Andrew McDowell, EIB Global Director General

What are the key drivers reshaping the development finance landscape? Listen to Jason Mitchell discuss with Andrew McDowell, EIB Global Director General, the forces that are reshaping European development finance at a moment of geopolitical and climate-driven upheaval and how EIB Global is redefining its tools to fill gaps that markets and multilateral development banks aren’t addressing.

Recording date: 12 December 2025

Andrew McDowell

Andrew McDowell is Director General of EIB Global where he oversees the European Investment Bank's investment and advisory activities outside the European Union. Based in Luxembourg, Andrew manages a team of professionals across numerous offices around the world, supporting climate-related and other projects aligned with EU policy objectives in partner countries. His role places him at the centre of Europe's evolving approach to development finance in an increasingly complex geopolitical environment. He previously served as EIB Vice-President and as Economic Advisor and Programme Manager to the Prime Minister of Ireland.

Episode Transcript

Note: This transcription was generated using a combination of speech recognition software and human transcribers and may contain errors. As a part of this process, this transcript has also been edited for clarity.

Jason Mitchell:

Hi everyone. Welcome back to the podcast, and I hope everyone is staying well. There's a question that I've been mulling over for a couple of weeks now. How is Europe rethinking development finance in light of the current geopolitical environment? For a long time, this was a largely technocratic world. Decisions that were once driven by economic or financial logic are now increasingly shaped by power politics, security concerns, and strategic rivalry. In practise, that means climate ambitions now sit sometimes uncomfortably alongside energy security, industrial policy and strategic autonomy. And the multilateral system that underpinned post-war development finance is fragmenting just as climate impacts or intensifying and financing needs are accelerating. And there are a few institutions that sit closer to these tensions than the European Investment Bank, which is why it's great to have Andrew McDowell from the European Investment Bank Global on the podcast, particularly following the recently announced EIB Global new strategy.

When I last interviewed Andrew way back in 2019, the EIB was just emerging as the EU's self-styled climate bank. Since then, the world has changed dramatically. Climate finance gaps are widening, private capital remains elusive in the places it's needed most, and the EU's external investment agenda is now explicitly framed around economic security, critical raw minerals and mutually beneficial partnerships. So we talk about the forces that are reshaping European development finance at a moment of great geopolitical and climate-driven upheaval, how EIB Global is redefining its tools from climate strategy and blended finance to energy security, just transition, adaptation and results-based lending to fill gaps that markets and MDBs aren't really addressing.

Andrew is director general of EIB Global where he oversees the European Investment Bank's investment and advisory activities outside the European Union. Based in Luxembourg, Andrew manages a team of professionals across numerous offices around the world supporting climate-related and other projects aligned with EU policy objectives in partner countries. His role places him at the centre of Europe's evolving approach to development finance in an increasingly complex geopolitical environment. He previously served as EIB vice president and as economic advisor and programme manager to the Prime Minister of Ireland.

Welcome to the podcast Andrew McDowell. It's great to have you here, and thank you for taking the time today.

Andrew McDowell:

Thanks, Jason. Great to reconnect and great to be back on the podcast. Looking forward to the conversation.

Jason Mitchell:

Absolutely. It's been six years, but it's been a great catch up. And by the way, congrats on the new role at the EIB Global. Really, it's fantastic to see that. So, Andrew, let's start out with some scene setting. So you've assumed leadership of the EIB Global at what many consider an inflexion point for European Development Finance. Now notwithstanding the obvious geopolitical pressures, what do you see as the key drivers that are reshaping the development finance landscape going into next year into 2026? And again, I know your role has changed, but how are these different from the challenges you faced during your previous tenure at the EIB?

Andrew McDowell:

Well, thanks Jason. I mean, look, I think a lot has changed since I left EIB back in 2020 and in particular what you call the obvious geopolitical pressures, but they are worth posing on for a moment because I think that's been the biggest change. Clearly we're in a different global political landscape, and Europe in particular is facing pressures, security pressures, economic pressures, continued environmental pressures, and these are higher up our agenda now as the European Investment Bank and really driving our prioritisation and our strategy including for EIB Global, which is, as you've said, the part of EIB that originates loans and advisory operations outside of the EU. But I have to say that is the dominant driving agenda for us. But of course like other MDBs, we're seeing a global landscape where I think climate is going to continue to be extremely important in the minds of our borrowers who are increasingly affected by climate risk and increasingly interested both for economic and environmental reasons, investing in climate related projects.

We see obviously a macroeconomic landscape where we may be approaching the bottom of the interest rate cycle again after a couple of years of cutting. That's obviously going to have impact on our clients and on the flows of capital globally, including for borrowers and emerging markets. Obviously we see an MDB reform agenda in particular being driven by our shareholders, being driven by the G20. In a world of increased fiscal scarcity, we're being expected to do more with less stretching our own balance sheets, innovating around private sector mobilisation. So for me, these would be some of the biggest themes as we go into 2026 on top of the geopolitical competition and fragmentation that we're seeing.

