Sunday

19th Jan 2020

Opinion

First overhaul the investment bank for a greener EU

  • A new 'Green New Deal' for Europe becomes more and more urgent to restructure our economy in the face of the climate challenge (Photo: Matt Tempest)

In a few weeks, as European citizens we will be called to elect our new representatives at the European Parliament.

This democratic choice will be essential to make sure they push on our behalf to shape the kind of Europe we want to live in. And an improved European Investment Bank (EIB) should be part of their scope.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

But why is focusing on the EIB so important now, and what role could this mainly unknown giant bank play in the just transition our society so badly needs?

While Brexit unfolds, far-right forces are likely to gain increasing ground in the next European parliament. In parallel, the climate outcry from the youth all over the world cannot be ignored any longer.

The European Union thus finds itself at a crossroads: listening to the citizens and getting closer to them, or barricading itself in an ivory tower doomed to be corroded at its foundation by the unbridgeable distance from its own community.

In this context it will be crucial to show that the EIB – the EU's bank, the 'financial arm' of the Union – joins forces with the rest of the EU institutions to face the future in the public interest.

After 60 years of silent activity from its Luxembourg headquarters, the EIB needs to open up and become a more accessible, democratic institution.

Over the last decade, the bank got increasingly under the spotlight especially when it took on the implementation of the 'Juncker investment plan'.

Gas and fossil fuels

Also thanks to the joint pressure of civil society organisations, the EIB has taken small steps to respond to the impact of its projects on local communities, from slightly improving its transparency practices to get out of direct support to harmful coal and mining projects.

But if the bank is to reflect the radical changes that are needed for the transformation of the European economy and society towards a sustainable path, what is necessary is rather a genuine overhaul.

We condensed the key steps for such fundamental reform in a new manifesto addressed to the members of the future parliament, calling them to prioritise the scrutiny over the EIB in their future mandate.

With the upcoming elections, the effort to reclaim democratic oversight on how the money of EU taxpayers is spent by the bank of the Union is indeed the kind of signal that EU citizens need to regain trust in their representatives in Brussels.

Many say that a 'Green New Deal for Europe' becomes more and more urgent to restructure our economy in the face of the climate challenge and of the big social inequality gap that contributed to turn frustrated citizens towards populistic, far-right extremes.

And most scenarios for such Green New Deal or the creation of a European Climate Bank - as pushed by the French president Emmanuel Macron - make the EIB a central player to roll-out climate-friendly investments.

But to make this happen, business as usual can no longer be an option at the EIB.

Showing its serious climate commitment would be an essential step in this direction.

As it becomes clearer every day that in order to achieve full decarbonisation by 2050 huge investments will be needed, the bank of the EU cannot afford to use its precious resources to still finance climate-wrecking fossil fuel projects.

The bank's upcoming new energy policy should guarantee its full alignment with the Paris Agreement, and rule a shift of funds from fossil fuels to energy efficiency and small-scale renewable projects.

In parallel, public participation in the policy-making of the bank should be strengthened, both for what concerns its governance and external oversight, and the involvement of affected citizens.

Its Board of Directors for example – the one approving the bank's loans – is not involved enough in the critical assessment of the funded projects and is often kept in the dark about the controversial aspects related to them.

And to date, the European Parliament has had very limited competences to steer change at the EIB.

Solid accountability to the citizens and communities impacted by its operations should then be another irrevocable pillar of the EU bank's operations.

Meaningful citizens' consultations, together with a stronger due diligence on human rights need to become a priority for the EIB.

At the same time, the bank needs to adopt a stricter attitude towards fraud and corruption. A series of investments in projects under corruption investigations cast doubt over the Bank's practices in this regard.

The recent Dieselgate scandal shows that the EIB needs to improve its monitoring and due diligence for all the projects it supports, especially when public support is granted to the private sector.

Restoring trust in the potential of EU institutions – including the EIB - to lead the way towards a more sustainable future is a complex mission and can't be done overnight.

But with efforts at different levels – from the European Commission and citizens' representatives at the European parliament, to the governance of the bank itself – positive change can be achieved.

It's in everyone's interest.

Author bio

Adriana Paradiso is communications coordinator at Counter Balance.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Exclusive

EIB 'maladministration' verdict over VW fraud report

EUobserver should have been granted access to a fraud investigation into a €400m EU loan to Volkswagen Group (VW), and recommendations on how to avoid future misuse, the European Ombudsman has concluded.

EIB 'more sensitive' to fraud after Dieselgate

The president of the European Investment Bank, Werner Hoyer, said the bank had high standards - but did not explain why an anti-fraud report on a loan to Volkswagen was being kept secret.

EIB silent on report into 'fraudulent' VW loan

European Investment Bank vice-president Taylor tells EUobserver the fraud investigation into a €400 million EIB loan to Volkswagen had 'considerable ramifications', but didn't want to explain why the report was kept secret.

EU banks more vulnerable to shocks than feared

Eurozone banks, such as Deutsche Bank, might be much more vulnerable to a repeat of the 2008 financial crisis than EU "stress-tests" have said, according to a new audit.

Why EU subsidy schemes don't work - the evidence

Counter to popular beliefs among policymakers, the positive effects of support schemes are found to be very limited. In order to revitalise Europe, the newly appointed EU Commission needs to reconsider government's role in innovation and entrepreneurship.

News in Brief

  1. 'No objection in principle' on Huawei cooperation, EU says
  2. French aircraft carrier goes to Middle East amid tensions
  3. EU suggests temporary ban on facial recognition
  4. EU industry cries foul on Chinese restrictions
  5. 'Devil in detail', EU warns on US-China trade deal
  6. Trump threatened EU-tariffs over Iran, Germany confirms
  7. EU trade commissioner warns UK of 'brinkmanship'
  8. Germany strikes coal phase-out deal

Column

Why nations are egomaniacs

A nation, Reinhold Niebuhr wrote, is not capable of altruism. Even less so, if such a group has formed on the basis of strong emotions and casts itself as the "saviour of the nation".

Maltese murder - the next rule-of-law crisis in EU?

While Poland's government is escalating its rule of law crisis by introducing even more drastic measures against the country's judges, another problem is looming over the EU's commitment to upholding the rule of law: Malta.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us