Check against delivery
Thank you very much for your kind introduction. I am very happy about our partnership with Project Syndicate to launch the platform “Sustainability Now”. It will bring together a wide range of top experts for an interdisciplinary discussion on how to build a sustainable global economy.
Eminent economists, scientists, bankers, policymakers, business and civil society leaders will publish on this platform – and their commentary will be distributed to newspaper readers all over the world.
This is more than welcome, because we need a well-informed global dialogue to solve our most urgent global problem. We must support the voices of reason against the rising tide of populism – when we lose the support of citizens, we cannot prevail in the fight against climate change.
Ladies and Gentlemen,
It is a great honour for me to speak at your conference. It brings together many organisations we partner with and fosters the spirit of cooperation between multilateral institutions, academia and the private sector – a spirit that is very much needed today.
Humanity is at a crossroads. During my 30 years in public life I have seen world changing events – such as the fall of the Berlin Wall and more recently the financial crisis. It feels to me like we are going through another one of these seismic shifts.
Millions of young people all around the world are protesting against political and business leaders that are too slow to react to the climate challenge. Their protest has started to change majorities in our democratic institutions, as we have seen this spring in the European elections.
And the democratic institutions are reacting – we all have heard it yesterday at the UN Climate Action Summit.
Well, it is about time! The Paris Agreement has set us on the right track, but we are moving forward far too slowly. We must act immediately and swiftly if we want to ensure a sustainable transition to a “net-zero” emissions economy.
If we wait too long, we risk having to enact an abrupt transition, which would also be disruptive for financial markets. Or worse, we may be unable to transition altogether and face existential consequences for the human race and many forms of life on our planet.
The IPCC clearly indicated the years to 2030 as our last window of opportunity to avert catastrophic climate change. This is also true for the protection of biodiversity and ecosystems. Investment over the next 10-15 years will change the face of our economies and our societies. To quote Nobel Prize Laureate Paul Romer, in the next 10 years we will build the cities where humanity will live forever – a crucial challenge for rapidly urbanizing developing nations.
This is why I was glad yesterday to present at the General Assembly LUCI, the Leadership for Urban Climate Investment that will strengthen the capacity of 2000 cities over the next six years to prepare projects and link 1000 new projects to finance.
In Europe and other industrialised countries, we will need to replace the majority of our infrastructure stock within a generation. Scientists have clearly shown us the consequences of making the wrong investment decisions and remaining on an unsustainable path.
For the financial community this situation represents an unprecedented opportunity – to play a major role in making our economies carbon-neutral, greener, climate resilient as well as more inclusive, maintaining our societies’ stability. Yet we also face a major challenge – to recognize the right investments and massively redirect capital towards them.
The reality is that sustainable finance flows fall well short of the trillions of dollars that need to be invested in low-carbon and climate resilient assets. And the pipeline of high-quality projects reaching the market is insufficient. Something is amiss, ladies and gentlemen.
Public finance institutions like the EIB must play a leading role to facilitate the flow of private capital into sustainable investments at the needed scale globally by helping to create the right environment and partnering with the private sector.
Indeed, public finance institutions have a duty to take the lead. If you want to win a race with time like this, it is not sufficient to do just enough to reach the finishing line. You have to cross the finishing line at full speed to win. This is how we need to look at the years until 2030.
Each one of our institutions and each one of us as citizens can choose to be part of the solution or bear the responsibility of continued inaction.
Young people are vigorously reminding us of this and we must listen.
The EIB Group has been listening. We have been at the forefront of the fight against the climate emergency, in line with the EU’s leading role.
Our experience gives us the confidence that we can do even more. We know we can set ourselves increasingly ambitious goals and deliver on them.
Since 2012 we have provided EUR 150 billion of finance supporting EUR 550 billion (USD 600 billion) of investment in climate action and environmental sustainability. This made the EIB Group the world’s largest multilateral provider of finance for projects supporting these objectives.
In 2015, we pledged to provide USD 100 billion for climate action projects in the five year period to 2020. And we are delivering!
The EU member states know that they can rely on us, the EU Bank.
