A year after Volkswagen admitted fiddling its diesel emissions, the European Investment Bank (EIB), whose loans backed the carmaker’s efforts to develop cleaner engines, is still unable to say whether or not public funds were used to rig emissions tests, writes Anna Roggenbuck.
Anna Roggenbuck is EIB policy officer for CEE Bankwatch Network.
This is all alarming, since the EU financial arm should be able to audit its loans and is also legally obliged to inform the public about their environmental outcomes. Representing member states, the EIB’s board of directors should ensure the bank’s accountability in this kind of case. What is it waiting for?
Shortly after the VW scandal hit the front pages, Bankwatch uncovered that the world’s largest car producer enjoyed generous financial support from the EIB, the world’s largest public lender. Our analysis found that in the space of ten years, between 2005 and 2015, the bank extended a total of €4.3 billion in 19 loans. Fourteen of these loans were specifically intended for improving fuel efficiency and reducing emissions.
Of the 19 loans, five were even labelled ‘climate action’ lending, as part of the EIB’s commitment to allocate 25% of its total investments to projects supporting the global effort to address the climate crisis.
A couple of weeks later, EIB President Werner Hoyer announced that the bank would conduct its own thorough investigation into whether loans were used in line with the agreed purpose of cutting emissions. Yet, since then, it has been silent on the scope of the investigation and the possible consequences for Volkswagen if it is found to have reported false emission reductions as a result of the EIB’s financial support.
In December 2015, OLAF, the EU’s anti-fraud office, opened its own investigation into the possible role of EIB money in the VW emissions-rigging affair, and it is yet to disclose its findings.
In a press conference in January, Hoyer singled out a 2009 loan to VW Antrieb, worth €400m, saying the bank could not rule out it had been used to finance a cheating device to rig emissions tests.
This loan was awarded, as part of the EIB’s €8bn European Clean Transport Facility, set up in 2008 as part of the bank’s contribution to the European Economic Recovery Programme and a pillar of the Commission’s “Green Cars Initiative”. These schemes were aimed at supporting research, development, and innovation in fuel efficiency and pollution reduction in Europe’s transport sector. But we already sensed a reason to worry. In a press release, Bankwatch and Greenpeace called on the EIB to make sure these loans did not end up as “window dressing for the car industry.”
Over the past year, Bankwatch has been requesting disclosure of information on the EIB’s loans to Volkswagen and European Clean Transport Facility, in particular, information that can help assess the bank’s performance in ensuring its funds were not being misused.
After months of repeated requests, in May 2016, Bankwatch was finally granted access to a redacted version of the finance contract and completion report from 2011 for the VW Antrieb RDI loan. The company indeed reported a reduction in pollution and carbon dioxide emissions from its diesel and petrol engines. However, its legal liability – in the case that this report included false statements – seems to be restricted since the finance contract anticipated neither results in fuel efficiency and pollution reduction nor the obligation to report performance on these factors.
In the 2011 report on the European Clean Transport Facility, it is evident that the bank cared little about the environmental impact of this financing mechanism, and its contribution to the development of “green cars” was limited. Nowhere did the report discuss the facility’s contribution to the development of sustainable transport or pollution reduction, or even fuel efficiency gains in private cars. Instead, it reported the funds were just used for recurrent research and development expenditures like staff salaries and only a quarter was allocated to innovative activities.
But if we were initially worried about the EIB’s oversight over the use of its loans, we are now increasingly concerned about its ability to scrutinise itself. In an email dated 30 August 2016, responding to Bankwatch’s latest request for information, the bank said the internal investigation was “still ongoing”. The bank apparently tries to downplay its role but it might have inadvertently enabled Dieselgate.
It is one thing that EIB money might have been used for the very opposite of what it was intended for and ultimately worsened, rather than improved air quality on European roads. But it is a whole other issue that the bank fails to address this in a transparent manner and be publicly accountable.
Eventually, in repeatedly avoiding disclosing information that is clearly in the public interest, the EIB has disregarded its legal duties as a public financial institution. One year after the VW scandal, there is still no assurance that the EIB is able to prevent its loans from fuelling similar or even worse scandals.