EIB Group increases financing to a record €95 billion in 2021, helping the European Union fight the pandemic and speed up the green and digital transformation
• Since the beginning of the COVID-19 pandemic, the EIB Group provided overall €58.7 billion to fight the pandemic and its economic consequences.
• Some €27.6 billion went to supporting the green transformation of EU economies. Meanwhile, EIB lending to EU cohesion regions reached €19.8 billion, helping countries ensure a just transition to a green economy.
• The European Guarantee Fund, created with 22 EU Member States, has so far underpinned €174.4 billion in additional financing to support European businesses recovering from the pandemic.
• EIB Group financing for development and partnerships outside European Union reached €8.1 billion. The EIB’s work in developing countries will get a boost starting this year, thanks to the founding of a new branch – EIB Global.
• EIB supported COVAX initiative to provide vaccines to developing countries with €900 million as part of Team Europe – 1 bn doses delivered so far
• EIB President Werner Hoyer: “In the past two years, we demonstrated that fighting the pandemic, financing the recovery and investing in climate action are mutually supportive goals.”
For the second year in a row, the EU Bank focused on fighting the COVID-19 crisis while increasing its financing for green projects. The European Investment Bank Group (EIB Group) worked with partners in Europe and around the world to deliver a record €95 billion in financing, a 23% increase from 2020 (€77 billion). The European Investment Bank provided over €65 billion in loans, while the European Investment Fund provided just above €30 billion in guarantees and equity.
Financing hit the highest level in the EIB’s 63-year history, largely due to additional resources provided by the €24.4 billion European Guarantee Fund (EGF), which was established in 2020 with support from 22 EU members States to help Europe’s economy (and in particular SMEs and Midcaps) deal with the economic impact of the COVID 19 pandemic.
The rise in financing volumes shows the key role the EIB Group has played in the European Union’s massive response to the pandemic. EIB Group loans, guarantees and other financing instruments have complemented national resilience programmes, supported local authorities and provided affordable finance to public and private companies. From healthcare to small businesses, sectors most affected by the pandemic have benefited from EIB support.
At the same time, the EIB Group has intensified investments in the twin green and digital transition, implementing the Climate Bank Roadmap 2021-2025 approved by the Board of Directors in November 2020. Financing for innovation, which will be key to the transition, reached a record €20.7 billion. The EIB has adopted new targets for lending to support EU cohesion policies, committing more funds for projects in Europe’s transition and less developed regions, where the green and digital transition could be more difficult.
Outside the European Union, the EIB continued to work with EU partners in the Team Europe effort. To support European Union policies globally, the EIB has created a new branch dedicated to international partnerships and development finance, EIB Global. EIB Global will begin operating this month.
EIB President Werner Hoyer, speaking at the EIB Group’s annual press conference on 27 January, said: “In the past two years, we demonstrated that fighting the pandemic, financing the recovery and investing in climate action are mutually supportive goals. There is no safe world without access to healthcare and vaccines and without a decisive shift to an economic model based on innovative, climate-friendly solutions. In 2021, our record financing volumes are testimony of Europe’s impressive effort to roll back the pandemic and promote a green recovery in Europe and beyond. By creating a new arm, EIB Global, for our business outside the European Union, we are determined to support the green and digital transitions through Europe’s global partnerships.”
Boosting health lending worldwide
As part of the COVID-19 response, the EIB Group last year increased its financing for the health and life sciences sector to almost €5.5 billion. In 2020, the EIB approved a €100 million loan to BioNTech, the German company that developed the first COVID-19 vaccine in cooperation with Pfizer. In 2021, the EIB continued to support vaccine research and production as well as COVID-19 diagnosis and treatments. The EIB has also intensified its role in the COVAX initiative, which was started by the Gavi alliance to bring vaccines to developing countries.
“Just 10 days ago, a plane touched down in Kigali, the capital of Rwanda, to deliver the billionth vaccine dose under COVAX, which has now reached 144 countries in the world. Europe is exporting more vaccines than any other region in the world. And we are also backing the build-up of vaccine production capacities in less developed regions” EIB President Hoyer said.
Overall, more than 780 million people around the world will benefit from improved health services, including COVID-19 vaccines, made possible by EIB financing. Some 10 million people will have access to safer drinking water, while 3.8 million will benefit from improved sanitation.
Record financing for small businesses, with a key role for the EIF
Almost half of EIB Group financing – €45 billion – went to small and medium-sized enterprises (SMEs) hit hard by the pandemic. The EIB, the EU bank, directed its financing to those who needed it most – healthy small businesses whose activity was severely curtailed by the crisis. The EIB allocates most of its financing to SMEs through lenders and other financial intermediaries, and the EIB and the EIF have significantly increased their cooperation with these partners during the COVID-19 crisis. Financing from the EIB Group benefited more than 430 000 SMEs and mid-caps in Europe globally last year, and it sustained over 4.5 million jobs.
The European Investment Fund (EIF), the EIB subsidiary that supports high-tech start-ups and small businesses across Europe, was instrumental in reaching these volumes. In 2021, the EIF increased almost threefold its committed financing to a record €30.5 billion (from €12.9 billion in 2020). The EIF designs and develops both venture and growth capital, guarantees and microfinance initiatives. Through its activities, the EIF fosters EU objectives in support of countering climate change as well as fostering innovation, research and development, entrepreneurship, growth and employment.
