Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Malex Cie Alongsid Damien Sas Hour. This is Bloomberg Intelligence
Speaker 2: Radio and you're broadcasting to live from the Earth Shot
Speaker 2: Summit right here at the Plaza Hotel in Midtown Manhattan.
Speaker 2: The summit celebrates innovators who are trailblazing solutions to repair
Speaker 2: our planet, and that event is co hosted by Bloomberg Philanthropies.
Speaker 1: We have a great guest I lined up for.
Speaker 2: You, sort of connecting the dots between how we go
Speaker 2: green and carbon neutral and how we also pay for it.
Speaker 2: Joining us now is Nadia Calvino, President of the European
Speaker 2: Investment Bank EIB.
Speaker 1: European Green Deal is huge.
Speaker 2: There's a set of policies that look to make the
Speaker 2: European Union climate neutral by twenty fifty. You're looking to
Speaker 2: mobilize over one trillion euros in order to do that.
Speaker 1: How's it going, Yes, where it's going? Well, it's going well.
Speaker 3: We are on track to meet the target of one
Speaker 3: trillion euros in investment in green finance. More than fifty
Speaker 3: percent of our annual investments go to the climate transition
Speaker 3: to the green finance, so as to make it a success.
Speaker 3: At European success a success for all of us.
Speaker 2: But why do I keep hearing then that Europe has
Speaker 2: more of the stick approach and the US has the
Speaker 2: carrot approach with the IRA, how did they differ?
Speaker 3: Well, I think that we have a shared endeavor, you know,
Speaker 3: which is to ensure that we do this green transition,
Speaker 3: that we move to a net zero economy, and that
Speaker 3: this is profitable.
Speaker 1: Well, my side of things is the carrots.
Speaker 3: Actually, I am the investor, so we are probably we
Speaker 3: are the largest multilateral development bank in the world.
Speaker 1: Maybe people don't know.
Speaker 3: With a six hundred billion balance sheet, ninety percent of
Speaker 3: the investments are done in the EU, where we are
Speaker 3: the largest investor in renewables. We're probably one of the
Speaker 3: largest investors in renewables in the in the whole world,
Speaker 3: and right now here in the UN General Assembly. Around
Speaker 3: the General Assembly, I'm having lots of meetings exchanges to
Speaker 3: try to bring that agenda forward with a global perspective.
Speaker 4: Well, Nadia, I mean renewables is a very broad topic, solar, wind, water, nuclear,
Speaker 4: Talk to us about where you're deploying your balance sheet.
Speaker 4: I mean six hundred billions a lot of money, well more.
Speaker 1: Than fifty percent, as I said, go into climate finance.
Speaker 3: And this is sustainable infrastructures, this is sustainable transport. This
Speaker 3: is also renewables, wind energy, greeds, solar, and also new fuels,
Speaker 3: the fuels of the future, for example, green hydrogen. We're
Speaker 3: supporting very innovative, large projects, also large traditional infrastructures and
Speaker 3: dynamic startups that are really going to be the ones
Speaker 3: finding the technologies, the breakthrough technologies for all of us.
Speaker 2: I mean we've seen with hydrogen though that a lot
Speaker 2: that it's hard, that green hydrogen particular is quite hard.
Speaker 2: I mean Germany had a sort of backtrack from that
Speaker 2: in particular with the war in Ukraine. In addition, like
Speaker 2: ORSID dropped and had to ditch out on a hydrogen project.
Speaker 2: Can you do hydrogen profitably?
Speaker 1: And how do you do that?
Speaker 3: But we have to, we have to because it is
Speaker 3: can right now, well we are right now. We're investing
Speaker 3: in a number of projects in Europe which are more
Speaker 3: having to do with industry hubs. So we are greening industry,
Speaker 3: highly polluting, highly energy intensive, so like a cement indus
Speaker 3: that yes, and still you know, all these large industry
Speaker 3: so we are we're seeing for example, close to port
Speaker 3: to Report in the south of Portugal, we're going to
Speaker 3: have a green hydrogen hub, so that's very close to
Speaker 3: traditional industries and we're helping them become green and also profitable.
Speaker 3: Likewise in other parts of Europe. You know, we are
Speaker 3: at the early stages of these new technologies and it
Speaker 3: is only normal you know that some projects fail, that
Speaker 3: some projects are succeeding, and that's.
Speaker 1: That's why we are.
Speaker 3: The European Investment Bank is a public investment bank to
Speaker 3: take the risk, to make sure that patient capital, long
Speaker 3: term investors are taking those risks, so that also we
Speaker 3: mobilize private capital and we make this a success.
Speaker 4: Well, you know, other multi level finance institutions, I mean
Speaker 4: development banks out for example China, Korea, et cetera, have
Speaker 4: had a very poor track record of deploying capital profitably.
