EIB President Werner Hoyer’s overview of 2020 activities at the EIB Group’s 2021 Annual Press Conference
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Welcome, ladies and gentlemen, to the EIB Group press conference, where we provide an overview of our activities in 2020.
Thank you for being here!
This press conference is about what the EIB Group did last year, which means the European Investment Bank and the European Investment Fund, the bank’s subsidiary specialising in financing for small and medium enterprises. I am delighted to be joined by the Fund’s Chief Executive Alain Godard, who will take questions related to the Fund.
Ladies and gentlemen, it has been a difficult yet crucial year for EU Institutions, a milestone in the long path of the European Project.
EIB ROLE AND TOTAL FIGURES
The COVID-19 crisis meant that many organisations failed to meet their planned business targets for 2020. With the strong support of our shareholders and our partners in the European institutions we have been able to help Europe navigate this crisis.
The EIB Group demonstrated its role as a vital instrument of strategic autonomy for Europe and its Member States.
…A vehicle that allows the Union to act SWIFTLY and with ONE voice;
…A vehicle that does not turn its back on globalisation, but recognises the importance of a strong and competitive Europe in a global world;
… A vehicle that is able to act on all fronts both inside and outside EU borders, recognising the incontestable links between innovation, climate and development;
… A vehicle that strengthens Europe’s place in the world.
Ladies and gentlemen, the EIB Group finished 2020 with almost €77 billion in signatures. You have to put this into perspective. That is about half the amount of the EU budget. Of this, close to €13 billion were provided by the European Investment Fund.
Our original target was €73 billion of signatures in 2020. In fact, one year ago we thought Brexit would be our greatest challenge, as we prepared to transform into Europe’s climate bank. We were terribly wrong.
COVID-19
At the outset of the pandemic, like firefighters, we could not simply be content with protecting our own home; our job is to run towards the fire and save others – in this case thousands of companies across the EU and beyond.
- We started with a quick response package that was adopted in March last year, just as the lockdowns came in.
- We subsequently developed a €25 billion European Guarantee Fund, agreed in the European Council to help support solvent companies struggling under the fallout of the Corona-crisis.
We have been proud to do our part in the EU response to the crisis, together with the ESM and the European Commission. The EIB Group last year signed €25.5 billion in COVID-related projects, and we have almost another €25 billion approved.
HEALTHCARE
Much of our COVID lending so far has been to support small businesses, but a very substantial part of our work in 2020 was to support health projects aimed at ending the pandemic.
We signed loans to support hospitals, in the EU and beyond. We quickly approved a loan of €100 million to BioNTech, backing the work that brought us the first COVID-19 vaccine. We were in a favourable position of working with them for a long time already, financing their cancer treatments.
We are also financing other developers of vaccines, treatments and diagnostics. This is happening because of the patient work we did over years, building expertise in this field that is second-to-none:
- Since 2014 we have invested €6.8 billion in research and development in health.
- We have built a portfolio of roughly 50 innovative venture stage biotech and medtech companies allowing them to scale-up.
- When the pandemic hit, many started working for COVID-19 related solutions.
So, today, beyond BioNTech, we support over 25 highly innovative European biotech and medtech companies with promising candidate projects in vaccine, treatments and diagnostics against COVID-19. I insist, it is not only vaccines: it is also treatments and medication.
The healthcare sector is a clear example of what the EIB does best. We see a market failure and, as a public bank, we step in to invest where private money would not, because of the long-term horizon of these projects and their high risks.
We have been working together with the European Commission to address this market gap for years.
…We will continue to support schemes like COVAX, aiming for equal access to these solutions.
…And we will continue our work together with partners to prepare for possible future pandemics.
Already in 2019, we issued our first Sustainability Awareness Bonds, to finance projects promoting universal access to affordable health services. Our sustainability bonds have also been linked to projects around education, water, and in 2021 also to biodiversity – in addition to our Climate Awareness Bonds, which we continue to issue for climate action. We more than doubled our climate and sustainability awareness bonds issuing last year, to more than €10 billion. You might remember the EIB was the avant garde of green bonds in 2007, considered a ‘lunatic idea’ by many back then, which today has obviously grown into a very successful program.
INVESTMENT REPORT
This morning I would like to share with you the highlights of our EIB Investment Report. The report will be published on Thursday and you are all invited to read advance copies.
Europe is STILL dealing with the backlog of structurally needed public investment from the LAST crisis.
Here we face a PARADOX: European firms are telling us, through our Investment Survey, that COVID-19 and climate change are creating even GREATER structural investment needs:
At the same time, we see that these very same firms are CUTTING DOWN on investment.
- 45% expect to CUT investment in the coming year, while only 6% expect to increase it.
- Investment in digitalisation and innovation are most affected by this…
- … and also climate-related investments are negatively affected by the pandemic.
The problem with this is that a weak recovery in corporate investment could NOT come at a worse time!
Even BEFORE the crisis, we were NOT doing enough: for over 15 years, we have invested - every year - around 1.5 percentage points of GDP less in research, development and innovation than our main competitors.
Yet again, looking just at the effect of the first phase of the pandemic, our economists estimate that European firms could be forced to CUT investment in this area by between 30 and 50% - depending on how much they are able and willing to increase leverage.
So far we provided oxygen to the economy: we kept credit channels open.
However, looking forward, we will need to complement that emergency relief with support for what may be – for many firms – a LONG and difficult recovery:
We need to make sure that viable firms do NOT face binding finance constraints, and that they adapt by INVESTING in green technologies and digitalisation.
