WEBVTT - EIB President Nadia Calvino Talks Climate Action 0:00:02.400 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:06.960 --> 0:00:09.840 Malex Cie Alongsid Damien Sas Hour. This is Bloomberg Intelligence 0:00:09.920 --> 0:00:12.479 Radio and you're broadcasting to live from the Earth Shot 0:00:12.520 --> 0:00:15.480 Summit right here at the Plaza Hotel in Midtown Manhattan. 0:00:15.480 --> 0:00:19.360 The summit celebrates innovators who are trailblazing solutions to repair 0:00:19.440 --> 0:00:23.079 our planet, and that event is co hosted by Bloomberg Philanthropies. 0:00:23.120 --> 0:00:24.840 We have a great guest I lined up for. 0:00:24.760 --> 0:00:26.759 You, sort of connecting the dots between how we go 0:00:26.880 --> 0:00:29.320 green and carbon neutral and how we also pay for it. 0:00:29.720 --> 0:00:32.480 Joining us now is Nadia Calvino, President of the European 0:00:32.600 --> 0:00:34.360 Investment Bank EIB. 0:00:35.080 --> 0:00:36.440 European Green Deal is huge. 0:00:36.479 --> 0:00:38.239 There's a set of policies that look to make the 0:00:38.280 --> 0:00:41.000 European Union climate neutral by twenty fifty. You're looking to 0:00:41.000 --> 0:00:44.120 mobilize over one trillion euros in order to do that. 0:00:44.560 --> 0:00:47.400 How's it going, Yes, where it's going? Well, it's going well. 0:00:47.440 --> 0:00:49.360 We are on track to meet the target of one 0:00:49.400 --> 0:00:52.520 trillion euros in investment in green finance. More than fifty 0:00:52.560 --> 0:00:56.240 percent of our annual investments go to the climate transition 0:00:56.320 --> 0:00:58.680 to the green finance, so as to make it a success. 0:00:58.680 --> 0:01:01.120 At European success a success for all of us. 0:01:01.120 --> 0:01:03.680 But why do I keep hearing then that Europe has 0:01:03.760 --> 0:01:05.800 more of the stick approach and the US has the 0:01:05.840 --> 0:01:08.039 carrot approach with the IRA, how did they differ? 0:01:08.760 --> 0:01:11.640 Well, I think that we have a shared endeavor, you know, 0:01:11.680 --> 0:01:14.520 which is to ensure that we do this green transition, 0:01:14.600 --> 0:01:16.800 that we move to a net zero economy, and that 0:01:16.880 --> 0:01:17.840 this is profitable. 0:01:18.240 --> 0:01:20.200 Well, my side of things is the carrots. 0:01:20.240 --> 0:01:23.600 Actually, I am the investor, so we are probably we 0:01:23.640 --> 0:01:26.120 are the largest multilateral development bank in the world. 0:01:26.200 --> 0:01:27.120 Maybe people don't know. 0:01:27.160 --> 0:01:30.039 With a six hundred billion balance sheet, ninety percent of 0:01:30.040 --> 0:01:32.640 the investments are done in the EU, where we are 0:01:32.680 --> 0:01:35.440 the largest investor in renewables. We're probably one of the 0:01:35.520 --> 0:01:38.720 largest investors in renewables in the in the whole world, 0:01:39.200 --> 0:01:42.039 and right now here in the UN General Assembly. Around 0:01:42.240 --> 0:01:46.039 the General Assembly, I'm having lots of meetings exchanges to 0:01:46.160 --> 0:01:49.080 try to bring that agenda forward with a global perspective. 0:01:49.360 --> 0:01:53.600 Well, Nadia, I mean renewables is a very broad topic, solar, wind, water, nuclear, 0:01:53.920 --> 0:01:56.000 Talk to us about where you're deploying your balance sheet. 0:01:56.040 --> 0:01:58.640 I mean six hundred billions a lot of money, well more. 0:01:58.560 --> 0:02:01.120 Than fifty percent, as I said, go into climate finance. 