President of the European Council Donald Tusk said yesterday at the UN that the European Council expects the EIB to increase its ambition to deliver on climate action and environmental sustainability, within the EU but also in supporting the EU’s climate objectives globally.
We stand ready to embark on a new journey as we finalise the EIB’s increased ambition to 2030 for climate action and environmental sustainability, which builds around three commitments.
Firstly, we will increase our own financing. Last year, nearly 30% of our new commitments worldwide were dedicated to such goals. I want us to be much bolder and aim for 50% for climate action and environmental sustainability by 2025.
Secondly, we commit to making a real difference in growing sustainable finance from billions to trillions. By working with our public and private partners we aim to help unlock more than 1.1 trillion dollars of investment by 2030.
This will include a marked increase in support for climate change adaptation and climate resilience.
Thirdly, we aim to align all our financing activities with the principles and goals of the Paris agreement by the end of 2020. As an important first step, we will phase out energy projects that depend solely on fossil fuels.
This builds on our 2015 Climate Strategy, which committed us to mainstream climate change consideration in “everything we do”. Science tells us that transitioning to a carbon-neutral economy entails ending the use of fossil fuel as soon as possible.
Thanks to our emissions performance standard, we have not supported any coal-fired power projects for almost a decade – the first MDB to do so.
We will position the EIB as an incubator for climate finance and expertise to mobilize others, helping our societies and economies transform to a low carbon future.
But we must not forget that some countries are further advanced than others on the road to a low-carbon economy, and that some areas, communities and sectors will be more deeply affected than others by this transition.
We must make sure that no-one is left behind in our fight against climate change. We therefore commit to increase our support for a just and fair transition of the most vulnerable regions and groups.
Currently, 41 regions in the EU are mining coal, providing jobs to about 240,000 people most of whom have limited opportunities to find alternative employment.
In 2016, the EU pledged to support coal and carbon-intensive regions in their shift to a new model, working with all relevant partners. We are committed to supporting this effort. For instance, we are proposing a dedicated Energy Transition Package in our new Energy Lending Policy.
At the EIB we have been supporting this “just transition” for a long time. One example is our work with the Polish municipality of Katowice over the past 20 years. Our EUR 205 million loans contributed to its successful transition from stagnating coal-mining town to vibrant urban centre, offering new business opportunities and a healthier environment for its citizens.
Projects like these are needed to ensure broad support for a transition that is inevitable. Protest waves like the “yellow vest movement” in France have shown that the best climate action strategy does not help when you lose the support of voters in the process.
Ladies and gentlemen,
The financial markets have a major role to play in this whole transition. Investor has started to change, and my conversations this week in New York show me that the appetite for green investment has grown considerably.
The market for green and sustainable bonds has broken the USD 800 billion threshold. This is great. However, this progress pales when compared with the scale of the global bond market of around USD 100 trillion. Saying that there is room for improvement is a clear understatement.
As a public finance institution, the EIB Group can play a key role by acting as a market maker and helping to redirect private finance towards sustainable investments, particularly when it comes to capital markets instruments.
As the pioneer of the green bond market, we understand well the potential value of this instrument. We issued the first green bond, our “Climate Awareness Bond”, in July 2007 and have issued around EUR 25.8 billion in green bonds in 13 currencies since.
…In 2018, we also issued one of the first SDG bonds, our “Sustainability Awareness Bond”, for which we made a new, very successful issuance last week of EUR 250 million. Our “SABs” extend our ability to use proceeds to support other sustainability objectives, starting with the water, health and education sectors.
But this can only be the beginning.
To conclude, let me repeat that there is an extremely urgent need for more ambitious action! We have just over 10 years to turn the tide on the climate and environmental emergency.
I would like to make you all an offer: The EIB is already a global Climate Bank and a global Green Bank. Yet we are now committed to doing MUCH more.
The EIB Group and other international financial institutions have a clear role to play in paving the way for other investors to rise to the challenge and seize the opportunity. But we clearly cannot overcome this crisis alone.
We need to join forces. We need to work in partnership. We are here to work with all of you to take this agenda forward.
…Let us build a strong coalition for urgent action.
… And let us use this coalition so that the next generation will remember the moment we started reversing the crisis and addressing the greatest of challenge faced by the global community.
Thank you very much!