This chapter was presented at the ECPR Standing Group on the European Union EU Climate and Energy Section, held in Rome (remotely) on 12 June, 2021, and an earlier version was presented at the workshop ‘EU as a global actor in sustainability policy’ of the Governance of Sustainability in Europe network held in Budapest (remotely) 27–28 May, 2020. I would like to acknowledge the helpful comments received from Helene Dyrhauge, Thomas Hoerber, Kristina Kurze and Matúš Mišík on these occasions.
1In alignment with UN decarbonization objectives (UNFCCC, 2015), finance is crucial to achieving the European Union (EU)’s climate neutrality goals by 2050. Necessary annual investments are substantial and are estimated to be in the range of EUR 260 billion by the European Commission (European Commission [EC], 2020b) to EUR 300 billion by academia (Claeys et al., 2020) and up to EUR 350 billion as assessed jointly by the EC and the European Investment Bank (EIB) (von der Leyen & Hoyer, 2021), totaling EUR 3.5 trillion for the period 2020–2030, if not more (McKinsey, 2020). Of this total, EUR 1 trillion is expected to be financed through the Sustainable Europe Investment Plan (SEIP), funded by the EU budget and associated instruments, such as InvestEU (EC, 2020a), to support sustainable investments over the next decade. The remaining two-thirds, amounting to EUR 2 trillion, must be sourced from other avenues, including the EIB. As the EU’s long-term financing body and one of the largest multilateral banks (Toplensky & Barker, 2019), the EIB is well-positioned to drive change and help “achieve climate neutrality by 2050” (EC, 2019b, p. 4), given its activities across various sectors in over 160 countries within and beyond the EU. In this context, the EIB proclaimed its transformation into a climate bank in 2019.
2The EIB's role is accentuated by its dual identity as an EU body and a bank (Bussière et al., 2008; Coppolaro, 2024; Kavvadia, 2022). The EIB functions as both an institutional actor (Perry et al., 1999), promoting EU norms and values, and a business actor, mobilizing significant amounts of private investment to leverage public funding through blended finance in order to advance EU policy objectives, particularly climate neutrality.
3The EIB’s dual nature entails dual logics in its operations – the logic of appropriateness and the logic of consequentialism – corresponding to its institutional and banking dimensions, respectively (Kavvadia, 2023a). EIB's increasing politicization (Clifton et al., 2014; Krukowska, 2019; Liebe & Howarth, 2019; Mertens & Thiemann, 2017, 2018, 2019; Robinson, 2009) has heightened its logic of appropriateness, particularly in climate action. The bank has surpassed its inherent role as a policy-taker by exhibiting institutional activism in policymaking (Griffith-Jones & Carreras, 2024; Kavvadia, 2021b; Mertens & Thiemann, 2023). This is evident in its climate policy divergence from EU taxonomy; specifically, the EIB does not fund nuclear energy or natural gas projects. Despite this rebalancing toward a more active role in policy-making, the bank’s operations remain primarily aligned with the logic of consequentialism, offering positive conditionality linked to its banking nature through low-cost lending to EU priority projects (Kavvadia, 2023). The EIB’s banking identity, which was ab initio designed to address market failures in long-term financing for European policy objectives, was the core reason for its creation in 1957 (Coppolaro & Kavvadia, 2022) and continues to be a fundamental aspect of its function. Consequently, since its establishment, the EIB has developed in response to its task of supporting the EU’s ever evolving priorities by financing projects in an expanding number of sectors, including infrastructure, human capital, innovation, climate, and, more recently, even defense. Supplementing public resources through the banking system has been deemed essential for all these sectors, including the decarbonization process (OECD, 2021a). In this context, the EIB’s role as a public bank (Marois, 2021) is particularly vital, especially as commercial banks often shy away from climate-related projects due to potential disruptive intermediation and financial stability risks (OECD, 2021b). As a result, the EIB receives both political and economic support in the form of guarantees for its climate activities under InvestEU, incentivizing climate-related investments primarily through its low-cost lending, which constitutes its main activity.
4For climate finance, the EIB deviated from the historic tradition of changing its policies following EU Council decisions to support priority objectives. Instead, for climate finance, it announced its transformation into the first “International Climate Bank” (EIB, 2019b, p. 1) almost a month before the EC unveiled the European Green Deal (EGD) in November 2019. This transformation “should not only be interpreted as a radical break with its history, but also as layering on top of, as well as converting, its existent practices” (Mertens & Thiemann, 2023, p. 73) as a policy-taker. Recognized as a pivotal moment in its evolution, the bank’s pivot to climate has consequently sparked academic interest in the EIB’s motivations in its politicization process (Griffith-Jones & Carreras, 2024; Kavvadia, 2021b; Mertens & Thiemann, 2023). However, this interest often overlooks potential business interests, except for the recent work by Mocanu and Thiemann (2025). But can an EU body driven by consequentialism authentically pivot toward climate if the market logic does not fully support it? And can an organization operating as a bank in the market abruptly change its modus operandi without first adopting a relevant, well-considered strategy?
