The European Investment Bank’s latest resilience and renewal report, which tracks both public and private investment in climate mitigation and adaptation activities, has found that despite the financial pressures over the past year, businesses increased their investment in schemes to reduce emissions and to improve climate resilience.
The report utilises several datasets, along with survey data, including the EIBIS, an annual survey of more than 13 000 firms in Europe and roughly 800 in the United States. Also included is the EIB Municipality Survey, which polls 750 municipalities in the European Union on their infrastructure investment and the barriers they face[i]. One of the report’s headline findings is that of the EU-based businesses analysed, 88% of firms reported some form of investment in climate change mitigation, with most taking action on energy efficiency (57%) and minimising waste (64%). The progress made in green investment over the past year follows a dip seen during the covid-19 pandemic. However, the share of firms engaging in climate action also rebounded after stalling in 2021. The most recent data from April-July 2022 finds that 51% of firms have already invested in some form of climate action, 8% of whom invested for the first time in 2022. Notably, 51% are also planning to invest in the future.
In terms of company size, the report finds that small and medium-sized enterprises (SMEs) are less likely to invest in energy efficiency and climate action than larger businesses. “Climate change awareness is also important, with firms more likely to invest if they have climate targets, have been affected by extreme weather or perceive that the transition to a low-carbon future will impact their businesses.”[ii]
Concerningly though, the report highlights that businesses’ ability to make long-term investments are facing severe headwinds given the current ongoing challenges, such as economic uncertainty and inflationary pressures. As a result, a significant share of firms are pessimistic about their ability to invest in green technology, including energy efficiency. Almost a third (32%) said they are pessimistic due to the current financial outlook or because of confusion over which solutions are suitable.
Regarding climate adaptation specifically, the EIB has found that almost 60% of EU-based firms have faced at least one physical climate risk to their operations, supply chain, or both over the past 12 months. The study found that one-third of businesses took at least one step to improve climate resilience, suggesting that investment in resilience and adaptation is less of a priority than investment in mitigation.
The research notes that the high energy prices seen across Europe following the war in Ukraine have helped drive investment into energy efficiency measures. It follows similar findings by the IEA at the end of 2022, where the drive by governments for energy security, as a result of the conflict in Ukraine, led to new policies and investment in clean energy and energy-saving measures. The IEA (International Energy Agency) study found that policy changes are driving an energy transition. It expects annual clean energy investment to surpass $2 trillion by 2030, a rise of more than 50% from today. It forecasts boosts to solar and wind capacity additions in the United States and predicts that clean energy targets in China will lead to its coal and oil consumption peaking before the end of this decade[iii].
The latest EIB research suggests that solar and wind energy have effectively become ‘default options for clean energy investment’, remaining the most attractive alternatives to fossil fuels for investors. Between 2020 and 2021, renewable investments increased by almost EUR 20 billion in the European Union, twice the amount in the United States[iv]. 33% of businesses report taking steps to adapt to the effects of climate change.
[i] Investment Report 2022/2023 (eib.org)
[ii] Ibid
[iii] The IEA reports that the price crisis is driving investment in renewables, energy saving, and nuclear, accelerating the energy transition | Zero Carbon Academy
[iv] Investment Report 2022/2023: Resilience and renewal in Europe – Chapter 2 (eib.org)
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
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