The European Parliament has called on the European Investment Bank (EIB), the world’s largest public lender, to facilitate Europe’s effort to tackle the climate crisis by fully aligning its investment policies and practices with the Paris climate accord.
Yesterday, the European Parliament approved two reports (see here and here) on the activities of the EIB. One report was led by MEP David Cormand in the Committee of Budgets (BUDG) and the other by MEP Bas Eickhout in the Committee on Budgetary Control (CONT).
Both reports send a strong signal to the bank: it needs to seriously ratchet up its standards on transparency, accountability and sustainability. The role of the EIB in financing the European Green Deal while being part of the EU’s response to the economic consequences of the Covid-19 crisis was a key focus of both reports.
Bankwatch, Counter Balance and a growing number of civil society groups have been calling on the EIB to up its game if it is to genuinely become the EU Climate Bank. We are glad to see that the European Parliament is of a similar opinion urging the EIB to align its performance with the Paris Agreement by the end of the year.
The CONT report “calls on the EIB to commit to ending the financing of all projects that are not in line with the Paris Agreement and the EU’s climate goals” and “calls on the EIB to draw up a roadmap with specific, measurable, attainable, realistic and time-defined targets with regards to the implementation of the Paris Agreement.” In addition, the BUDG report has urged the EIB to guarantee for climate neutrality of its non-climate lending.
In this context, MEPs rightly noted that currently a third of the EIB financing, which flows via intermediaries – mostly commercial banks – is distributed with no control over its climate impact. The EIB, they explain, needs to start “requiring its intermediary clients to disclose their exposure to fossil fuels, and (…) gradually apply restrictions to heavily exposed intermediaries” and the Parliament “expects that by the end of 2025 all intermediaries will have a decarbonisation plan, since this is indispensable for their financing to continue (…).”
Ongoing discussions around the future role of the EIB outside of Europe did not escape Parliament’s attention either. MEPs called on the EIB “to prioritize poverty eradication, domestic resource mobilisation and human rights” and to “make sure human rights considerations are taken into account all through its decision-making process”. Given the harmful impacts of EIB operations exposed over the last years, for example in Kenya or Georgia, we welcome the request “to strengthen its human rights strategy, including the risk of reprisals against human rights defenders” in the context of the upcoming review of the EIB environmental and social standards.
The quality of the EIB operations was also of particular focus and the Parliament asked the bank “to make full use of contractual clauses enabling it to suspend disbursements in cases of projects’ non-compliance with environmental, social, human rights, tax and transparency standards”. Echoing repeated calls from civil society and local communities, the reports also ask the EIB to “enhance its monitoring of projects and improve its reporting and evaluation of actual results achieved and its analysis of actual economic, social and environmental impacts”.
Anna Roggenbuck, EIB Policy Officer at CEE Bankwatch Network, said:
“CEE Bankwatch Network is very glad to see this year’s reports emphasising the importance for the EIB to raise the bar on transparency when implementing its projects, especially under European investment plans like the Juncker Plan and its successor InvestEU. Transparency is a key issue for citizens to understand the actions and impacts of EU institutions and a tool for an institution like EIB to demonstrate its ethics, integrity, and accountability. We also support the call for more external and independent control of the EIB operations by the European Court of Auditors in order to scrutinize the quality, effectiveness and additionality of EIB operations”.
Xavier Sol, Director at Counter Balance, said:
“The Parliament made it clear: the increased responsibilities of the EIB under the economic recovery plans at European level have to come with better control of public funding channeled to its clients. In this regard, parliamentarians rightly urge the EIB to truly implement its proclaimed ‘zero tolerance towards fraud and corruption’. It is time for EU public finance to stop ending as a blank cheque to polluters or fraudsters”.
For additional information please contact:
Policy Officer, CEE Bankwatch Network
Director, Counter Balance
+32(0)2 893 08 61