5This paper aims to address this research gap by investigating whether, beyond political motivations, the EIB pivot to climate in 2019 was influenced by pre-existing business-strategy-driven motives. Additionally, the paper examines whether the transition into a climate bank was truly transformative. Given that a change in strategic orientation toward climate has not been disclosed prior to the 2019 pivot, this study aims to ascertain if such a strategy was ever in place internally. Management theory views strategy change as an intentional and rationally manageable process (Ansoff, 1987; Mintzberg et al, 2009; Johnson et al, 2024). Changes in strategy are deliberate, involving planning, accountability, and communication. They are therefore reflected in organizational metrics and the business model (Casadesus-Masanell & Ricart, 2010; Teece, 2010; Demil et al., 2013). Employing a realist approach to unravel an eventual and deliberate business strategy behind this shift, the paper examines i) pre-pivot climate-related lending metrics to assess whether increasing demand-driven and supply-pushed climate finance business-driven motives also influenced the EIB’s pivot to climate and whether the transition to a climate bank was truly transformative; and ii) the EIB’s business model before and at the pivot to uncover potential business strategy changes to determine if the EIB underwent transformational changes reflected in its business model.
6The paper contends that the swift transition to climate, while not substantiated by a pre-existing business strategy, served the bank’s business interests by presenting significant opportunities driven by first-mover advantages, while simultaneously positioning the bank as a climate trendsetter in the climate finance sector. In the absence of a pre-existing deliberate business strategy, the EIB’s turn to climate is better characterized as a swivel rather than a complete pivot, as it does not represent a discontinuous change in the bank’s operations but rather another progressive development that could be readily accommodated within its pre-existing business model.
7Beyond the scholarly literature, the paper analyzes primary sources, including official documents such as reports, press releases, speeches, presentations, policy documents, press articles, and publicly available datasets.
8The remainder of the chapter is structured as follows. Section two presents the conceptual framework. Section three analyzes the EIB as a climate actor leading up to its pivot to climate, including metrics and the business model to determine if the pivot was the final step in a pre-planned strategic path toward climate. Section four discusses whether and to what extent the EIB’s orientation toward climate constitutes a transformative change and identifies the business motivations behind the pivot. A synthesis of the key findings is provided in the conclusions.
9Organizations are goal-oriented, primarily focused on their success or, at the very least, their survival, in logical and predictable ways. While organizations are influenced by anthropogenic non-rational factors, group dynamics, and unforeseen circumstances, rational organization theory suggests that they predominantly pursue rationality through goal-oriented, efficiency-seeking behavior and structured systems (Daft & Armstrong, 2015; March & Simon, 1958; Simon, 1997). In this context, organizations make informed decisions by factually analyzing situations and solutions, using input/output metrics that reflect vital functions in objective and measurable ways. These metrics are foundational elements in management information systems, among others. They enable various analyses, including financial, impact, effectiveness, efficiency, and resilience analyses. By reviewing the EIB's climate-related metrics before the bank’s pivot to climate, this paper aims to assess the bank’s propensity to support climate initiatives relative to its overall activity and its readiness to shift focus in terms of project appraisal and risk appetite. The metrics will reveal whether climate financing constituted a significant portion of EIB activity, potentially designating the bank as a de facto climate bank prior to its pivot, and revealing an eventual pre-existing business strategy. If this is the case, the pivot may represent a final step in formally announcing the EIB’s transformation into the “first international climate bank” (EIB, 2019b, p. 1) and the bank's “quantum leap” (EIB, 2019b, p. 1) to reshape the EIB into a climate bank (Kavvadia, 2021b). This transformation would be reflected in a transformative change of the bank’s business model at the pivot. Furthermore, the paper examines the EIB’s climate finance amounts and their percentage share of total activity compared to other multilateral development banks (MDBs) to determine whether the EIB occupied a leading position in climate finance before claiming its metamorphosis into the first international climate bank. If the EIB occupied a leading position in the sector before its pivot, this would be a further indication of a pre-existing strategy as the EIB would have privileged climate over time. Beyond metrics, a strategic, informed decision-making process would also be reflected in the EIB’s operational plans. Additionally, “the hypothesized course of [observed] events” (Weber, 1949, p. 44) as a transformative change would impact the essentials of the EIB’s functioning and its business model, which can be defined as “an architecture for how a firm creates and delivers value to customers and the mechanisms employed to capture a share of that” (Teece, 2018, p. 40). Unlike common practice, business models serve as tools for consensus and clarity-building not only for establishing organizations but also for their transformations. Given that goals and structure are fundamental components of business models, a transformative turn toward climate by the EIB would necessitate a revision of its business model. Business model revisions occur “when changes are sensed in technology, consumer demand, or the competitive landscape… [and are] best undertaken before the need for change becomes obvious” (Teece & Linden, 2017, p. 6). The study of the EIB’s business model before and at the pivot will therefore demonstrate whether the turn to climate was part of a strategically planned change. It will also showcase whether this turn constitutes a discontinuous reform of the bank’s functioning or merely a minor adjustment in EIB’s activities in support of the EU’s evolving priority objectives. Furthermore, as simplified representations of organizational structure and processes, business models constitute a vanguard point and framework of analysis to observe the ways in which change impacts organizations. Besides, using the EIB's business model as an analytical framework, this paper identifies how the pivot benefited the EIB, which in turn, and in the eventual absence of a pre-existing deliberate business strategy, hints at the bank's opportunistic business interests in pivoting to climate.
