5 Legal Competence and Criteria for Green Finance Under
the EIB Schemes
Article 16 of the EIB’s statute,
26 reading in conjunction with art 309 of the Treaty on
the Functioning of the EU (TFEU),
27 gives the EIB competence to grant loans and
guarantees for economically productive investment projects in three areas:
• Projects for developing less developed regions
• Projects for modernising or converting undertakings or for developing new
activities called for by the progressive establishment of the common market; and,
• Projects of common interest to several Member States.
As is obvious, these are blue skies objectives set out in the statute of the bank and
must thus always guide the adoption, design and application of selection criteria for
project funding. Operationally speaking, the EIB establishes a Corporate Operational Plan which sets out a three year strategic plan which is reviewed and refreshed
every year. In this Plan is published the EIB’s evolving mission statement, priorities
(for project financing) and any relevant key performance indicators which guide the
bank’s activities.
It should also be noted that there are three pillars to EIB financing: commerciality,
economic productivity and completion of the internal market. Article 18(1) explicitly
states:
It may grant loans or guarantees only: (a) where, in the case of investments by undertakings
in the production sector, interest and amortisation payments are covered out of operating
profits or, in the case of other investments, either by a commitment entered into by the State
in which the investment is made or by some other means; and (b) where the execution of the
investment contributes to an increase in economic productivity in general and promotes the
attainment of the internal market.
All projects must thus meet these basic objectives. Crucially, whilst the latter two
objectives are obvious, it is sometimes forgotten that the EIB as a “AAA/A-1+”
bank
28 operates on commercial terms. It might operate on a non-profit making
basis,
29 but that does not mean it is unconcerned with commerciality. In this
connection, the EIB would itself “borrow on the capital markets the funds necessary
for the performance of its tasks”.
30
Another important limitation on the bank’s powers to grant finance is that the
investments in question should “be carried out in the territories of Member States”
26 For the 2013 version see http://www.eib.org/attachments/general/statute/eib_statute_2013_07_
01_en.pdf.
27 Notably art 309, TFEU.
28 On July 31, 2018, S&P Global Ratings affirmed its ‘AAA’ long-term and ‘A-1+’ short-term issuer
credit ratings on the European Investment Bank (EIB), despite the withdrawal of the UK from the
EU. See S&P Global, Research Update (July 2018) at www.spratings.com.
29 Art 309, TFEU makes this characteristic of the bank clear.
30 Art 20(1) Statute of the EIB.
140
J. Chuah
the EIB Schemes
Article 16 of the EIB’s statute,
26 reading in conjunction with art 309 of the Treaty on
the Functioning of the EU (TFEU),
27 gives the EIB competence to grant loans and
guarantees for economically productive investment projects in three areas:
• Projects for developing less developed regions
• Projects for modernising or converting undertakings or for developing new
activities called for by the progressive establishment of the common market; and,
• Projects of common interest to several Member States.
As is obvious, these are blue skies objectives set out in the statute of the bank and
must thus always guide the adoption, design and application of selection criteria for
project funding. Operationally speaking, the EIB establishes a Corporate Operational Plan which sets out a three year strategic plan which is reviewed and refreshed
every year. In this Plan is published the EIB’s evolving mission statement, priorities
(for project financing) and any relevant key performance indicators which guide the
bank’s activities.
It should also be noted that there are three pillars to EIB financing: commerciality,
economic productivity and completion of the internal market. Article 18(1) explicitly
states:
It may grant loans or guarantees only: (a) where, in the case of investments by undertakings
in the production sector, interest and amortisation payments are covered out of operating
profits or, in the case of other investments, either by a commitment entered into by the State
in which the investment is made or by some other means; and (b) where the execution of the
investment contributes to an increase in economic productivity in general and promotes the
attainment of the internal market.
All projects must thus meet these basic objectives. Crucially, whilst the latter two
objectives are obvious, it is sometimes forgotten that the EIB as a “AAA/A-1+”
bank
28 operates on commercial terms. It might operate on a non-profit making
basis,
29 but that does not mean it is unconcerned with commerciality. In this
connection, the EIB would itself “borrow on the capital markets the funds necessary
for the performance of its tasks”.
30
Another important limitation on the bank’s powers to grant finance is that the
investments in question should “be carried out in the territories of Member States”
26 For the 2013 version see http://www.eib.org/attachments/general/statute/eib_statute_2013_07_
01_en.pdf.
27 Notably art 309, TFEU.
28 On July 31, 2018, S&P Global Ratings affirmed its ‘AAA’ long-term and ‘A-1+’ short-term issuer
credit ratings on the European Investment Bank (EIB), despite the withdrawal of the UK from the
EU. See S&P Global, Research Update (July 2018) at www.spratings.com.
29 Art 309, TFEU makes this characteristic of the bank clear.
30 Art 20(1) Statute of the EIB.
140
J. Chuah