Speaker 4: And you know, I know the IIB is different. I
Speaker 4: know the World Bank Group is very very different. And
Speaker 4: I know we're talking about perpetual capital, perpetual investments, but
Speaker 4: the end of the day, you do have to get
Speaker 4: a return on your investment. So talk to us about
Speaker 4: which sectors within the broader renewable space, within the border
Speaker 4: climate space, carry the highest return on investment from your perspective.
Speaker 1: Well, actually, we are very profitable. Let me be very clear.
Speaker 3: The fact that we are a public bank doesn't mean
Speaker 3: that I don't have to deliver for ashholders. So around
Speaker 3: two billion euros we had in profit last year. We've
Speaker 3: been profitable since the bank, since its inception. We have
Speaker 3: a very low return, very low level of non performing assets.
Speaker 3: When I say very low, I mean like zero point
Speaker 3: four percent of our assets.
Speaker 4: Huh.
Speaker 3: So it is a very profitable bank. And what we
Speaker 3: have is a very large balance sheet and very balanced
Speaker 3: portfolio with large infrastructures, traditional infrastructures which are very profitable,
Speaker 3: lower risk and also highly risky endeavors like innovative startups
Speaker 3: or large investments into new green technologies. And that's what's
Speaker 3: allowing us, I think, to make a difference in making
Speaker 3: projects bankable at the end.
Speaker 1: Of the day.
Speaker 2: So what have you noticed in terms of if you
Speaker 2: support a project, does it bring in private investors in
Speaker 2: private capital at the end.
Speaker 3: End of the day, it does absolutely, you know, the
Speaker 3: European Investment Bank is considered to be a reference in
Speaker 3: terms of technical expertise in some areas, for example green
Speaker 3: for example, health. So once the EiV says yes, I'm
Speaker 3: going to invest in this project, immediately a number of
Speaker 3: investors say.
Speaker 1: I join, naddie.
Speaker 4: I'd love to ask you a question. I mean, in
Speaker 4: my world, the emerging market space, there has been an
Speaker 4: absolute explosion of sustainable finance vehicles and mechanisms, you know,
Speaker 4: green bonds, clean bonds, you name it.
Speaker 1: I'm curious to hear.
Speaker 4: Your thoughts about a lot of it. I mean, a lot
Speaker 4: of sovereign nations, a lot of countries are issuing that
Speaker 4: under this green bond umbrella.
Speaker 1: You know, do you believe in that?
Speaker 4: Do you think they're just green washing or are they
Speaker 4: really deploying that capital in a clean and efficient way.
Speaker 3: We have to ensure, indeed that the green bond standards
Speaker 3: around the world are not green washing, and that that
Speaker 3: should be a top priority. Otherwise, you know, once you
Speaker 3: lose the credibility, then you lose everything. And in capital markets,
Speaker 3: I don't have to explain.
Speaker 1: It to you.
Speaker 3: So that's why I think we have a very important
Speaker 3: shared interest in having global standards. You know, the taxonomies
Speaker 3: that are being developed in different parts of the world.
Speaker 3: In Europe has been a pioneer in that area. Also,
Speaker 3: the European Investment Bank, by the way, has pioneered green bonds,
Speaker 3: and we have to make sure that those standards are
Speaker 3: met and that green investments are really green, so that
Speaker 3: we make sure that this is providing sufficient finance to
Speaker 3: close the investment gap.
Speaker 2: How do you offset your risk? How do you offset
Speaker 2: risk when you're taking on riskier projects.
Speaker 3: Well, we have a capital base, but generally what we
Speaker 3: do is that we have riskier and less risky projects
Speaker 3: and we mobilize our capital in a very wise manner.
Speaker 3: You know, sometimes our shareholders and say you should take
Speaker 3: on more risk because that's what.
Speaker 1: Your capital is for.
Speaker 3: But I think that we have a relatively good balance
Speaker 3: in terms of can you give.
Speaker 2: Me a balance on that, Like what would be considered
Speaker 2: a low risk project, what would be considered a high
Speaker 2: risk for example, Well.
Speaker 3: An infrastructure in a European country, that is a low
Speaker 3: risk project.
Speaker 1: When we're building.
Speaker 3: A trains or rolling stock or or a metro or port.
Speaker 3: I mean we are lending to a sovereign state which
Speaker 3: has a very high rating and this is our shareholders.
Speaker 3: So investments within the EU are considered to be generally
Speaker 3: lower risk. Or for example, we do also through the
Speaker 3: financial sector, we do lending to SMEs in Europe that
Speaker 3: is very profitable, lower risk.
Speaker 1: Then if we are investing in a.
Speaker 3: Very large project one billion, two billion project in green hydrogen,
Speaker 3: as you were saying, you know, I'd like.