10By unraveling the bank’s pre-existing business strategy prior to its pivot to climate, the paper sheds light on EIB’s banking side. This adds to existing research that has primarily focused on the EIB’s institutional nature and political motivation. This research is necessary for a full understanding of the EIB’s turn to climate.
11This approach builds on European integration scholarship, which has highlighted two traits of the EIB, as a policy entrepreneur, able “to mobilize institutional capacities and expertise in order to address […] challenges […and] a resource-dependent organization that seeks to secure its survival and legitimacy by adjusting its business strategies” (Mertens & Thiemann, 2023, p. 70).
12Despite several efforts at politicization observed mostly in recent years, the EIB was conceived and established as an EU policy agency with a dual nature (Bussière et al., 2008; Coppolaro, 2024; Kavvadia, 2022, 2023b). Through its market operations, it mainly provides positive conditionality with low-cost finance based on the logic of consequentialism and, to a lesser extent, normative impact based on the logic of appropriateness to achieve EU policy objectives (Kavvadia, 2023a). Despite the prevalence of the logic of consequentialism and the EIB’s role in supporting EU priorities, academic work concerning the EIB’s pivot has primarily focused on the bank’s institutional side. This focus is due to the bank’s abrupt turn toward climate, which exceeds its policy-taking role and adopts a policy-making stance (Griffith-Jones & Carreras, 2024; Kavvadia, 2021b; Mertens & Thiemann, 2023). To provide a comprehensive analysis of the EIB’s pivot, this paper focuses on the banking perspective to determine whether, beyond political motivation, there was also a deliberate business strategy that led to the EIB’s climate move and whether the proclaimed pivot was as transformational as announced. Beyond any political motivation, it is crucial to understand the EIB as a business actor, as the bank must continuously balance its dual nature while serving political European objectives and operating in the market, mostly without budgetary funding (van der Zwet et al., 2016). By identifying a pre-existing deliberate potential EIB business strategy, this paper adds a new element to existing research, enhancing the understanding of the bank’s pivot to climate. Conversely, if no pre-existing deliberate business strategy is revealed, the paper will confirm existing research findings on the EIB’s politicization activism while approaching the analysis of the bank’s pivot from a banking perspective.
13As previously mentioned, business strategies are reflected in organizations’ metrics and business models. The paper therefore reviews the bank’s past activity metrics and assesses the EIB’s business model to determine whether the climate reorientation has been strategically planned. This would be evidenced by an increase in climate-related metrics and a revision of the business model prior to or at the time of the pivot.
14Otherwise, the pivot to climate would not be transformational, but rather, it would be dictated by opportunistic spots or short- to medium-term business interests.
15The EIB's activity encompasses both the bank’s lending and borrowing operations. Despite the bank’s pioneering role in opening the green bond segment of the capital markets in 2007 and its central role as a green issuer since then, this paper focuses solely on its climate lending. This focus is justified as the bank’s own announcement of its pivot to climate in 2019 contained future activity thresholds exclusively for lending, without any green-borrowing targets (EIB, 2019b).
16The EIB’s pre-pivot climate-related lending highlights the weight the bank attributes to financing this sector—especially when compared to its corresponding aggregate metrics. It also demonstrates the bank’s capabilities in areas such as climate project due diligence, risk management at the project and sector levels, demand for climate projects, and climate lending products. Furthermore, by examining the EIB’s past climate lending metrics comparatively alongside those of other MDBs, this paper demonstrates the global trend in climate finance demand and the EIB’s contribution to it, and its positioning as a climate financier.
17Can an EU body driven by consequentialism authentically pivot toward climate if the market logic doesn’t fully support it? The analysis of the EIB’s pre-pivot climate lending will reveal whether i) the EIB’s turn to climate was a final step after progressively evolving into a predominantly green financier, with climate finance representing most of its annual aggregate activity, and ii) whether the EIB was a natural claimant for recognition as the first international climate bank if its climate lending significantly exceeded that of its peers.
18The EIB began financing environmental projects in 1972, bolstering the EU’s growing interest in environmental protection in response to rising global environmental awareness and the prioritization of energy efficiency and sustainability due to the oil crisis. By the 1980s and 1990s, the EIB had significantly expanded its environmental portfolio, supporting projects in renewable energy, clean transport, and sustainable urban development. In the 2000s, the EIB began mainstreaming environmental sustainability across all sectors of its lending, formally prioritizing climate action. The 2010s marked major developments in the EIB’s climate finance by aligning with the Paris Agreement in 2015, culminating in its self-branding as a climate bank in 2019.
19Nonetheless, EIB’s climate lending in absolute amounts during the six years prior to its pivot shows no upward trend, with an average of EUR 19.2 billion per year, representing 27% of its total activity during this period. Notably, in 2018, just before the pivot, climate lending reached a nadir with a total of EUR 16.2 billion. This six-year low can be attributed to the fact that the EIB’s climate lending, as presented in Table 1, mirrors the overall annual lending activity of the bank, which had also been inconsistent during this period. However, when analyzing climate lending as a share of the bank’s overall annual lending, there is a slight upward trend, increasing from 25% in 2013 to 29% in 2018, the year preceding the shift toward climate focus. While this trend aligns with the EIB’s “climate finance target of at least 25%” (EIB, 2015, p. 23; Relicovschi, 2015, p. 9), stated as an institutional commitment in the bank’s operational plan for 2015–2017, climate was not intended to become the EIB’s primary objective but rather to remain a secondary area of activity. This is evidenced by the EIB’s corporate operational plan, a medium-term strategic document initiated in 1999 “[w]ith a view to targeting Bank operations more effectively in support of Community policies both within and outside the Union” (EIB, 2000, p. 8). The analysis of past metrics demonstrates the absence of a business strategy to focus on climate lending.
