· Published in Investigations

The wheel of corporate fortune: How the EIB boosts profits in the name of competitiveness

The European Investment Bank (EIB) has long financed large and profitable companies. This will increase, as the Bank has become a key EU institution for boosting the bloc’s competitiveness in strategic economic sectors.

By offering loans on favourable terms — including lower interest rates, extended payback periods, and de-risking measures not available through private lenders – the EIB enables large companies to make projects more lucrative with public funds, effectively transferring substantial public resources into the hands of already wealthy, profitable corporations.

The report looked at seven companies that are the EIB’s top corporate clients — Iberdrola, Stellantis, Intesa Sanpaolo, Leonardo, Northvolt, and Gavi, the Vaccine Alliance — to examine the Bank’s approach centred at supporting large companies and its shortcomings in delivering social and environmental benefits. The findings demonstrate that six out of seven corporations have ample resources to self-finance their projects, an exception being a company now in crisis due to a failed project.

Since 2020, the EIB’s top clients have collectively amassed €100 billion in profits, a sum which surpasses half of the EU’s annual social infrastructure investment needs. Instead, the report highlights how the strategy adopted by the EIB has brought little to no benefit to our societies and economies. The companies paid out €38,7 billion in dividends to shareholders, used €11,9 billion to inflate short-term profits through share buybacks, and paid out €146,7 million to CEOs, while benefiting from over €11 billion in EIB loans. Similarly, it showcases a pattern of harmful practices by the EIB’s largest clients, including environmental damage, social injustices, and military financing. These practices illustrate a lack of priority for social and environmental benefits in EIB’s investments. The EIB itself earned €8,9 billion in profits from 2020 to 2023, despite its non-profit mandate.

  • Iberdrola received €3,5 billion from the EIB since 2020 while reporting profits of €4,8 billion in 2023. At the same time, the company is linked to 13 socio-environmental conflicts in Central America, Brazil, and Europe, primarily due to large-scale projects with significant ecological and social impacts. One of them is the largest European solar plant in Spain financed by the EIB, which did not deliver promised local jobs, illegally expropriated the main land owner and is being investigated for fraud by the European Public Prosecutor’s Office.
  • Stellantis received €785 million from the EIB while recording a 24% increase in profit (€16,5 billion annually). The company has paid out €11,8 billion in dividends to its shareholders since 2021. The car manufacturer has paid a €1,5 billion fine to avoid going to trial for cheating with engine emissions tests of engines, and received another fine for violating air pollution standards in the US. The CEO’s salary of €36,5 million in 2023 starkly contrasts with the average EU workers’ earnings.
  • Intesa Sanpaolo, Italy’s largest bank, received €2,9 billion from the EIB since 2020. It only reports 5% of its emissions financed, leaving much of its environmental impact unaccounted for. Since the Paris Agreement concluded in 2015, it has financed $81 billion in fossil fuels, including $8,6 billion in 2023 alone, exploiting loopholes that facilitate continued investment in dirty energy.
  • Leonardo was granted €460 million by the EIB despite its production of weapons and military equipment, raising ethical concerns regarding the EIB’s role in indirectly supporting militarization through finance. Leonardo has also been supplying EIB-supported helicopters to Israel, which according to the International Court of Justice is plausibly committing a genocide in Gaza.
  • Orange has received €500 million from the EIB since 2020. The telecom giant reported €2,4 billion in profit in 2023 and paid out €1,9 billion of these profits to its shareholders. Orange put so much pressure on workers it led to a suicide wave. The company also prioritises lucrative markets over providing universal internet access, providing poor service in former French colonies, and complying with government requests to shut down internet access.
  • Northvolt received €1,3 billion from the EIB since 2020, including a €942,6 million loan in 2023 — nearly 20% of the funding for the expansion of the first EU gigafactory. It is now in crisis and struggling for survival, therefore it has been making €1,7 billion in losses since 2020. The company plans to cut 1,600 jobs amounting to a 24,6% reduction of its workforce. The failure of the company demonstrates that the EU’s competitiveness strategy of relying on giving billions in public support to private companies is unlikely to deliver the necessary social and environmental benefits Europe needs;
  • Gavi, the Vaccine Alliance has received €1,9 billion from the EIB since 2020. During the COVID-19 pandemic, its deal for 210 million Moderna doses cost low-income countries nearly five times the manufacturing price, significantly boosting Big Pharma profits while putting at risk millions of lives in the Global South.

Financing large companies has long been a feature of the Bank’s business model, which is now set to increase even further to support the EU’s competitiveness. But it is urgent that the EIB aligns this with its mandate to defend the general interest, and meets the needs of the public – who are the Bank’s ultimate owners. Public investments essential to address critical challenges— like climate change, just energy transition, biodiversity loss, and social services — are urgently needed. Therefore, how public funds are ultimately used should not be decided on the basis of attractive financial returns to the private investors, but for their ability to support public wellbeing and sustainability.

Company Profit in 2023Profit 2020-2023Dividends 2020-2023Share buybackCEO salary and bonusEIB support since 2020
Iberdrola €4.8 billion €16.6 billion €4.7 billion €1.5 billion €25.2 million €3.5 billion
Stellantis €18.6 billion €49.6 billion €11.8 billion €3.3 billion €77.5 million €785 million
Intesa Sanpaolo €7.7 billion €19.3 billion €13.9 billion €6.8 billion €26.5 million €2.9 billion
Leonardo €0.7 billion €2.4 billion €0.2 billion / €6.4 million €460 million
Orange €2.4 billion €9.5 billion €8.1 billion €0.3 billion €8.8 million €500 million
Northvolt €1.2 billion €1.7 billion / / N/A €1.3 billion
Gavi, l’Alliance du vaccin €0.3 billion €4.3 billion / / €2.3 million €1.9 billion
Total €33.3 billion €100 billion €38.7 billion €11.9 billion €146.7 million €11.3 billion

Instead of channelling billions to subsidise profits of large companies, the EIB should become a public bank supporting a truly public mandate. To do so, the EIB should:

  • Finance projects and companies that serve social and environmental needs;
  • Work with public entities not driven by profit;
  • Improve its standards to ensure finance for sustainable projects that respect human rights and the environment;
  • Introduce key social, economic and environmental conditions1 for companies and financial institutions benefitting from the EIB’s finance.

Report published by Counter Balance with Observatori del Deute en la Globalització (ODG), Observatoire des Multinationales, and Gresea. This research benefited from the financial support of the Open Society Foundation through the European network of corporate observatories (ENCO).

Photo : Gwenael Piaser cc by-nc-sa

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