In addition to reducing structural bottlenecks – this requires support instruments that help reduce risk – such as equity and quasi-equity products.
I think we have much to learn from the experience under the Juncker Plan in this respect, which was a huge success.
BIDEN
Today will be a special day: with the inauguration of Joe Biden as President of the United States of America. I want to welcome the United States back among the community of believers in partnership, cooperation, and multilateralism. You’ve been missed!
The change in the US administration should renew the vital role of multilateral institutions, for which Europe has been the main, and lately a bit lonely, standard bearer for the last four years.
CLIMATE
Last year, Europe set a more ambitious emission reduction target by 2030, showing once again global leadership in climate.
During our post-COVID convalescence, we need to make sure we don’t go back to the way things were before the pandemic. This requires tremendous investment.
At the EIB we showed that, with creative instruments, a relatively small pot of public money is able to draw a massive amount of private investment to projects that would otherwise have struggled to find financing.
Last summer, ahead of schedule, the financial pillar of the famous Juncker Plan, the European Fund for Strategic Investments, achieved its increased target of mobilising €500 billion of investment.
In 2020, we laid out our plan for this great climate investment wave, our Climate Bank Roadmap. Under which 50% of our activity will support climate and environmental sustainability. It ensures that all our activity is aligned with the Paris climate agreement.
And it sets us on course to mobilise €1 trillion for climate and the environment by the end of this decade.
In addition to phasing out financing for coal and unabated gas projects, this means phasing out financing for airport expansions and setting stringent criteria for the financing of motorways, because of the emissions associated with these sectors.
But more important than what we won’t finance under the Climate Bank Roadmap is what we will finance more: energy efficiency projects in all sectors, renewable energy projects, green innovation and research.
DEVELOPMENT
I mentioned the opportunity for reinvigorated multilateralism with the new administration in Washington. That is important for the climate. It is also vital in development finance.
We achieved record lending levels in Africa last year, and are proud members of Team Europe:
- We signed close to €5 billion of financing across the continent in more than 50 deals, a roughly 50% increase over the previous year.
- 71% of our financing in sub-Saharan Africa benefitted Least Developed Countries (LDCs) or Fragile States.
- We reached the target for SheInvest, our initiative to mobilise €1 billion in investment to boost gender equality and economically empower women across Africa…
But there is so much more that can and should be done.
Our climate ambitions and EU policies will not materialise without a stronger development dimension to what the EU Bank does. As the European Union is responsible only for about 8% of emissions worldwide, our climate ambition will not really have impact if we don’t support new green solutions outside the EU.
Here we need to think also in terms of EU’s strategic autonomy.
This is true for investments outside the EU for climate but very true when it comes to vaccines, medicines and manufacturing capacity: these are matters interlinked with EU’s global role. Here too, the EU Bank has a very clear track record.
PUBLIC CONSULTATIONS
As a public bank, we are driven by the public interest; and as the EU Bank, we respond to EU policy. We also consult the public at large and civil society. This year will see us conduct a number of public consultations with the aim of better informing our decisions.
We will be reviewing our transparency policy. We will also be reviewing our environmental and social statement and standards, which promote the protection of human rights and environmental protection in everything we do. And we will be reviewing our lending policy in the transport sector.
These consultations provide us with the opportunity to listen to, and better balance, the interests of all stakeholders, as well as gain from the wealth of knowledge and expertise that is out there.
COHESION
We will also review our Cohesion policy. Ensuring cohesion in Europe was one of the raison d’être for the establishment of the EIB and remains a key part of our DNA. The EIB remains strongly pro-cohesion in terms of its investment activities.
Last year, an unprecedented 35.2% of the bank’s lending in Europe went to cohesion regions. But we think we can be even more effective – and not only for the benefit of Europe as a whole.
EIF
This year will again be a busy year for the EIB Group, with demand for our interventions high both within the EU and outside.
In 2020, the EIF was instrumental in generating much-needed financing for more than 330 000 SMEs and small mid-caps.
We keep on working so that EIF can further meet the many ambitions that Europe has in the fields of SMEs and innovation and alleviate the effects of the crisis where it is most needed.
The EIF will continue to finance underserved segments and sectors of the economy and areas of strategic importance to the EU like the green economy and digitalisation.
CONCLUSION
In conclusion, the EIB Group, working in partnership with other institutions, has helped Europe navigate through “4Cs”: COVID, Climate, Competitiveness and Cohesion. And it has supported Europe’s policy interests globally.
We have achieved unprecedented impact on climate, preparing the ground for much more. But the risk of a recovery that neglects climate and the environment remains.
We have acted globally, not just in Europe. But the risk of Europe neglecting its role on the global stage remains.
We have tackled the pandemic. But the risk of delays and inequalities in giving access to the vaccine, of neglecting investment in therapies, and of underinvesting in health and research in a way that exposes us to the impact of future pandemics remains.
And the risk of failing to address investment gaps in innovation and digitalisation remains.
I believe that the EIB Group is a key tool in correcting market failures in all these areas. It’s never been more relevant than today.
I very much hope that next year we will again be able to meet in person.
In 2021, YOUR Bank, the EU’s Climate Bank, will be playing its part in a digital and green recovery, mobilising the PRIVATE sector and COMPLEMENTING Member State efforts.
Thank you and we look forward to your questions!