Table 1. EIB climate lending in EUR billions and share of overall annual lending (2013–2019)
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
19
|
20.1
|
20.7
|
19.9
|
19.4
|
16.2
|
21.3
|
|
25%
|
26%
|
26%
|
27%
|
29%
|
29%
|
31%
|
Source: Author’s calculations from EIB’s website dataset.
20As the EIB does not provide free funding, such as grants, but instead lends to capital investors seeking loans for bankable climate projects, the lending figures must be considered in relation to the prevailing overall demand for climate financing.
21Tracking gaps in alignment with the Paris Agreement, the OECD (2017) estimated that climate financing needs are expected to reach USD 1.3 trillion annually by 2030, of which only half was covered by available climate finance, totaling a meager USD 653 billion in 2019 (Naran et al., 2022). MDBs provided around USD 230 billion between 2013 and 2018, covering one-third of the climate finance provided globally. As shown in Table 2, the EIB contributed EUR 115 billion during the same period, providing half of the MDB’s global climate finance and one-sixth of the climate finance available worldwide, meeting 10% of climate financing needs.
22The global MDB financing data presented above is only indicative and not fully comparable because i) it is incomplete, including only six of the 20 existing MDBs. However, it does include those characterized as “legacy MDBs”—EIB, World Bank (WB), the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the African Development Bank (AfDB)—which “have dominated international development cooperation for decades” (Delivorias & Falkenberg, 2024, p. 3). The paper substitutes the Inter-American Development Bank (IDB) with the Asian Infrastructure Investment Bank (AIIB) due to its broader geographical mandate and shareholding, despite the AIIB’s limited data set, as it commenced operations in 2016; ii) MDB criteria for categorizing projects as climate-related vary and methodologies differ, as some MDBs, such as the ADB, included adaptation at a later stage; iii) datasets are in USD, except for the EIB, whose figures are denominated in EUR, and are considered in the paper using an arbitrary parity of 1:1 considered reasonanble based on historic data; iv) figures in some cases—such as the EIB—refer to signed loans, while most other cases pertain to approved financing operations; and v) with the exception of the EIB, MDBs provide finance primarily in developing and emerging countries, where climate financing is not viewed as a priority by countries and investors. As mentioned, EIB figures concern climate lending mainly within the EU, where the bank conducts approximately 90% of its annual activity. For comparability among MDBs, the paper extrapolates EIB non-EU climate lending by considering only 10% of the EIB figures below. The extrapolation is deemed sufficient because, as previously mentioned, the MDB climate lending figures are merely indicative. They are not intended to provide a reliable comparison, but rather to demonstrate demand trends in climate-finance and EIB’s positioning as a climate financier within the MDB ecosystem.
Table 2. Comparative MDB climate finance data in EUR/USD billions and share of overall annual lending (2013–2019)
|
MDB
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
Notes
|
|
EIB
|
€19 bn (25%)
|
€20.1bn (26%)
|
€20.7bn (26%)
|
€19.9bn (27%)
|
€19.4bn (29%)
|
€16.2bn (29%)
|
€21.3bn (31%)
|
Paris aligned since 2015
|
|
World Bank
|
$10.3bn (21%)
|
$11.2bn (22%)
|
$12.5bn (24%)
|
$13.1bn (26%)
|
$13.9bn (28%)
|
$15.7bn (30%)
|
$17.8bn (32%)
|
Climate Action Plan since 2016
|
|
EBRD
|
€2.1bn (24%)
|
n.a.
|
€3.8bn (30%)
|
€4.0bn (32%)
|
€4.1bn (34%)
|
€4.6bn (36%)
|
€5.0bn (38%)
|
Leader in % terms
|
|
ADB
|
$2.4bn (22%)
|
n. a.
|
$3.3bn (26%)
|
$4.1bn (28%)
|
$4.5bn (30%)
|
$5.1bn (32%)
|
$6.2bn (35%)
|
Paris-aligned since 2016
|
|
AIIB
|
n. a.
|
n. a.
|
$0.3bn* (15%)
|
$0.9bn (18%)
|
$1.4bn (25%)
|
$2.1bn (28%)
|
$3.0bn (30%)
|
*First operations in 2016
|
|
AfDB
|
$1.8bn (18%)
|
n. a.
|
$2.5bn (22%)
|
$2.8bn (24%)
|
$3.2bn (28%)
|
$3.6bn (30%)
|
$4.1
|
|
n. a: not available
Source: Author’s calculations from MDB’s website datasets.
23As other MDBs operate in emerging and developing countries, unlike the EIB, and in order to increase comparability among MDBs, the paper extrapolated the EIB climate lending figures for climate finance outside the EU. As shown in Table 3, these metrics are lower than those of its peers, or at best equal. In this context, the EIB non-EU climate lending was neither robust nor did it follow an upward trend like that of its peers.
