Civil Society Seminar with the EIB’s Board of Directors, Luxembourg

Good morning ladies and gentlemen. It’s a pleasure to be here and a privilege to be invited to address this gathering.

My topic today is one that everyone in this audience will, no doubt, have great experience of, namely how a business enterprise can be a good corporate citizen. Looking at the European Investment Bank, what is it that makes the EIB a good corporate citizen? I am going to argue that it is not the pursuit of business, to the exclusion of all other values that enables the EIB to achieve this aim.

In order to be a good corporate citizen, the EIB has to marry its ethics with its commerce, its morals with its money.

A business organisation usually faces a few very common choices: It can give its business a narrow focus and make the return on capital as large as possible. The idea is to make as much as you can, and to do it now. You can see how the pressure builds and how you end up with a business as a source of value, but not really guided by any value.

The other choice for a business entity is to perceive itself as a community organisation. To see itself as rooted in the society that gives it a home. To decide to pay good wages and lift the purchasing power of working people. To support social infrastructure such as libraries, schools and the arts.

Interestingly enough history teaches us that, as early as the nineteenth century, the best companies were all seen as community organisations and not as followers of profit-maximising capitalism.

For example, the Prussian State of the nineteenth century made it a condition for its approval of a new stock corporation that it served the public interest. The rationale was that there is no such thing as a market that is not underpinned by social institutions.

In 1958, the year that the EIB was created under the Treaty of Rome, Europe’s economy was still recovering from two world wars. The founding Member States were united by one vision: that of a prospering and peaceful Europe, where citizens would profit from a common market in goods and where they would enjoy fundamental rights.

The EIB stands firmly by the European law and common European principles that have guided its business since the beginning. It is accountable to the 28 Member States that are its shareholders. It pursues a not-for-profit business, which enables it to cover its costs but does not lead to the maximisation of profit.

At the same time the EIB fulfils the economic remit assigned to it under the European treaties: It finances projects that are of common European interest; projects that support Europe’s economy and improve the lives of European citizens. The EIB acts as a bank.

And it is not just any bank. It is the world’s biggest international financing institution. In 2015 the EIB issued bonds totalling EUR 62.4 billion. Its 2015 lending volume for new signatures amounted to EUR 76.9 billion. It is this system of borrowing and lending that makes the EIB self-sustainable and independent of taxpayers’ money.

The fact that the EIB is a bank explains why its activity is client-focused. The EIB’s clients are its lenders and borrowers. As a bank the EIB strives to protect its clients’ business interests and is bound by professional rules, such as the confidentiality of client-related business data.

It is this focus on clients and their interests, by the way, which distinguishes the EIB from the European Central Bank. Whereas the ECB is more policy-driven, the EIB is more client-driven and puts an emphasis on the projects that it finances. Here our Projects Directorate comes into play, which ensures the high quality of our technical, environmental and social standards. This is a unique feature for a financing institution.

All this is not without consequences for the EIB’s role as a good corporate citizen. It is correct that the EIB is guided by European values such as transparency and accountability. But it is also correct that the EIB follows best banking practice as established for financing institutions. The EIB continuously faces the task and challenge of reconciling its role as a public body with its role as a bank.

The EIB needs to be seen against this background, and it cannot be mentioned often enough: the EIB differs from all other banks because it is also an official European body. But at the same time the EIB differs from the other European institutions and bodies simply because it is a bank.

There has been criticism that, in the past, the EIB put too much emphasis on being a bank, at the expense of transparency and dialogue with its stakeholders. I understand this criticism. Indeed the EIB traditionally saw itself as closely linked with its clients and at first did not heed the calls of civil society. And, as is often the case, it is a difficult and rather lengthy process to change an established business style. But I believe that it is safe to say that we have seen a vast improvement over the last few years.

The most recent example of this improvement is the introduction of the European Fund for Strategic Investments. EFSI was created by a European regulation that lays down our joint understanding of transparency and accountability.

There are other examples that show that the EIB lives up to the standards of a responsible and sustainable organisation.

We publish our annual sustainability report and share details of our responsible lending and borrowing.

We have enacted the EIB Climate Strategy, which is a forward-looking statement and guides the Bank’s climate action. In the area of climate action, the EIB has already achieved much:

In 2015 our climate-related investment represented 26.8 per cent of overall financing, clearly exceeding the 25 per cent minimum climate finance commitment requested by our shareholders.

Last year’s climate finance outside Europe accounted for as much as 30 per cent of overall lending. Looking ahead, the EIB will be even more ambitious. We have undertaken to raise the share of our climate financing outside the EU in the developing countries to 35 per cent by 2020.

We have created a Transparency Policy, which has just been successfully revised after intense public consultation.

We have created an independent Complaints Mechanism, which enables third parties to address complaints.

The EIB is also a responsible corporate citizen in its role as an employer. It has enacted and will continue to improve a Diversity Strategy that strives for equal and inclusive treatment of staff members.

The EIB’s staff are proud to work for the EIB. Our employees want to work for an organisation that does good, not just a good organisation. They stand for the European values that the EIB embodies.

The EIB has learnt that, all over the world, we are only as good as our reputation. A good name takes a lifetime to build and a moment to destroy. That is why we take our corporate social obligations seriously.

The EIB will continue to strive to be a good corporate citizen. In doing so it will continue to ensure that the word “good” is interpreted in two ways.

It means economically successful, of course. Performing well is a mission in its own right.

And we should not forget that a well-run business makes a major contribution to an economy. As an entrepreneur we create jobs and offer financial products that satisfy our clients’ demands. We contribute to economic welfare in Europe. We sponsor community activities and make philanthropic contributions.

But being a “good” corporate citizen also means being “good” in a moral sense. Our idea is that, as an organisation, we have to marry our performance with our ethical concerns. Our economic health and our ethical well-being are inseparable. They merge. They need one another.

This does not mean that we are sentimental. It simply means that we are as serious about our reputation and the values we stand for as we are about our balance sheet.

Ladies and gentlemen, for me this is the first EIB Civil Society Seminar, but for the Bank and many of you this is already the fifth meeting of this kind. It is important that we are and stay engaged in this dialogue.

We are happy to have you here. I hope that you will enjoy today’s event.