In 2019, the European Investment Bank (EIB) declared itself a climate leader among multilateral development banks and adopted the “Climate Bank Roadmap 2021-2025” with the aim of: to become the EU Climate Bank and support the European Green Deal. However, beneath the glossy surface of this ambition, a recent Counter Balance report reveals critical shortcomings that suggest the EIB often prioritises profit and competition over genuine climate and environmental protection, and struggles to ensure a just transition.

Prioritizing Profit Over the Planet: The Flawed Model of Climate Finance

Although the public sector was the largest recipient of EIB climate loans in 2023 (45 %), the Bank's business model is strongly focused on supporting private investors, favoring policies that reduce their risks and increase profits. However, this “derisking” approach is not the most efficient use of public funds, as many of the necessary climate investments are not profitable enough for the commercial sector. As a result, private companies and investors benefit more from EIB concessional lending than society as a whole, which should be the main beneficiary of public funds. The Bank also underinvests in climate change adaptation measures and concessional lending, particularly outside the EU, where financing is often driven by EU geopolitical and economic interests rather than local sustainability needs. Moreover, the approach to biodiversity as “natural capital” leads to supporting only profitable conservation projects, ignoring those that are necessary but financially unattractive.

Introductory Methodology and Support for Controversial Solutions

The EIB’s methodology for classifying climate finance, based on the EU taxonomy and common MDB methodologies, also includes activities that extend the life of fossil fuels and other polluting industries. The most problematic include:

• Hydrogen: Financing hydrogen produced from fossil fuels (e.g. blue hydrogen with CCS technology) and “hydrogen-ready” infrastructure is criticized for its risk "greenwashing" and extending the lifespan of fossil infrastructure. Even hydrogen from renewable sources is energy intensive and the EIB lacks criteria to ensure its efficiency.
• Carbon capture and storage (CCS): The EIB supports CCS, although the technology is expensive, risky and has a history of failed projects, with concerns about CO2 leaking back into the atmosphere.
• Bioenergy and biogas: Classification as a climate-friendly solution is controversial due to concerns about sustainability, methane leakage, and support for industrial agriculture.
• Transportation: The EIB categorizes road financing as climate finance, which undermines the decarbonization of the sector and diverts resources from sustainable solutions such as rail and public transport.
• Digital investments: The EIB includes data centers in climate finance, despite the sector’s huge carbon footprint and high energy consumption. The bank also under-estimates the resource and energy intensity of clean technologies like batteries, which are extremely material and energy intensive.

Gaps in Alignment with the Paris Agreement (PATH Framework)

Although the EIB claims alignment with the Paris Agreement through its PATH framework, there are significant spaces, which enable financing of companies contributing to climate change:

• Support for polluters: The EIB continues to finance companies that are expanding their fossil fuel activities or investing in the largest global fossil fuel banks. The REPowerEU exemption allows fossil fuel companies to raise funds for renewable energy projects or electric vehicle infrastructure, even if they still have large-scale polluting activities. An example is the financing of the Polish company PGE, which is the largest coal producer and CO2 emitter in Poland.
• Financial intermediaries: These are not required to have decarbonisation plans, which means that a significant part of EIB loans may not be in line with the Paris Agreement.
• Weak decarbonization plans: The companies’ plans lack binding short-term targets and enforcement mechanisms, which weakens their credibility. Moreover, information about these plans is often not publicly available. Fossil companies invest only minimal revenues in clean energy and pay out most of their profits to shareholders or use them to buy back shares, which calls into question the logic of public support.

The EIB’s current strategy, driven by competitiveness and profit, risks “greenwashing” and prolonging environmental devastation. It is essential that the EIB’s new climate strategy, to be reviewed this year, preferred public solutions a a truly just transformationThe bank should End fossil fuel financing, close spaces within PATH, support proven and effective solutions, and put strong social and environmental conditions to the private sector. Only in this way can the EIB truly fulfil its mission as the "EU Climate Bank" and effectively contribute to a sustainable future for all. Spring

A message Behind the green curtain of the EIB