24Consequently, metrics hint to a lack of a pre-existing business strategy and the EIB’s inability to establish primacy in global climate financing, which would justify its claim of becoming the first international climate bank.
Table 3. Extrapolated EIB climate lending outside the EU in EUR billions and share of overall annual lending (2013–2019)
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
1.9
|
2.0
|
2.1
|
2.0
|
1.9
|
1.6
|
2.1
|
Source: Author’s calculations from the EIB’s website dataset.
25To fully understand the EIB’s role in climate finance, note that 90% of the bank’s annual aggregate lending occurs within the EU. This raises the question of whether the EIB’s relatively limited climate finance metrics before the pivot were a result of low aggregate demand. However, this is not the case. In contrast, according to the EIB (EIB, 2025a), demand for climate finance exceeds supply in the EU, creating, according to the European Central Bank, a EUR 558 billion annual funding gap that undermines the EU’s 2030 climate targets (ECB, 2025).
26Given the relatively weak performance and lack of upward trend, the EIB’s climate lending leading up to the pivot did not reflect the bank’s prioritization of climate objectives or a proactive preparation to become a climate bank. The lending metrics were low and inconsistent, despite strong demand for climate finance, especially in the EU, as demonstrated by peer activities. EIB climate lending outside the EU was not only lower but also more unstable than that of all its peers, except for the AIIB, which began operations only in 2016. Furthermore, the EIB’s meager climate metrics were not due to the bank’s underperformance but were fully in line with the climate targets of at least 25% of overall activity mentioned in its Operational Plan 2015–2017 (EIB, 2015). ). The analysis of the pre-pivot EIB climate metrics hints at the absence of a deliberate business strategy and the evolutionary development of climate lending leading to the culmination of the bank’s increasing role in the climate finance sector from 2013 to 2018, which would naturally lead EIB to become the first international climate bank in 2019. Post-pivot, the EIB improved its climate lending metrics, from EUR 19 billion (29% of aggregate lending) in 2018, just prior to the 2019 pivot, to EUR 44.8 billion (nearly 60% of total) in 2024 (EIB, 2025b), five years after its pivot. Nonetheless, its peer MDBs also strengthened their climate lending. Indicatively in 2024, climate lending of the WB reached USD 42.6 billion (44% of total financing) (WB, 2024), the EBRD achieved EUR 9.7 billion (58% of its total annual investment) (EBRD, 2025), while the AIIB’s green finance as percentage of its total exceeded the EIB with USD 6 billion (67% of the aggregate) (AIIB, 2025). The analysis of these metrics does not support EIB’s primacy in green finance within the MDB ecosystem. Additionally, it demonstrates that its pivot was not the result of a deliberate pre-existing strategy, as all MDBs followed suit, following EIB’s self-anointment of being the first international climate bank.
27As shown in the previous section, the modest EIB climate lending metrics during the six years prior to the pivot to climate were not due to low demand for climate finance. Instead, they were aligned with the EIB's climate targets outlined in the pre-pivot operational plan, which serves as a mid-term strategy document. It is therefore important to examine whether the metrics were limited while the bank was simultaneously preparing for a strategic and transformational complete makeover through restructuring and the introduction of new processes to become the first international climate bank. To decipher the eventual EIB reorientation leading up to the pivot, this paper employs a business model perspective for three reasons. First, a strategy is reflected in the organization’s business model, and the organization's business model is part of organizational strategic planning (Casadesus-Masanell & Ricart, 2010; Teece, 2010; Demil et al., 2013). Second, as a framework for examining both the structure and processes used to create and deliver value (Ahokangas & Atkova, 2015; Demil & Lecocq, 2010), the EIB’s business model can help identify challenges, barriers, or even drivers that explain the bank’s low climate metrics from 2013 to 2018, as well as the motivational elements for the pivot to climate. Third, as a pathfinder in change stages (George & Bock, 2011), studying the EIB’s business model can outline a potential change path in preparation for the bank’s makeover.
28Since the EIB’s business model is not publicly available, this paper builds on scholarly work that has developed a hybrid business model for not-for-profit institutions (Kavvadia, 2021c). This model has already been applied to the EIB (Kavvadia, 2020, 2021a, 2022) and is illustrated in Chart 1. Given the EIB’s dual nature, its business model comprises four primary interlocking and inextricably linked elements around two poles. The first pole, which includes two elements, largely corresponds to the bank’s institutional nature: strategic choices, which reflect its mission and objectives, and value network, which encompasses its stakeholders. The second pole, comprising the other two elements, predominantly concerns the EIB’s banking nature, mirroring the liabilities and assets sides of the balance sheet: value capture refers to resourcefulness, including capital, borrowings, and risk management for resilience, efficiency, and effectiveness, while value creation is associated with lending. This bi-polar structure of the EIB’s business model allows for a flexible transition from the banking side to the institution side, adapting to political imperatives and prevailing market conditions.
Figure 1. European Investment Bank Business Model-including the two poles of its dual nature
Source: Kavvadia, 2021c, adapted by the author.
