In a challenging year, the European Investment Bank Group (EIB) exceeded its own targets, signing a record number of 1 095 operations and increasing financing volumes to EUR 72.22 billion. This was in spite of uncertainty and delays linked to Brexit and to the need for the remaining EU Member States to come to an agreement, last spring, over the replacement of the UK’s share of EIB capital.
“The EU bank has performed well in the markets, proving that there is strong demand for its products. It has also won support from the Member States in addressing and resolving the Brexit challenge”, EIB President Werner Hoyer said at the EIB Group’s annual press conference on 30 January in Brussels.
The financing provided by the EIB Group in 2019 supports total investment of around EUR 280 billion in Europe and worldwide, an increase of EUR 50 billion compared to 2018.
“We are able to reach out and work with a larger number of smaller projects contributing to prosperity in Europe and beyond. This more targeted approach allows us to maximise our impact in terms of total investment supported. This is sharper, smarter investment,” said Hoyer.
Ramping up climate action
A record 31% share of EIB financing went into climate action projects, transforming Europe’s energy markets, but also mitigating the effects of climate change and helping people in greatly affected areas to adapt. “Now, as Europe puts a strong emphasis on climate action, the EIB has decided to strengthen its role as the European Union’s climate bank. We are ramping up our climate action. The EU bank plays an integral part in the European Green Deal announced by the new President of the European Commission, Ursula von der Leyen,” Hoyer said.
In 2019, the EIB Group approved the most ambitious climate targets of any multilateral development bank globally. The EIB aims to dedicate 50% of its financing to climate action and environmental sustainability as of 2025. It expects to unlock more than one trillion euros in green finance by 2030. And it will align all its activities with the Paris Agreement already by the end of this year. Under its new energy lending policy, the EIB has decided to stop considering conventional fossil-fuel projects as from the end of 2021. It is working together with the European Commission to make the Just Transition Mechanism a reality. “We will pay particular attention to the regions that have thus far been most dependent on fossil fuels for their jobs and economic activity. Climate action will not shift attention away from our core mission of cohesion,” Hoyer said. Investments in economic and social cohesion accounted for a 30% share of the EU bank’s financing in 2019.
No trade-offs between financing climate action, cohesion and innovation
The EIB Group remains strongly committed to supporting Europe’s competitiveness in the global economy. EUR 25.5 billion went to small and medium-sized companies in the past year, providing much-needed support to entrepreneurs that form the backbone of the EU’s economy and still often struggle to access finance. The EU bank made available EUR 14.4 billion for innovation, supporting new technologies and helping to build the industries of the future. EUR 15.7 billion financed the construction of modern infrastructure to improve people’s lives.
Operations signed in the last year alone will provide power supply for 7.4 million households and fresh drinking water for 10 million households around the world. They will support 4.4 million jobs in small and medium-sized enterprises and improve mobile communication services for 117 million people and health services for 12 million citizens.
The European Investment Fund (EIF), the EIB subsidiary that supports high-tech start-ups and small and medium-sized businesses all over Europe, signed operations for a record total of EUR 10.23 billion in 2019. The EIF has been innovating with new instruments and initiatives in the area of social impact to channel private capital towards public policy objectives. It launched the first ever sustainability venture capital fund with incentive mechanisms linked to the achievement of specific environmental impact goals. The EIF, the biggest provider of risk capital in Europe, has a new CEO since the beginning of 2020: Alain Godard, former EIB Director General of Risk Management, replaced Pier Luigi Gilibert on 1 January.
EFSI moves closer to final target of EUR 500 billion
The EIB Group has decades of experience in mobilising private capital to achieve European policy goals. The best example of this is the European Fund for Strategic Investments (EFSI), the financial arm of the Juncker Plan, managed by the EIB. Based on a guarantee of EUR 33.5 billion – EUR 26 billion from the EU budget and EUR 7.5 billion from the EIB – EFSI has so far channelled EUR 84.2 billion into 1 269 operations. By crowding in private capital, it has already mobilised EUR 458 billion, or 92% of the target set for the end of 2020, and created 1.1 million jobs.
The success of the Juncker Plan has not only inspired the European Commission to set up its successor, InvestEU, which will be launched in 2021. It has also pioneered the mechanism that will help mobilise private capital for the European Green Deal. “EFSI is a blueprint for how to tackle the next major challenge, the transformation to an economy that generates wealth without creating additional CO2 emissions. We know how to bring together the private and public sectors in a formidable and successful partnership with the European Commission,” Hoyer said. “The Juncker Plan has shown that shifting resources from subsidies and grants to loans and guarantees helps ensure that scarce public money can deliver stronger economic results.”
Improving lives and tackling climate change around the world
For more than 50 years, the EIB Group has helped the European Union to achieve its policy goals outside the EU, investing in tangibly improving people’s lives, underpinning economic resilience and adapting to climate change. Last year, the Group provided 12% of all financing – EUR 8.8 billion – outside the EU for a wide range of projects targeting female entrepreneurs, renewable energy, telecoms infrastructure, and other sectors of the economy. 43 of the countries where the EIB has active operations are defined as fragile states, those most in need of investment.
Over the last 10 years, EIB financing outside the EU totals EUR 69.6 billion, of which EUR 21.8 billion has gone to Africa.
EIB attracts money from sustainable investors around the world
The EIB Group funds its activities on the global capital market and benefits from an “AAA” rating. In the last year, it borrowed EUR 50.3 billion from international investors. It continues to set standards, especially in the market segments for green and sustainability bonds. The EU bank issued its first green bond in 2007 and today is still the market leader in this segment with a volume of EUR 26.7 billion issued. In 2018, the EIB issued its first Sustainability Awareness Bond to meet the UN’s Sustainable Development Goals. The proceeds of the first bond were mainly invested in water projects whilst a second bond launched last year is earmarked for healthcare and education.