0:02:01.160 --> 0:02:05.320 And this is sustainable infrastructures, this is sustainable transport. This 0:02:05.480 --> 0:02:10.480 is also renewables, wind energy, greeds, solar, and also new fuels, 0:02:10.480 --> 0:02:13.320 the fuels of the future, for example, green hydrogen. We're 0:02:13.360 --> 0:02:18.120 supporting very innovative, large projects, also large traditional infrastructures and 0:02:18.240 --> 0:02:21.080 dynamic startups that are really going to be the ones 0:02:21.639 --> 0:02:24.639 finding the technologies, the breakthrough technologies for all of us. 0:02:24.680 --> 0:02:27.160 I mean we've seen with hydrogen though that a lot 0:02:27.280 --> 0:02:30.640 that it's hard, that green hydrogen particular is quite hard. 0:02:30.720 --> 0:02:33.120 I mean Germany had a sort of backtrack from that 0:02:33.200 --> 0:02:36.680 in particular with the war in Ukraine. In addition, like 0:02:36.840 --> 0:02:40.280 ORSID dropped and had to ditch out on a hydrogen project. 0:02:40.960 --> 0:02:42.560 Can you do hydrogen profitably? 0:02:42.840 --> 0:02:43.720 And how do you do that? 0:02:43.800 --> 0:02:45.920 But we have to, we have to because it is 0:02:46.080 --> 0:02:49.600 can right now, well we are right now. We're investing 0:02:49.600 --> 0:02:51.799 in a number of projects in Europe which are more 0:02:51.840 --> 0:02:55.960 having to do with industry hubs. So we are greening industry, 0:02:56.280 --> 0:02:59.880 highly polluting, highly energy intensive, so like a cement indus 0:03:00.639 --> 0:03:04.320 that yes, and still you know, all these large industry 0:03:04.680 --> 0:03:07.760 so we are we're seeing for example, close to port 0:03:07.800 --> 0:03:10.000 to Report in the south of Portugal, we're going to 0:03:10.040 --> 0:03:13.000 have a green hydrogen hub, so that's very close to 0:03:13.240 --> 0:03:17.280 traditional industries and we're helping them become green and also profitable. 0:03:18.120 --> 0:03:20.440 Likewise in other parts of Europe. You know, we are 0:03:20.800 --> 0:03:23.360 at the early stages of these new technologies and it 0:03:23.440 --> 0:03:25.880 is only normal you know that some projects fail, that 0:03:26.000 --> 0:03:28.320 some projects are succeeding, and that's. 0:03:28.520 --> 0:03:29.720 That's why we are. 0:03:30.200 --> 0:03:32.680 The European Investment Bank is a public investment bank to 0:03:32.680 --> 0:03:36.040 take the risk, to make sure that patient capital, long 0:03:36.120 --> 0:03:39.360 term investors are taking those risks, so that also we 0:03:39.400 --> 0:03:42.240 mobilize private capital and we make this a success. 0:03:42.760 --> 0:03:45.040 Well, you know, other multi level finance institutions, I mean 0:03:45.080 --> 0:03:47.960 development banks out for example China, Korea, et cetera, have 0:03:48.040 --> 0:03:50.640 had a very poor track record of deploying capital profitably. 0:03:50.680 --> 0:03:52.240 And you know, I know the IIB is different. I 0:03:52.280 --> 0:03:54.320 know the World Bank Group is very very different. And 0:03:54.360 --> 0:03:57.120 I know we're talking about perpetual capital, perpetual investments, but 0:03:57.240 --> 0:03:59.400 the end of the day, you do have to get 0:03:59.400 --> 0:04:01.160 a return on your investment. So talk to us about 0:04:01.160 --> 0:04:04.800 which sectors within the broader renewable space, within the border 0:04:04.880 --> 0:04:09.120 climate space, carry the highest return on investment from your perspective. 0:04:08.960 --> 0:04:11.560 Well, actually, we are very profitable. Let me be very clear. 0:04:11.600 --> 0:04:13.400 The fact that we are a public bank doesn't mean 0:04:13.400 --> 0:04:16.520 that I don't have to deliver for ashholders. So around 0:04:16.520 --> 0:04:18.880 two billion euros we had in profit last year. We've 0:04:18.920 --> 0:04:22.400 been profitable since the bank, since its inception. We have 0:04:22.480 --> 0:04:26.400 a very low return, very low level of non performing assets. 0:04:26.640 --> 0:04:28.520 When I say very low, I mean like zero point 0:04:28.520 --> 0:04:29.640 four percent of our assets. 