29The EIB’s business model at the pivot has been in use since 2010, following a path of smooth evolution with incremental adjustments, punctuated by two revisions since the bank’s establishment in 1957. These revisions were introduced mainly to bolster the EIB’s banking side—value creation and value capture—amidst turbulent economic and market conditions (Kavvadia, 2020). During the revisions, the EIB’s strategic choices were also modified. However, since its establishment, strategic choices have frequently changed to adapt to Europe’s ever-evolving priorities, rendering the EIB into EU’s “one-stop shop” or “a Jack of all trades” (Kavvadia, 2023c, pp 327), and triggering multiple incremental changes without ever necessitating revisions of the business model. Reflecting the EIB’s institutional nature, such changes are politically motivated and implemented promptly following decisions made in the boardroom by governors or directors. This was also the case with the EIB’s shift toward climate, which was proclaimed directly after a board of directors meeting in November 2019. Despite the EIB’s quick political reflexes, to adjust its strategic choices, the bank’s contribution to the EU’s objectives primarily relies on its banking nature and operations in the market. The EIB focuses on low-cost lending to promote positive conditionality in support of European priorities. Unlike the EIB’s politically mandated strategic choices—part of the institutional pole of the bank’s business model—that can be swiftly aligned with EU policy objectives through internal decisions, its banking side cannot be simply switched through organizational decisions to align with EU policies. The banking side involves balancing multiple actors, both internally and externally, which requires time, strategy, and testing on both sides of the bank’s balance sheet with unpredictable results. Additionally, as the assets and liabilities of the balance sheet function in tandem, they necessitate harmonious functioning between the two elements of the EIB’s banking nature. As a result, institutional decisions concerning the bank’s value creation—such as climate lending targets—must be supported by the bank’s value capture—such as financial resourcefulness and resilience. This ensures the bank’s financial robustness, stability, and ability to act according to consequentialist logic. The need to balance these two elements within the business model explains why past revisions occurred through a bidirectional dialogue process between EU policymakers and the EIB as a policy entrepreneur (Kavvadia, 2022). The EIB’s banking side is therefore part and parcel of the bank’s organizational strategy. As such, this paper unravels whether the EIB’s pivot was the result of a pre-existing deliberate strategy. It assesses the extent to which that bank’s turn toward climate was as transformative as self-claimed by studying eventual changes to its business model as a surrogate for the strategy.
30Being an EU body and a multilateral organization, the EIB’s business model revisions are deliberated at the highest EU level, with changes becoming publicly available (Kavvadia, 2022). In preparation for the EIB’s transition to climate, the bank’s business model was not revised. This contradicts the bank’s rhetoric that claimed a radical change, which it touted as a “quantum leap” (EIB, 2019b, p. 1). However, a revision is a possible outcome of organizational efforts to combine or recombine assets to create and capture economic value, thereby altering their business model to varying degrees. Historical institutional analysis of the EIB (Kavvadia, 2022) has shown that its business model changes can be categorized as follows: i) radical, which implies that structures and processes are severely affected, triggering a revision (such a radical change and business model revision did not occur, as it would disrupt the EIB’s modus operandi with inherent high risks for the bank and its stakeholders). Radical changes often yield unforeseeable results and generally occur on paper during the design phase of newly created and non-existing organizations (Keen & Qureshi, 2006; Ries, 2011); ii) self-same, which is the opposite of a radical change and refers to business-as-usual operations, with minor cosmetic adjustments in structure and processes. A feigned turn to climate is also excluded due to reputational risks stemming from the increasingly intensified scrutiny of the EIB by its stakeholders, particularly the EU member states, other EU institutions, and NGOs that wish to advance the climate agenda, and iii) smart, which involves incremental layering changes with non-disruptive adjustments to align structure and processes. The smart change aligns with the EIB’s path-dependent incremental evolution (Howarth & Kavvadia, 2023; Kavvadia, 2022) and can therefore be considered the alternative followed by the EIB. Beyond its proclaimed pivot, this alternative entails layering adjustments to meet climate finance imperatives. This is also supported by the scholarly claim of Mocanu, D. & Thiemann, M. (2025). The smart business model change scenario of the pivot to climate is by no means transformative; however, it demonstrates the operational readiness to enhance support for climate projects. Consequently, increased post-pivot climate metrics support the EIB’s rebranding as the first international climate bank, in line with its 2019 pledge for a climate threshold—lending reaching 50% of the bank’s aggregate lending by 2025, which was achieved ahead of schedule, when green financing reached 58% of aggregate financing in 2022.
31If climate lending metrics were low during the 2013–2018 period, but the EIB had already been preparing for its transformation into a climate bank, then it was likely building value creation through new products and practices and strengthening value capture to enhance its financing and risk-bearing capacity in anticipation of future increases in climate lending—particularly given that climate projects are typically high-risk and innovation-intensive, and the bank is known for its risk aversion (Clifton et al., 2022; Griffith-Jones & Naqvi, 2021; Honohan, 1995; Kavvadia, 2022, 2023c; Mertens & Thiemann, 2023). The preparation for the EIB’s transition to climate would, however, be evident in the bank’s pre-pivot activity metrics, as increased risk-appetite and attractive targeted green-lending products would have resulted in higher pre-pivot climate metrics. On one hand, the introduction of new climate-specific lending products would show an increase in climate lending, at the latest the year before the pivot. However, in 2018, climate metrics reached their lowest point. On the other hand, since a capital increase had taken place in 2013 (EIB, 2013), the bank’s resourcefulness should have shown an increase in the EIB’s green bonds, which was not the case.
