Emma Navarro has served as vice-president and member of the Management Committee of the EIB since June 2018. As part of her responsibilities, she oversees the EIB’s operations financing the environment, climate action and the circular economy.

Hakan Lucius is head of corporate responsibility at the EIB, covering sustainability, transparency and stakeholder engagement.

In the following conversation, Hakan Lucius asks Emma Navarro some questions on the EIB Group’s contribution to sustainable finance in the European Union.

H. Lucius: Sustainability is a key priority of the European Union. The EIB Group is showing strong leadership in this field, for example with the approval of the new climate bank road map. How will the new ambition set out in this road map contribute to the transition towards a low-carbon future?

E. Navarro: With our new climate ambition we want to significantly step up our climate and environment financing and help unlock the massive investments that will be needed for the decarbonisation of our economies. We are not starting from scratch. In fact, climate and sustainability financing have long been a top priority for our Bank. Since 2012, we have invested more than €170 billion in climate and environment projects, making us one of the world’s largest multilateral climate financiers. Yet, we are well aware that we are facing an unprecedented challenge. If we want to win the race against climate change and avoid catastrophic consequences stemming from global warming we have to cut carbon emissions drastically. This requires a great transformation of our economies and lifestyles and, of course, massive investments are needed. Business as usual is not an option. This is why, in November last year, responding to the calls from European leaders, we decided to take a quantum leap in terms of our climate ambition. Under our new Climate Strategy, we will increase our climate and environment financing to 50% of our total lending, supporting €1 trillion of investments for these objectives in the next decade. We want to use our financing capacity to support investments critical for the decarbonisation of Europe and our partner countries. This, of course, places EIB as a central piece in the implementation of the European Green Deal, the ambitious plan launched by the European Commission to make Europe the first carbon-neutral continent by 2050. We are ready for the challenge.

H. Lucius: Which leads me to the next question: in the effort to reaffirm its role as the EU climate bank, what is going to change in the EIB compared to the status quo?

E. Navarro: We have embarked on a new journey to reaffirm our role as the EU climate bank. This will have significant implications in the way we operate and it is a Bank-wide transformation. Our ambitious climate financing targets mean that we will have to increase the share of green financing in all our activities. We have also committed to align all our financing activities to the goals and principles of the Paris Agreement. For us, it makes little sense to do great climate work on the one hand, if with the rest of our financing we are failing to respect those principles. All this will have implications for what we finance, for the projects that we support and how we appraise those projects. We are also strengthening our risk framework to take into account climate risks. Last year we introduced a new system to assess the physical risks of the projects that we finance and we are now working on a comprehensive plan to develop new climate risk metrics and assess and report on climate risks at a portfolio level. Overall, this journey is quite fascinating and challenging. We have set the direction of travel but we know that there is a lot to do. We are right now working very hard developing the new climate bank road map to make sure that we are able to deliver on the ambitious investment commitments that we have made for the next decade. The whole Bank is very motivated to deliver on our ambition. This is one of the things I am most proud of.

H. Lucius: In practice, how does the EIB ensure that the activities the Bank finances are sustainable?

E. Navarro: Sustainability is part of our DNA. As a public bank, we are a policy-driven and impact-driven institution. This is reflected in our investment decisions. For example, the projects that we finance not only need to be financially viable, they also need to support our priorities or public policy goals, such as climate and the environment, supporting SME financing, innovation and critical infrastructure. We also appraise our projects to take into account the externalities, meaning the economic effects for society. And all projects are carefully checked for alignment with our environmental and social principles and standards, to ensure that they comply with our corporate responsibility commitments. Our framework is particularly strong on climate. For example, we were one of the first IFIs to introduce a carbon price in the appraisal of our projects more than 20 years ago. We report on the carbon footprint of the operations we finance and compensate our own emissions. And our climate financing is not only closely monitored and reported but also externally audited. In short, our sustainability framework is robust and compares well with that of peers. Yet, our commitment to sustainability also means that we need to ensure that our sustainability framework remains fit for purpose. We need to continue our efforts to respond to new challenges and needs. This year we will perform a comprehensive review of our environmental and social policy and in that context we will also review our carbon prices to be fully aligned with our climate targets.

H. Lucius: How else is the EIB helping to deliver the European Union’s sustainability agenda?

E. Navarro: As I have mentioned before, the EIB is called on to be an important driver of the European Green Deal Investment Plan. Our ambitious climate financing targets will help to scale up green investments. Yet, our investments alone will not turn the tide: we need private investments. This is why current work to make the financial system greener is so important and we are contributing to current initiatives to make this happen. For example, we are supporting the development of the EU taxonomy at a technical level. This is a critical initiative to give clarity to investors on what climate financing is and to avoid greenwashing. We are committed to implementing the new classification on climate mitigation and adaptation as soon as it comes into force. We will contribute to this work under the new EU Platform on Sustainable Finance. Second, the development of green products. This is something that the EIB knows well. We launched the first green bond in 2007 and we have supported this market ever since. Now we are also supporting at a technical level the creation of the European green bond standard. This will further help to scale up this market. In addition, we have been working on new green products and new green labels, supporting for example green mortgages and green loans. Third, we need international consistency. Financial markets today know no borders and we need to have similar standards across jurisdictions. In this regard, we have joined different global initiatives, such as the International Sustainable Finance Platform launched by the European Commission and the network for greening the financial system. Lastly, we must not forget the importance of a just transition. This aspect is very relevant to our institution given our mission to promote social and economic cohesion in Europe. This is why we will join forces with the European Commission in the implementation of the recently announced Just Transition Mechanism. For us, it is clear that climate action and just transition are two sides of the same coin: we will only succeed in our climate objectives if we provide support to those most affected to ensure a well-managed transition that leaves nobody behind.