European climate-related investments gain momentum - EIB
Date: August 12th 2021
Author: Valerija Hozjan
Around 45% of companies in the European Union have made investments to address climate change, compared to 32% in the United States, according to the European Investment Bank’s (EIB) latest study.50% of companies in western and northern Europe have invested in tackling climate change, while the share in southern Europe is 38% and in central and eastern Europe 32%, according to the results of the EIB study ‘European firms and climate change 2020/2021: evidence from the EIB Investment Survey’.
At a country level, the differences are even more pronounced. Finnish (62%) and Dutch (58%) firms are at the forefront of climate-related investments, whereas only 23% of Cypriot, 19% of Irish and 18% of Greek companies are trying to tackle climate change.
When it comes to the type of investment made, then EIB says that a push towards energy efficiency is continuing.
Nearly half of the companies operating in the European Union have invested in some form of energy efficiency, up from 37% in 2019 to 47% in 2020. This is slightly lower than the 50% of firms that have done the same in the United States, where that has been a similar push since 2019.
Companies in western and northern Europe have invested the most (48%), followed by southern, central and eastern Europe (40%), say the study’s results.
“Climate change’s ultimate impact may still be hazy for many businesses, but more EU firms are investing to protect themselves than US firms,” added EIB in its press release.
Although investment in energy efficiency measures has increased, Europe’s potential to make energy savings remains largely untapped, EIB emphasises.
Barriers to climate-related investment
EIB’s economics department interviewed 685 municipalities in the EU, the United Kingdom and the US, between May and August 2020, asking them to assess their infrastructural gaps, investment needs and operational constraints.
Uncertainty about regulation and taxation (43%), followed by investment costs (41%) are the biggest constraints to climate-related investments in the European Union, show the study’s results.
Uncertainty about regulation can delay or cancel investment decisions, as firms will always seek a clear picture of that investment’s expected cost benefits.
A United Nations commissioned report warned on Monday that the world would surpass 1.5C of warming in the next 20 years, which is likely to put pressure on the EU to sharpen its climate policies during this decade, observers say.
Meanwhile, the latest scientific assessment report of the Intergovernmental Panel on Climate Change (IPCC) found the world was heading towards 2-3C of warming. It sees no way of avoiding an increase of above 1.5C by the middle of the 2030s.
“Immediate, rapid and large-scale” cuts in CO2 are necessary to reach net zero emissions by the middle of the century. Such action would offer a chance of bringing warming back to the levels aspired to under the Paris climate agreement, Montel reports.