32Business model changes are generally introduced “when changes are sensed in technology, consumer demand, or the competitive landscape… [but are] best undertaken before the need for change becomes obvious” (Teece & Linden, 2017, p. 6). This allows for testing before roll-out, as practiced by the EIB on previous occasions (Kavvadia, 2022). Despite the smart change in the EIB’s business model, its timing, as shown above and by Mocanu and Thiemann (2025), occurred post-pivot, revealing that the proclamation of the turn to climate was not the result of a pre-pivot deliberate strategy, but merely a self-anointment and rebranding. Analyzing the EIB’s metamorphosis into a climate bank from a business perspective confirms existing research from a political science perspective that describes the EIB’s turn to climate as politicized activism (Griffith-Jones & Carreras, 2024; Kavvadia, 2021b; Mertens & Thiemann, 2023).
33The political motivation of the EIB has been extensively discussed (Griffith-Jones & Carreras, 2024; Kavvadia, 2021b; Mertens & Thiemann, 2023). Complementing the findings of the EIB’s intensified politicization, this paper aims to decipher the underlying business benefits that followed behind the EIB’s pivot, completing the study of the bank’s pivot from both sides of its dual nature.
34Despite the rhetoric of transformation, the EIB’s pivot was largely a reputational and strategic repositioning rather than a fundamental change in its operations. The absence of a pre-pivot business strategy for a shift to climate, as exemplified by both the scant climate lending metrics and the non-transformational business model revision before the EIB’s proclamation as the first international climate bank, matches EIB’s own operational plan for 2015–2017. The timing of the smart business model change introduced at the pivot also revealed a lack of strategic planning for the EIB’s metamorphosis into a climate bank. Therefore, it is of interest to understand whether any benefits accompanied the EIB’s bold announcement of becoming the first international climate bank.
35Using the EIB’s business model as a conceptual framework for identifying the bank’s benefits: First, it is evident that by prioritizing climate as part of its strategic choices, the EIB satisfied its shareholders and those stakeholders who embraced the EU’s green agenda (Kavvadia, 2021b). In this way, it strengthened its relevance. Moreover, the timing of its bold proclamation also fortified the EIB’s position amid fierce rivalry, given the major changes in European economic governance (Hodson & Howarth, 2023; Kavvadia, 2021b), and had political benefits. Additionally, the pivot also benefited the EIB’s banking side, and in particular its value network, by positioning the bank as a leader in green finance through positional advantages in a market that encompasses a wide array of sectors and is closely intertwined with Industry 4.0 (Rifkin, 2011). In this respect, the EIB’s swift pivot to climate offered the bank a quasi first-mover status, benefiting from a potentially higher market share (Teece, 2013). As a climate market-maker, the EIB attracted further green lending demand in support of its value creation by presenting higher co-funding opportunities with peers and the wider banking sector. Most importantly, the pivot further strengthened the value creation by cross-reinforcing the bank’s three pillars of activity—namely lending, blending, and advising. Climate lending increased for three reasons: i) climate projects developed through the EIB’s advisory services were concurrently de-risked through blending with EU budgetary resources of the EGD, satisfying all due diligence criteria; ii) the blending decreased costs for clients, acting as a quasi-grant injection (Kavvadia, 2022); iii) the blending leveraged EIB climate lending in support of higher-risk and lower- and slower-profitability projects. Additionally, the pivot further strengthened the EIB’s value capture. It bolstered the bank’s resourcefulness by increasing green investors’ awareness and appetite for EIB green bonds, assuring further credit from rating agencies on Environmental, Social, and Governance (ESG) grounds, and enhancing the bank’s resilience by maintaining asset quality. In other words, the above market-making and risk-minimizing enabled the EIB to apply the golden rule of risking less and getting more, leading to increased efficiency.
36On the flip side, however, participants in the EIB’s value network increased their climatovigilance to ensure that the EIB’s claimed pivot actually takes place (Counter Balance, 2020a; Pacheco, 2025). This is because concerns about scrutiny have previously led to calls for the EIB to improve its transparency and accountability (CB, 2020a; EP, 2000; Feiler & Stoczkiewicz, 1999; Perez, 2021). These calls also addressed the need for the EIB to establish checks and balances to avoid reputational risks resulting from either intentional or unintentional errors, such as the Volkswagen Diesel-gate scandal. The EIB had promoted green technologies (EIB, 2009) for this project, which was later found to be polluting (CEEBN, 2017; EIB, 2019a). Despite the risk of a reputational fallout the EIB has not substantially strengthened its institutional mechanisms to prevent such greenwashing going forward (CB, 2020b; Monaghan, 2021; Bankwatch, 2025).
37The EIB’s swift transition into the climate market was intended to generate benefits, but it also presented challenges predominantly related to market, process, and risk profile issues. These challenges stem from “four structural obstacles linked to the environment of the EIB that may prevent it from fulfilling the promise of a climate bank and redirecting its investments in a time-critical manner” (Mertens & Thiemann, 2023, p. 77). As identified by Mertens and Thiemann (2023), these obstacles include self-preservation, resource dependency, transparency, accountability, and taxonomy. They noted that when the EIB proactively turned to climate, there was inherent uncertainty regarding the demand for climate loans. It may have been challenging for the EIB to identify bankable climate-related projects for the additional EUR 10 billion per annum required to meet its threshold target of 50% by 2025, especially in the aftermath of the pandemic’s health and economic crisis (CB, 2020a; Kavvadia, 2021d). However, with EGD acting as a strong industrial policy instrument, demand for green investments increased, enabling the EIB to reach its climate thresholds, despite its energy policy being more restrictive than EU taxonomy (EC, 2019a) in that it does not fund nuclear energy and natural gas projects.
