EIB President Nadia Calvino Talks Climate Action

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Malex Cie Alongsid Damien Sas Hour. This is Bloomberg Intelligence Radio and you're broadcasting to live from the Earth Shot Summit right here at the Plaza Hotel in Midtown Manhattan. The summit celebrates innovators who are trailblazing solutions to repair our planet, and that event is co hosted by Bloomberg Philanthropies.

We have a great guest I lined up for.

You, sort of connecting the dots between how we go green and carbon neutral and how we also pay for it. Joining us now is Nadia Calvino, President of the European Investment Bank EIB.

European Green Deal is huge.

There's a set of policies that look to make the European Union climate neutral by twenty fifty. You're looking to mobilize over one trillion euros in order to do that.

How's it going, Yes, where it's going? Well, it's going well.

We are on track to meet the target of one trillion euros in investment in green finance. More than fifty percent of our annual investments go to the climate transition to the green finance, so as to make it a success. At European success a success for all of us.

But why do I keep hearing then that Europe has more of the stick approach and the US has the carrot approach with the IRA, how did they differ?

Well, I think that we have a shared endeavor, you know, which is to ensure that we do this green transition, that we move to a net zero economy, and that this is profitable.

Well, my side of things is the carrots.

Actually, I am the investor, so we are probably we are the largest multilateral development bank in the world.

Maybe people don't know.

With a six hundred billion balance sheet, ninety percent of the investments are done in the EU, where we are the largest investor in renewables. We're probably one of the largest investors in renewables in the in the whole world, and right now here in the UN General Assembly. Around the General Assembly, I'm having lots of meetings exchanges to try to bring that agenda forward with a global perspective.

Well, Nadia, I mean renewables is a very broad topic, solar, wind, water, nuclear, Talk to us about where you're deploying your balance sheet. I mean six hundred billions a lot of money, well more.

Than fifty percent, as I said, go into climate finance.

And this is sustainable infrastructures, this is sustainable transport. This is also renewables, wind energy, greeds, solar, and also new fuels, the fuels of the future, for example, green hydrogen. We're supporting very innovative, large projects, also large traditional infrastructures and dynamic startups that are really going to be the ones finding the technologies, the breakthrough technologies for all of us.

I mean we've seen with hydrogen though that a lot that it's hard, that green hydrogen particular is quite hard. I mean Germany had a sort of backtrack from that in particular with the war in Ukraine. In addition, like ORSID dropped and had to ditch out on a hydrogen project. Can you do hydrogen profitably?

And how do you do that?

But we have to, we have to because it is can right now, well we are right now. We're investing in a number of projects in Europe which are more

That's why we are.

The European Investment Bank is a public investment bank to take the risk, to make sure that patient capital, long term investors are taking those risks, so that also we mobilize private capital and we make this a success.

Well, you know, other multi level finance institutions, I mean development banks out for example China, Korea, et cetera, have had a very poor track record of deploying capital profitably. And you know, I know the IIB is different. I know the World Bank Group is very very different. And I know we're talking about perpetual capital, perpetual investments, but the end of the day, you do have to get

Well, actually, we are very profitable. Let me be very clear.

The fact that we are a public bank doesn't mean that I don't have to deliver for ashholders. So around two billion euros we had in profit last year. We've been profitable since the bank, since its inception. We have a very low return, very low level of non performing assets. When I say very low, I mean like zero point four percent of our assets.

Huh.

So it is a very profitable bank. And what we have is a very large balance sheet and very balanced portfolio with large infrastructures, traditional infrastructures which are very profitable, lower risk and also highly risky endeavors like innovative startups or large investments into new green technologies. And that's what's allowing us, I think, to make a difference in making projects bankable at the end.

Of the day.

So what have you noticed in terms of if you support a project, does it bring in private investors in private capital at the end.

End of the day, it does absolutely, you know, the European Investment Bank is considered to be a reference in terms of technical expertise in some areas, for example green for example, health. So once the EiV says yes, I'm going to invest in this project, immediately a number of investors say.

I join, naddie.

I'd love to ask you a question. I mean, in my world, the emerging market space, there has been an absolute explosion of sustainable finance vehicles and mechanisms, you know, green bonds, clean bonds, you name it.

I'm curious to hear.

Your thoughts about a lot of it. I mean, a lot of sovereign nations, a lot of countries are issuing that under this green bond umbrella.

You know, do you believe in that?

Do you think they're just green washing or are they really deploying that capital in a clean and efficient way.