Jason Mitchell:

That's a great backdrop, and we're going to dig into a lot of this and particularly the latest EIB Global strategy. But I guess first EIB Global was originally designed to strengthen the EU's development impact abroad, how is it redefining what development finance looks like? I guess as you said in the age of climate transition, where do you see the biggest gaps that MDBs including the EIB still aren't really filling?

Andrew McDowell:

I think we all acknowledge we're still not addressing the major gap around private sector mobilisation into emerging markets and in particular obviously into some of the emerging markets that face the greatest developmental challenges and with the least fiscal capacity. I think we all know the numbers in terms of the scale of capital mobilisation required to deliver on the UN's sustainable development goals, including the climate transition. And we know MDBs themselves, multilateral development banks themselves are only going to be able to finance directly through their own balance sheets, a relatively small proportion of that financing gap.

We also know private sector investment levels into most emerging markets have fallen quite significantly in the last 20 years. So I think this is still the biggest gap. I don't think we've cracked this nut yet that has been requested by our shareholders. So we adapt our governance, our strategies, our product design, our operating models to focus more on what private capital flows we can mobilise rather than what we do directly through our own balance sheet or to complement directly what we do through our own balance sheet and I still think the biggest challenge we all faced collectively.

Jason Mitchell:

When we recorded our first episode way back in 2019, we talked about how the EIB was emerging as the EU's climate bank. And just as then, the EIB continues to advance its ambitions for climate action under the climate bank roadmap. But I guess stepping back, how do you see climate reoriented or at the very least recalibrating in its climate mission relative to other priority sectors? Not to mention notions like European strategic autonomy, economic security, and even defence. To what degree is this strategic orientation or reorientation a pragmatic, I don't want to call it this, but am I right in saying a subtle deprioritization of the climate mandate in favour of a broader geopolitical and geoeconomic agenda given the most recent European Commission focus?

Andrew McDowell:

Allow me to politely push back, but I don't think it's a deep prioritisation of the climate agenda. In fact, on the contrary, if our new strategy is identifying some changes in our approach in some areas it's also identifying areas of continuity where we will continue to prioritise and step up. And climate indeed is one of those areas of more continuity than change I would suggest. And in fact, alongside the EIB Global strategy published in the last number of months, it has also published its new climate bank roadmap, which recommits EIB to the extremely ambitious goals that were set out at the beginning of this decade that at least 50% of our financing would go towards climate action and the other environmental sustainability goals of the EU, that all of our operations would remain Paris aligned, including our exclusions for unmitigated fossil fuel projects and that we would mobilise through our financing at least one trillion euro of investment over the course of this decade into climate related projects.

We have in the new strategy identified the need for greater simplicity in how we do this to make this easier for our clients, for our borrowers to align with our definitions of climate action and environmental sustainability. We have indeed in the new geopolitical context also made it clear we need to find the connections between our climate finance business and Europe's own industrial competitiveness and economic security. But it does not mean we are deprioritizing climate. We are just making those connections in a much clearer way than we've done in the past. So indeed, outside of EU in the EIB Global business, just under 60% of our financing last year continued to support climate action, both mitigation and adaptation. In fact, about a third of that supported adaptation, which is a very high percentage, our highest percentage ever, and I expect us to deliver similar outcomes in terms of climate finance under the new strategy over the coming years.

Jason Mitchell:

Yeah, thanks for that clarification. One of the elements I like about the EIB Global strategy is frankly it's honesty. I mean, in my mind it recognises that the climate agenda is increasingly questioned by key players and that the funding cuts are creating large gaps in finance for climate affected development. At the same time, you're maintaining commitments under the climate bank roadmap while also prioritising nine different sectors where climate is just one consideration. With an estimated, I'm guessing it's around six and a half trillion in annual climate finance needs globally by 2030, how does the EIB plan to maintain its climate ambitions when the geopolitical winds are shifting against climate multilateralism? In other words, are you essentially trying to hold the line while others retreat or is there a more strategic play here?

Andrew McDowell:

I think we are holding the line. I mean, I think, Jason, this is perhaps one of the benefits of our pillar shareholder structure. As you know, we're owned by the 27 EU member states, and I think that shareholding structure maybe uniquely allows the EIB to indicate that we will continue to hold the line in this particular area. This is an area that's very important for our political masters or shareholders for the European public at large, and hence an area that we can continue to prioritise. I don't think we are going to struggle in any way to find projects to support even as perhaps some others de-prioritise this area. I mean, if anything, we see increased demands for capital in the renewable energy area in particular, which we continue to support.

