On Tuesday, the EIB joined with African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Council of Europe Development Bank, European Bank or Reconstruction and Development, Inter-American Development Bank, Islamic Development Bank, New Development Bank and World Bank Group in signing a joint statement reflecting their collective climate ambition. Among other things, the statement promises to increase climate finance, particularly for adaptation initiatives.
Mario Draghi on Tuesday took the opportunity to encourage MDBs to “co-share with the private sector the risks that the private sector alone cannot bear”. The Italian prime minister and former European Central Bank president said that, if the private sector could be brought into the fight against climate change effectively, then money would no longer be a constraint.
Tuesday’s MDBs’ statement includes a promise to increase the level of private capital mobilised for mitigation and adaptation investments, via platforms, investment vehicles and blended finance instruments.