0:04:29.720 --> 0:04:30.040 Huh. 0:04:30.080 --> 0:04:32.120 So it is a very profitable bank. And what we 0:04:32.200 --> 0:04:34.400 have is a very large balance sheet and very balanced 0:04:34.440 --> 0:04:39.680 portfolio with large infrastructures, traditional infrastructures which are very profitable, 0:04:39.800 --> 0:04:45.320 lower risk and also highly risky endeavors like innovative startups 0:04:45.400 --> 0:04:48.960 or large investments into new green technologies. And that's what's 0:04:49.000 --> 0:04:51.440 allowing us, I think, to make a difference in making 0:04:51.480 --> 0:04:52.960 projects bankable at the end. 0:04:52.839 --> 0:04:53.240 Of the day. 0:04:53.360 --> 0:04:55.080 So what have you noticed in terms of if you 0:04:55.080 --> 0:04:58.279 support a project, does it bring in private investors in 0:04:58.320 --> 0:05:00.120 private capital at the end. 0:05:00.040 --> 0:05:02.359 End of the day, it does absolutely, you know, the 0:05:02.360 --> 0:05:04.880 European Investment Bank is considered to be a reference in 0:05:04.960 --> 0:05:08.880 terms of technical expertise in some areas, for example green 0:05:09.160 --> 0:05:12.440 for example, health. So once the EiV says yes, I'm 0:05:12.480 --> 0:05:15.000 going to invest in this project, immediately a number of 0:05:15.040 --> 0:05:15.919 investors say. 0:05:15.920 --> 0:05:17.320 I join, naddie. 0:05:17.320 --> 0:05:18.640 I'd love to ask you a question. I mean, in 0:05:18.680 --> 0:05:21.720 my world, the emerging market space, there has been an 0:05:21.760 --> 0:05:25.120 absolute explosion of sustainable finance vehicles and mechanisms, you know, 0:05:25.160 --> 0:05:27.320 green bonds, clean bonds, you name it. 0:05:27.520 --> 0:05:28.320 I'm curious to hear. 0:05:28.200 --> 0:05:29.599 Your thoughts about a lot of it. I mean, a lot 0:05:29.600 --> 0:05:32.320 of sovereign nations, a lot of countries are issuing that 0:05:32.520 --> 0:05:34.279 under this green bond umbrella. 0:05:34.720 --> 0:05:35.840 You know, do you believe in that? 0:05:35.839 --> 0:05:37.520 Do you think they're just green washing or are they 0:05:37.520 --> 0:05:40.400 really deploying that capital in a clean and efficient way. 0:05:40.800 --> 0:05:43.320 We have to ensure, indeed that the green bond standards 0:05:43.360 --> 0:05:45.719 around the world are not green washing, and that that 0:05:45.760 --> 0:05:48.320 should be a top priority. Otherwise, you know, once you 0:05:48.360 --> 0:05:51.320 lose the credibility, then you lose everything. And in capital markets, 0:05:51.320 --> 0:05:52.560 I don't have to explain. 0:05:52.240 --> 0:05:52.520 It to you. 0:05:53.040 --> 0:05:55.200 So that's why I think we have a very important 0:05:55.360 --> 0:05:59.480 shared interest in having global standards. You know, the taxonomies 0:05:59.520 --> 0:06:01.440 that are being developed in different parts of the world. 0:06:01.480 --> 0:06:04.279 In Europe has been a pioneer in that area. Also, 0:06:04.320 --> 0:06:07.400 the European Investment Bank, by the way, has pioneered green bonds, 0:06:07.440 --> 0:06:10.440 and we have to make sure that those standards are 0:06:10.520 --> 0:06:14.240 met and that green investments are really green, so that 0:06:14.320 --> 0:06:17.039 we make sure that this is providing sufficient finance to 0:06:17.120 --> 0:06:18.240 close the investment gap. 0:06:18.560 --> 0:06:21.560 How do you offset your risk? How do you offset 0:06:21.680 --> 0:06:24.040 risk when you're taking on riskier projects. 0:06:24.720 --> 0:06:27.400 Well, we have a capital base, but generally what we 0:06:27.440 --> 0:06:30.359 do is that we have riskier and less risky projects 0:06:30.400 --> 0:06:33.240 and we mobilize our capital in a very wise manner. 