Speaker 4: To take a variation on that question. That's important because
Speaker 4: you're right, it's a lot of these small medium enterprises.
Speaker 4: They're the ones who are actually proactively, you know, taking
Speaker 4: risk in the market. What sort of risk hedges transmission vehicles,
Speaker 4: carbon credits, offsets, can they take advantage of it? I mean,
Speaker 4: what's available to them to help offset their risk in
Speaker 4: the space.
Speaker 3: Well, what we do is we provide guarantees and portfolio
Speaker 3: guarantees or other sort of financial support to the banks
Speaker 3: so that they can lend to SMEs with lower interest rates.
Speaker 1: That's basically what we do. And again that.
Speaker 3: Allows us to reach a large share of European smeans
Speaker 3: and there, for example now investing in green technologies energy
Speaker 3: efficiency thanks to the support of the European Investment Bank.
Speaker 3: I don't know if many of them know it, you know,
Speaker 3: because they go to a bank, a commercial bank.
Speaker 1: But you know, although they are.
Speaker 3: They have to signal in their loans that this is
Speaker 3: supported by the European Investment Bank. I don't know if
Speaker 3: they always do, but the fact of the matter is
Speaker 3: the EiV is one of the key elements that is
Speaker 3: driving the European economy.
Speaker 2: Where does natural gas fall into this?
Speaker 1: For you guys, Well, we have to get away from
Speaker 1: natural gas, right, need it?
Speaker 3: So it gets hard, I understand, and we all understand.
Speaker 1: We are in the midst of that transition.
Speaker 3: But if there is one thing that we have learned
Speaker 3: due to the war in Ukraine is that we cannot
Speaker 3: be dependent on Russia.
Speaker 1: And starting with.
Speaker 3: Russia, but other parts of the world be talking about
Speaker 3: energy cheap, other elements of the of the supply chain,
Speaker 3: critical raw materials. You know, Europe has to stand up
Speaker 3: on its two feet and become independent when it comes
Speaker 3: to energy.
Speaker 1: That's that's a clear idea I think.
Speaker 4: You know, I want to talk about economic disparity, but
Speaker 4: more in terms of the type of partners you choose
Speaker 4: to go into business with, right, the types of banks,
Speaker 4: you know, I think of the Brookfields, the Blackstones, the
Speaker 4: Macquarie is, you know, these big infrastructure investors, the Morgans
Speaker 4: and analysts. You know, does that matter, like you know,
Speaker 4: can you partner with smaller banks, medium sized banks, international banks?
Speaker 4: I mean, how often do you do that or do
Speaker 4: you kind of stick to the people you know and
Speaker 4: look best.
Speaker 3: No, we partner with a lot of financial institutions around
Speaker 3: the world. Of course, we do a very serious check
Speaker 3: when it comes to not only the financial strength of
Speaker 3: the counterparties, but also compliance and reputational risks. And also
Speaker 3: we are investing through funds, investment funds. We have a subsidiary,
Speaker 3: the European Investment Fund, which is partnering with private investment
Speaker 3: funds to then mobilize these other sort of venture capital
Speaker 3: and quasi capital investments.
Speaker 2: What's the thing that you guys are most excited about
Speaker 2: right now, either some kind of technology or a certain
Speaker 2: type of project that you feel like has real potential
Speaker 2: that can really unlock other opportunities.
Speaker 3: Well, I think there are two areas where let me
Speaker 3: focus on what I have been discussing here in New York,
Speaker 3: because back in Luxembourg there we discuss many other it's.
Speaker 4: Going on behind closed doors.
Speaker 3: Indeed, that's why I'm going to give you a sneak review.
Speaker 3: Now we have been discussing. There's nothing so revolutionary or surprising,
Speaker 3: but actually I've been discussing. We've been discussing four main subjects.
Speaker 3: Green climate, health, that's a big issue. I think that
Speaker 3: there's a lot of interest in health. Multilateral development institutions
Speaker 3: working as a system.
Speaker 1: We're working better than ever.
Speaker 3: We're cooperating with the World Bank, African Development Bank, Asian
Speaker 3: Development Bank, and we want to really be giving as
Speaker 3: much value for money to our shareholders in supporting the
Speaker 3: global economy and investment.
Speaker 1: And then fourth point has been women.
Speaker 3: I think that there is also a lot of There
Speaker 3: are lots of things going known around the world in
Speaker 3: terms of partnering and networks of women, and I think
Speaker 3: we have to support that that endeavoral.
Speaker 2: So, which definitely ties into help also at the same time.
Speaker 2: All right, Dadiet, thanks a lot. We really appreciate that
Speaker 2: was a wonderful sort of beneath the hood look on
Speaker 2: how you finance all of this now you help President
Speaker 2: of European Investment Bank, thank you so much.
Speaker 1: Thanks to you, Bye bye bye.