Level of climate finance transparency

Explanation

Transparency of climate finance data

The EIB publishes externally-audited project level data in PDF format on its website. This includes project level data underlying its submission to the Joint Report on MDB Climate Finance, and the information is available in an Excel-readable, bulk-downloadable format. In its submission to the OECD-DAC (Development Assistance Committee) climate-related development finance database, the EIB provides information but does not tag investments according to the relevant sectors. The criteria as to what constitutes “climate action” and “environmental sustainability” projects are laid out in the Climate Action and Environmental Sustainability List of eligible sectors and eligibility criteria. Relatedly, the EIB also reports against the Sustainability Accounting Standards Board (SASB) framework and the Global Reporting Initiative (GRI) framework. 

The EIB publishes its International Aid Transparency Initiative (IATI) data monthly. According to the EIB 2022 Report on the implementation of the transparency policy, there has been a continuous increase in contracts published under IATI Standards and the corresponding lending amounts. Specifically, the number of contracts in 2021 rose by 64% compared to 2018, which was accompanied by a 59% increase in the lending volumes covered.

The EIB is rated 7^th for both its sovereign and non-sovereign portfolios in the 2023 DFI Transparency Index, performing lower than several of its MDB peers. As outlines by the Index’s analysis, this is primarily due to the absence of project level indicators, the lack of disclosures on financial intermediaries’ sub-investments, and the failure to publish full data on IATI. Further, the assessment notes that the EIB’s revision of its access to information policy in 2021 marks a step back in terms of standards regarding exceptions to disclosure, to the extent the EIB can no longer be considered a leader in this field.

In its Climate Bank Roadmap 2021–2025, the EIB stated that it would report against the EU Taxonomy once it is finalised. Since 2021, the EIB tracks financing that contributes to the environmental objectives of the Taxonomy. However, it is unclear whether the EIB conducts regulatory disclosure on Taxonomy-eligible (or aligned) activities in the EIB’s portfolio. Reporting against the Taxonomy should be encouraged at the EIB and other MDBs, considering the availability of taxonomies in other regions, as these need to be tailored to the specific context of each region.

The EIB has a very strong accountability mechanism in the European Ombudsman, an inter-institutional body of the European Union that independently investigates any EU citizen’s or entity’s complaints about maladministration, including transparency of information. The European Ombudsman has raised concerns about the EIBs transparency practices on multiple occasions in 2022 and 2023. Specifically, the Ombudsman advised that information rules set by the EU’s Aarhus convention require the EIB to adopt a more ambitious approach to disclosing its project financing.

Transparency of financial intermediary lending

The EIB discloses information on its intermediary lending at an aggregate, project level. According to the EIB, project summaries were published for 95% of intermediated finance operations, with the rest not published to protect commercial interests. Historically, the EIB offered a limited number of examples of subprojects. In the 2021 review of its Transparency policy, the EIB committed to disclosing project summaries for subprojects with a total project cost greater than EUR 50 million. This is a step in the right direction but does not go far enough. The EIB should strive to disclose project summaries for all subprojects financed through intermediated financing.

The EIB has an online portal for information on financial intermediaries (FIs), which allows users to search details by country and export data as a PDF. The portal includes contact information for FIs, an overview of the facility’s objectives, and information on final beneficiaries. However, it lacks details on the size of the facilities and information about the subprojects funded by FIs. Although the EIB has a separate portal containing information on all credit lines funded by the Bank, it does not differentiate between indirect and direct lending.

The EIB puts the responsibility on FIs to ensure subproject transparency and disclosure requirements. In its 2022 Environmental and Social Standards guidelines, the EIB states that FIs must:

1. Comply with sustainability-related disclosure requirements under applicable national and EU legislation if located in EU and EFTA countries.
2. Comply with relevant national legislation and publicly provide information on their due diligence and monitoring policies and procedures for assessing, managing, and monitoring the environmental and social impacts and risks of subprojects if located elsewhere.

It is unclear whether any compliance or auditing mechanisms are in place to ensure that FIs meet these requirements. For instance, while the EIB has a policy to disclose private equity fund sub-investments, this information is not available on their equity funds portal. Relying on FIs to enforce transparency and disclosure could create accountability issues. Moreover, the EIB states that when intermediated finance is dedicated to promoting environmental and social sustainability objectives, the financial intermediary must meet additional requirements, which may include reporting and commitments to demonstrate that sustainability impacts and risks are adequately considered in investment decisions according to the EU Taxonomy. However, it remains unclear how the EIB determines which requirements apply and when.

TCFD reporting

In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) the EIB reports on climate-related information to investors. This section assesses the level of detail provided in its 2023 TCFD report. We recommend that the EIB puts a stronger focus on its portfolio data disclosure, sectoral strategies, and climate-related renumeration and incentives in future TCFD reports.

Recommendations:

• The EIB should strive to disclose details for subprojects financed through financial intermediaries beyond the current threshold of projects over EUR 50 million. This should include a breakdown of subprojects financed, including their location, sector(s), and a brief description of activities. Where commercial confidentiality represents a genuine barrier to disclosure, this should be detailed.