0:06:33.279 --> 0:06:36.200 You know, sometimes our shareholders and say you should take 0:06:36.200 --> 0:06:37.760 on more risk because that's what. 0:06:37.640 --> 0:06:38.520 Your capital is for. 0:06:38.760 --> 0:06:41.839 But I think that we have a relatively good balance 0:06:41.880 --> 0:06:43.360 in terms of can you give. 0:06:43.200 --> 0:06:45.120 Me a balance on that, Like what would be considered 0:06:45.200 --> 0:06:47.120 a low risk project, what would be considered a high 0:06:47.200 --> 0:06:48.240 risk for example, Well. 0:06:48.640 --> 0:06:52.360 An infrastructure in a European country, that is a low 0:06:52.440 --> 0:06:53.040 risk project. 0:06:53.320 --> 0:06:54.520 When we're building. 0:06:54.120 --> 0:06:59.320 A trains or rolling stock or or a metro or port. 0:06:59.440 --> 0:07:02.760 I mean we are lending to a sovereign state which 0:07:02.760 --> 0:07:06.360 has a very high rating and this is our shareholders. 0:07:06.480 --> 0:07:10.440 So investments within the EU are considered to be generally 0:07:10.560 --> 0:07:13.200 lower risk. Or for example, we do also through the 0:07:13.200 --> 0:07:15.880 financial sector, we do lending to SMEs in Europe that 0:07:16.040 --> 0:07:18.680 is very profitable, lower risk. 0:07:18.800 --> 0:07:20.200 Then if we are investing in a. 0:07:20.240 --> 0:07:24.120 Very large project one billion, two billion project in green hydrogen, 0:07:24.120 --> 0:07:26.240 as you were saying, you know, I'd like. 0:07:26.280 --> 0:07:28.640 To take a variation on that question. That's important because 0:07:28.640 --> 0:07:30.880 you're right, it's a lot of these small medium enterprises. 0:07:31.200 --> 0:07:33.440 They're the ones who are actually proactively, you know, taking 0:07:33.520 --> 0:07:38.720 risk in the market. What sort of risk hedges transmission vehicles, 0:07:38.840 --> 0:07:41.280 carbon credits, offsets, can they take advantage of it? I mean, 0:07:41.320 --> 0:07:44.360 what's available to them to help offset their risk in 0:07:44.400 --> 0:07:44.880 the space. 0:07:45.320 --> 0:07:48.520 Well, what we do is we provide guarantees and portfolio 0:07:48.560 --> 0:07:53.000 guarantees or other sort of financial support to the banks 0:07:53.120 --> 0:07:56.280 so that they can lend to SMEs with lower interest rates. 0:07:56.440 --> 0:07:59.840 That's basically what we do. And again that. 0:07:59.800 --> 0:08:03.280 Allows us to reach a large share of European smeans 0:08:03.440 --> 0:08:07.679 and there, for example now investing in green technologies energy 0:08:07.680 --> 0:08:10.640 efficiency thanks to the support of the European Investment Bank. 0:08:10.800 --> 0:08:12.800 I don't know if many of them know it, you know, 0:08:13.240 --> 0:08:15.280 because they go to a bank, a commercial bank. 0:08:15.720 --> 0:08:18.480 But you know, although they are. 0:08:18.120 --> 0:08:20.920 They have to signal in their loans that this is 0:08:21.600 --> 0:08:23.840 supported by the European Investment Bank. I don't know if 0:08:23.880 --> 0:08:26.040 they always do, but the fact of the matter is 0:08:26.080 --> 0:08:28.240 the EiV is one of the key elements that is 0:08:28.320 --> 0:08:29.720 driving the European economy. 0:08:30.760 --> 0:08:33.280 Where does natural gas fall into this? 0:08:33.360 --> 0:08:36.520 For you guys, Well, we have to get away from 0:08:36.600 --> 0:08:38.600 natural gas, right, need it? 0:08:38.640 --> 0:08:42.120 So it gets hard, I understand, and we all understand. 0:08:42.240 --> 0:08:43.679 We are in the midst of that transition. 0:08:43.920 --> 0:08:45.839 But if there is one thing that we have learned 0:08:45.960 --> 0:08:48.960 due to the war in Ukraine is that we cannot 0:08:49.000 --> 0:08:50.640 be dependent on Russia. 0:08:50.960 --> 0:08:51.640 And starting with. 0:08:51.720 --> 0:08:54.800 Russia, but other parts of the world be talking about 0:08:54.920 --> 0:08:58.400 energy cheap, other elements of the of the supply chain, 0:08:58.440 --> 0:09:01.439 critical raw materials. You know, Europe has to stand up 0:09:01.440 --> 0:09:04.480 on its two feet and become independent when it comes 0:09:04.480 --> 0:09:05.040 to energy. 