The European Guarantee Fund provides crucial crisis support
The €24.4 billion European Guarantee Fund (EGF) was established in late 2020 by the EIB Group and 22 Member States to help companies in the EU, especially SMEs, recover from the pandemic-related crisis. EGF activity drove the rise the EIF funding. The EGF rapidly scaled up operations during 2021. Since December 2020, the EIB Group has approved €23.2 billion in financing with European Guarantee
Fund backing, or 401 individual operations in all 22 participating countries. Investments to date are expected to mobilise €174.4 billion.
“The EGF is proving to be a success story,” President Hoyer explained “During 2021, the fund has gained momentum. Financial intermediaries across Europe have used the fund’s guarantees to provide timely lifelines to small business that were coping with working capital and liquidity concerns, or did not want to give up their investment plans.
EIB Global: a new partner for Team Europe
Outside the European Union, the EIB Group provided €8.1 billion of financing in 2021. The EU bank is active in more than 160 countries worldwide and is a key partner of Team Europe. Since 1958, the EIB has invested more than €1.5 trillion in more than 14,400 projects outside the EU. It has financed projects in the public and the private sector, small businesses and large firms.
In line with the overall reform of the European Union’s global presence and initiatives, the EIB has now decided to reform its activities outside the European Union and establish a branch dedicated to international partnerships and development finance. This branch will be called EIB Global.
EIB Global will bring together all of the EIB’s resources and expertise gained outside the European Union under a clear management structure that can make a stronger, more focused contribution to Team Europe projects and initiatives. EIB Global will be assisted and supported by a Board Advisory Group, which will be established in the coming months.
In November, the EIB opened its first hub in Africa, in Kenya’s capital Nairobi. More offices are planned, as the EIB strengthens its presence in developing countries.
“EIB Global is the natural evolution of our long-standing commitment outside the European Union. By creating a dedicated arm, we will be able to better focus on projects that a have strong impact locally, whether by enhancing digitalisation, promoting renewable sources of energy or building quality infrastructure that reinforces adaptation to climate change. EIB Global as part of Team Europe will be an instrument to establish stronger partnerships with local institutions and other multilateral development banks,” President Hoyer said.
Milestones on the road to the EU climate bank
At the same time, the EIB has been transforming itself into the EU climate bank, in line with the EIB Group Climate Bank Roadmap 2021-2025 adopted by the Board of Directors in November 2020. The share of EIB investments that went to climate action and environmental sustainability projects rose to 43% last year (from 40% in 2020), despite the COVID-19 crisis, bringing the EIB closer to its 50% target.
Taking into account operations using the EIB’s own funds – without the EGF mandate that specifically targets SMEs hit by the pandemic – the EIB’s climate action financing actually rose to 51%.
The EIB also reached two milestones in its Climate Bank Roadmap. In October, just ahead of COP26 conference in Glasgow, the Board of Directors approved the EIB Climate Adaptation Plan and the Paris Alignment for counterparties framework (PATH). The bulk of EIB climate lending currently goes to climate mitigation. With the Climate Adaptation Plan, the EIB is committed to tripling from 5% to 15% the share of its total climate financing dedicated to adaption. With PATH, the EU bank has committed to an approach that takes into account the decarbonisation plans of clients. PATH provides a robust tool to help high-emitting companies adopt and implement decarbonisation plans.
“Our climate adaptation plan and the Paris alignment of counterparties are key elements of our strategy. By increasing financing in adaptation, we help to build more resilient infrastructure around the world and, in particular, in regions that need it most because of their exposure to extreme weather. With counterparty alignment, we encourage companies to decarbonise, and this will accelerate the transition to a world with fewer or no greenhouse gas emissions,” President Hoyer said.
New cohesion ambitions
Ensuring that no one is left behind is at the heart of the EU Bank’s raison d’être, and we are strongly committed to supporting the objectives of the European Union’s cohesion policy. In the last five years, the EIB provided €90.8 billion to projects supporting cohesion. In 2021 alone, financing for cohesion amounted to €19.8 billion, equivalent to 41% of signed financing in EU countries that is supported by the EIB’s own funds.
In October 2021, the EIB approved a new framework to increase lending to cohesion regions in 2021-2027. More specifically:
• The EIB will aim to increase its financing for regions identified by the European Commission as less developed or in transition to 45% of annual EU lending by 2025.
• The EIB will dedicate 23% of its annual EU lending to less developed regions (those with gross domestic product per capita of less than 75% of the EU average) by 2025.
EIB’s cohesion action for 2021-2027 will focus on 145 EU regions, 67 transition regions and 78 less developed regions.
Record financing for innovation
Finally yet importantly, last year a record €20.7 billion went to support innovation, the digital economy and human development. New technologies and solutions are needed to achieve the twin transition to a green and digital world.
One example of how financing in innovation pays off is the recent Northvolt announcement at the end of 2021. After succeeding in developing a lithium-ion battery, the Swedish company has signed deals with various European automotive manufacturers and announced the production of their first lithium-ion battery cell at the Northvolt gigafactory in northern Sweden. The EIB is a proud financier of Northvolt and supports a strong, independent European battery industry.