38The EIB pursued the benefits of a strategic layering change to its business model, which “rejuvenated [it] by altering only some of its elements [...] helping it to capture the lucrative” (Teece & Linden, 2017, p. 6). This shift marked a pivot in name only, rather than a fundamental change in operations. The incremental adjustments to its structure, procedures, and staff skills (Mazzucato & Mikheeva, 2020; Wright et al., 2018) were not transformative but aligned with the EIB’s evolutionary process. As evidenced by the climate lending metrics prior to and during the pivot, the EIB’s turn to climate was timely but did not fully capitalize on the immediate opportunities within the climate market for prompt delivery and advantages; rather, it served medium-term political and banking interests within the EU economic architecture, MDB ecosystem, and green-finance market.
39The EIB raised great expectations for decarbonization when it proclaimed itself the world's first international climate bank in 2019. It characterized this shift to climate as a “quantum leap” (EIB, 2019b, p. 1) and a “transformation” (Fayolle, 2020, p. 229). With a new climate strategy and energy lending policy, it excluded lending for fossil fuel and nuclear energy sectors, while aligning all its financing activities with the goals of the Paris Agreement. The bank pledged to reach a climate lending threshold of 50% of its aggregate lending by 2025. The EIB’s shift to climate has sparked academic interest primarily in the bank’s motivations as an EU agency. However, this has often overlooked the banking aspect of the EIB’s dual nature, with few exceptions. To fill this gap and gain a comprehensive understanding of the motivations behind the EIB’s pivot to climate, this paper examined whether the EIB disposed of a pre-pivot strategy for becoming the first international climate bank by analyzing: i) the pre-pivot climate lending metrics to determine whether the pivot was a culmination of growing climate lending activity reflecting the EIB’s strategy and ii) the EIB’s business model before and and at the pivot to determine whether the EIB’s turn to climate was as transformational and disruptive as has been suggested.
40The EIB had no pre-existing deliberate strategy to become the first international climate bank. The bank’s modest climate lending metrics in the six years prior to its pivot were not due to insufficient demand for climate finance, as the EUR 115 billion covered by the bank constituted only 10% of the USD 1.3 trillion in climate-finance needs. Instead, climate was not prioritized in the EIB’s pre-pivot strategy, as indicated by its operational plan for 2015–2017, which aimed to achieve around 25% of the overall financing through climate finance.
41Additionally, the EIB’s business model did not change radically before the pivot. The timing of the business model layering reveals the absence of a pre-pivot strategy to become the first international climate bank. The business model adjustment occurred at the time of the pivot, contrasting with customary practice. The EIB’s smart business model change at the time of the pivot served to accommodate layering changes for enabling the increase of climate lending in the medium-term, to obtain political and banking benefits, as in the past, with subsequent extensions and changes to the bank’s lending priorities resulting from EU policy priorities. The EIB’s political benefits originate from the bank’s post-pivot reinforced relevance and strengthened position within the EU economic governance and the MDB ecosystem as an incumbent trendsetter. Banking benefits stem predominantly from the EIB’s post-pivot acting as a market-maker in climate finance. This quasi-first-mover status increased demand for climate lending and enabled the bank to achieve and even exceed its threshold of 50% climate lending threshold by 2025. By establishing its green trend-setting stance, the EIB also stimulated demand for its green bonds and enhanced its resourcefulness through market funding (Spielberger, 2025). The bank’s resourcefulness was also further strengthened through institutional means, and in particular through EU guarantees received under the EDG, which enabled the de-risking of climate lending. The risk coverage from these guarantees minimized the EIB’s capital consumption, which is higher for climate lending due to increased risks, and strengthened the EIB’s resilience by safeguarding asset quality. The EIB’s post-pivot increased resourcefulness contributed to maintaining the bank’s top credit rating, despite financing higher-risk climate-related projects. Conversely, the pivot underscored the need for increased climatovigilance, accountability, and transparency within the EIB to mitigate reputational risks.
42The absence of a deliberate pre-pivot strategy to turn to climate showed that the pivot brought considerable political and banking benefits to the EIB through an expedient reaction to meet political demands rather than satisfying long-term banking interests. This is yet another example of the EIB’s ability to obtain significant political and banking benefits through swift and non-transformative layering changes to its modus operandi in order to meet EU priority objectives.
43EIB’s pivot to climate is in contradistinction to the two revisions of its business model to meet challenges in the banking environment of its operation, which entailed significant changes and were partly pilot-tested before their initiation, as is common in large and successful organizations.
44In summary, the EIB’s turn to climate was more of a swivel than a pivot, as it did not instigate any discontinuous change to the EIB’s modus operandi. Despite the rhetoric of transformation, the EIB’s pivot was largely a reputational and strategic repositioning rather than a fundamental change in its operations. The bank’s declaration to become the first international climate bank represents an additional evolutionary development that was driven not only by political motivations, as evidenced in existing research, but also by the bank’s business interests, providing significant banking benefits.