0:09:05.120 --> 0:09:06.880 That's that's a clear idea I think. 0:09:07.080 --> 0:09:09.320 You know, I want to talk about economic disparity, but 0:09:09.400 --> 0:09:11.640 more in terms of the type of partners you choose 0:09:11.679 --> 0:09:13.600 to go into business with, right, the types of banks, 0:09:13.640 --> 0:09:16.240 you know, I think of the Brookfields, the Blackstones, the 0:09:16.280 --> 0:09:18.920 Macquarie is, you know, these big infrastructure investors, the Morgans 0:09:18.960 --> 0:09:21.720 and analysts. You know, does that matter, like you know, 0:09:22.480 --> 0:09:25.880 can you partner with smaller banks, medium sized banks, international banks? 0:09:25.920 --> 0:09:27.240 I mean, how often do you do that or do 0:09:27.280 --> 0:09:29.160 you kind of stick to the people you know and 0:09:29.240 --> 0:09:29.880 look best. 0:09:30.080 --> 0:09:33.240 No, we partner with a lot of financial institutions around 0:09:33.280 --> 0:09:36.040 the world. Of course, we do a very serious check 0:09:36.160 --> 0:09:39.760 when it comes to not only the financial strength of 0:09:39.800 --> 0:09:45.120 the counterparties, but also compliance and reputational risks. And also 0:09:45.200 --> 0:09:49.520 we are investing through funds, investment funds. We have a subsidiary, 0:09:49.600 --> 0:09:52.720 the European Investment Fund, which is partnering with private investment 0:09:52.720 --> 0:09:56.679 funds to then mobilize these other sort of venture capital 0:09:56.720 --> 0:09:59.320 and quasi capital investments. 0:09:58.679 --> 0:10:01.480 What's the thing that you guys are most excited about 0:10:01.600 --> 0:10:04.600 right now, either some kind of technology or a certain 0:10:04.679 --> 0:10:07.520 type of project that you feel like has real potential 0:10:07.559 --> 0:10:09.679 that can really unlock other opportunities. 0:10:10.320 --> 0:10:13.000 Well, I think there are two areas where let me 0:10:13.040 --> 0:10:15.520 focus on what I have been discussing here in New York, 0:10:15.760 --> 0:10:18.680 because back in Luxembourg there we discuss many other it's. 0:10:18.600 --> 0:10:20.120 Going on behind closed doors. 0:10:20.640 --> 0:10:23.200 Indeed, that's why I'm going to give you a sneak review. 0:10:23.760 --> 0:10:28.040 Now we have been discussing. There's nothing so revolutionary or surprising, 0:10:28.080 --> 0:10:31.800 but actually I've been discussing. We've been discussing four main subjects. 0:10:32.200 --> 0:10:35.800 Green climate, health, that's a big issue. I think that 0:10:35.880 --> 0:10:39.720 there's a lot of interest in health. Multilateral development institutions 0:10:39.760 --> 0:10:40.679 working as a system. 0:10:41.000 --> 0:10:42.240 We're working better than ever. 0:10:42.400 --> 0:10:45.600 We're cooperating with the World Bank, African Development Bank, Asian 0:10:45.600 --> 0:10:48.880 Development Bank, and we want to really be giving as 0:10:48.960 --> 0:10:51.880 much value for money to our shareholders in supporting the 0:10:51.920 --> 0:10:53.280 global economy and investment. 0:10:53.920 --> 0:10:55.640 And then fourth point has been women. 0:10:56.120 --> 0:10:59.079 I think that there is also a lot of There 0:10:59.080 --> 0:11:01.000 are lots of things going known around the world in 0:11:01.080 --> 0:11:04.160 terms of partnering and networks of women, and I think 0:11:04.160 --> 0:11:06.480 we have to support that that endeavoral. 0:11:06.080 --> 0:11:08.840 So, which definitely ties into help also at the same time. 0:11:08.920 --> 0:11:10.640 All right, Dadiet, thanks a lot. We really appreciate that 0:11:10.720 --> 0:11:13.960 was a wonderful sort of beneath the hood look on 0:11:14.000 --> 0:11:16.559 how you finance all of this now you help President 0:11:16.559 --> 0:11:18.320 of European Investment Bank, thank you so much. 0:11:18.600 --> 0:11:19.959 Thanks to you, Bye bye bye.