We have to ensure, indeed that the green bond standards around the world are not green washing, and that that should be a top priority. Otherwise, you know, once you lose the credibility, then you lose everything. And in capital markets, I don't have to explain.

It to you.

So that's why I think we have a very important shared interest in having global standards. You know, the taxonomies that are being developed in different parts of the world. In Europe has been a pioneer in that area. Also, the European Investment Bank, by the way, has pioneered green bonds, and we have to make sure that those standards are met and that green investments are really green, so that we make sure that this is providing sufficient finance to close the investment gap.

How do you offset your risk? How do you offset risk when you're taking on riskier projects.

Well, we have a capital base, but generally what we do is that we have riskier and less risky projects and we mobilize our capital in a very wise manner. You know, sometimes our shareholders and say you should take on more risk because that's what.

Your capital is for.

But I think that we have a relatively good balance in terms of can you give.

Me a balance on that, Like what would be considered a low risk project, what would be considered a high risk for example, Well.

An infrastructure in a European country, that is a low risk project.

When we're building.

A trains or rolling stock or or a metro or port. I mean we are lending to a sovereign state which has a very high rating and this is our shareholders. So investments within the EU are considered to be generally lower risk. Or for example, we do also through the financial sector, we do lending to SMEs in Europe that is very profitable, lower risk.

Then if we are investing in a.

Very large project one billion, two billion project in green hydrogen, as you were saying, you know, I'd like.

To take a variation on that question. That's important because you're right, it's a lot of these small medium enterprises. They're the ones who are actually proactively, you know, taking risk in the market. What sort of risk hedges transmission vehicles, carbon credits, offsets, can they take advantage of it? I mean, what's available to them to help offset their risk in the space.

Well, what we do is we provide guarantees and portfolio guarantees or other sort of financial support to the banks so that they can lend to SMEs with lower interest rates.

That's basically what we do. And again that.

Allows us to reach a large share of European smeans and there, for example now investing in green technologies energy efficiency thanks to the support of the European Investment Bank. I don't know if many of them know it, you know, because they go to a bank, a commercial bank.

But you know, although they are.

They have to signal in their loans that this is supported by the European Investment Bank. I don't know if they always do, but the fact of the matter is the EiV is one of the key elements that is driving the European economy.

Where does natural gas fall into this?

For you guys, Well, we have to get away from natural gas, right, need it?

So it gets hard, I understand, and we all understand.

We are in the midst of that transition.

But if there is one thing that we have learned due to the war in Ukraine is that we cannot be dependent on Russia.

And starting with.

Russia, but other parts of the world be talking about energy cheap, other elements of the of the supply chain, critical raw materials. You know, Europe has to stand up on its two feet and become independent when it comes to energy.

That's that's a clear idea I think.

You know, I want to talk about economic disparity, but more in terms of the type of partners you choose to go into business with, right, the types of banks, you know, I think of the Brookfields, the Blackstones, the Macquarie is, you know, these big infrastructure investors, the Morgans and analysts. You know, does that matter, like you know, can you partner with smaller banks, medium sized banks, international banks?

No, we partner with a lot of financial institutions around the world. Of course, we do a very serious check when it comes to not only the financial strength of the counterparties, but also compliance and reputational risks. And also we are investing through funds, investment funds. We have a subsidiary, the European Investment Fund, which is partnering with private investment funds to then mobilize these other sort of venture capital and quasi capital investments.

What's the thing that you guys are most excited about right now, either some kind of technology or a certain type of project that you feel like has real potential that can really unlock other opportunities.

Well, I think there are two areas where let me focus on what I have been discussing here in New York, because back in Luxembourg there we discuss many other it's.

Going on behind closed doors.

Indeed, that's why I'm going to give you a sneak review. Now we have been discussing. There's nothing so revolutionary or surprising, but actually I've been discussing. We've been discussing four main subjects. Green climate, health, that's a big issue. I think that there's a lot of interest in health. Multilateral development institutions working as a system.

We're working better than ever.

We're cooperating with the World Bank, African Development Bank, Asian Development Bank, and we want to really be giving as much value for money to our shareholders in supporting the global economy and investment.

And then fourth point has been women.

I think that there is also a lot of There are lots of things going known around the world in terms of partnering and networks of women, and I think we have to support that that endeavoral.

So, which definitely ties into help also at the same time. All right, Dadiet, thanks a lot. We really appreciate that was a wonderful sort of beneath the hood look on how you finance all of this now you help President of European Investment Bank, thank you so much.

Thanks to you, Bye bye bye.