In the water financing area, this is an area of huge growth in terms of our own financing. I think last year we were the largest water financer in the world, including outside of the EU, so we see this as an area of significant growth and indeed in the transport area, particularly around urban transportation, railways, ports, we will continue to expand our business in those areas, all of which deliver significantly, not just on the economic development agenda, but also on the climate mitigation and indeed adaptation agendas. So we both have the will to continue in this area, we have the means in terms of the financial support from our shareholders and also the demand from the market to continue to grow our business in this area.

Jason Mitchell:

Yeah. You mentioned a little bit earlier that talk about mobilising private capital. In my mind, there's some degree of scepticism over whether multilateral lenders are genuinely able to mobilise private capital. What is EIB Global view is, I guess its most effective mechanism for driving additionality in this context? Where is the bank's struggle to crowd in private finance for climate critical sectors?

Andrew McDowell:

Yeah, look, I don't proclaim EIB to be the leader in this particular field, and I would have to acknowledge that we look at some of the innovations from some of our partner institutions; CRBD, IFC, some of the other regional development banks as sources of inspiration. I mean, I think clearly guarantees is the area where we continue to see a lot of potential for private sector mobilisation and particularly where we can offer significant credit enhancement and in the cases of supervised institutions capital relief for those institutions when they invest in emerging markets. I think this is an area that we would like to grow ourselves. We do see it as being very catalytic because what you find when you provide guarantees to institutions to invest in certain markets and certain sectors for the first time is perhaps in the second or third transaction, they don't need as much support, they just become more comfortable themselves with the local environment, with the risks and find ways to actually deploy capital without the need for continued credit risk mitigation by MDBs.

I do think there is an agenda required I think of perhaps regulatory reform in this particular area because the best way I think for multilateral development banks in the private sector to really collaborate is for each to take the risks that they are best in a position to manage and mitigate. And I think, for example, multilateral development banks are good at managing political risks, risks involving the state, involving state owned off-taking issues or other political risks that can face projects in emerging markets. I think the private sector in many ways is much better at managing the more commercial risks, operational risks, technology risks associated with projects in emerging markets. The difficulty with this approach though, in terms of particularly banking and insurance supervision is that unless you offer as an MDB a comprehensive risk guarantee, so in other words, you move all of the risks from the private sector to multilateral development banks, you don't see capital relief being offered to the private sector institutions.

And I think this is really something that I would like to see addressed perhaps at the G20 level in terms of recognising the role that multilateral development banks can provide to the private sector in terms of risk mitigation without necessarily comprehensive guarantees. And I would really hope this is an area where we can see some progress in 2026.

Jason Mitchell:

Say more about this at the G20 level. What would something like that look like that you would want?

Andrew McDowell:

I think it might look like a request perhaps to the banking regulatory and supervisory community as well as the insurance regulatory community to perhaps relook at how some of the rules are implemented when it comes to regulatory capital relief through guarantees. So what we see basically in the new post Basel III environment is that partial risk guarantees or political risk guarantees or other forms of partial risk guarantees are no longer in such demand from the banks because they don't offer the same degree of capital relief that they did before. And this is unfortunate because it means that we either have a choice of offering comprehensive guarantees in taking all the risks onto MDBs, which to be quite frank, I think is not optimal or nothing. And I think we need to find a way where we are all incentivized to manage and mitigate those risks that we are in the best position to handle. I don't think it can be the case that multilateral development banks should be asked to take in their entirety all the risks away from the private sector in order to get them to invest in emerging markets. As I said, I think MDBs are good at managing some type of risks, but the private sector is much better at managing other type of risks, and we need to design products that fulfil that division of labour and also get recognised by supervisors in terms of their risk mitigation effects.

Jason Mitchell:

Yeah, this is super, super interesting. So I hope you don't mind if I dig a little bit deeper in this. It just seems to me that blended finance has become a bit of a buzzword currently. I mean, I know it's got a history, but it seems particularly activated now, particularly in academic circles, but the results historically look a bit mixed. In other words, expectations seem to be running very high, but I worry that it can't really scale. I hope I'm wrong, but from your perspective, what types of risk sharing structures, again, to go back to your word if MDBs are good at one thing in the private sector, are good at other types of things, but what kind of risk sharing structures actually work in practise, and what approaches do you think the industry should retire because they failed to deliver impact at scale?

Andrew McDowell:

Yeah, I mean, so there is many, many different approaches to blended finance, and so in some ways you can look at the balance sheet level of the MDBs themselves, where we obviously take in extensive amounts of private finance into our own balance sheet through our bond issuances and obviously deploy that then across the world on the asset side of our balance sheet. And obviously we're seeing some innovations in that regard that MDBs are expected to deliver through stretching their balance sheets and enhancing their own risk appetite and increasing the degree of leverage and private sector mobilisation through their own balance sheets. But then of course, at the project level, we see other techniques, and we see techniques where we co-finance with the private sector and obviously through the benefit of our due diligence and confirmation that projects meet our credit risk requirements as well as our environmental and social due diligence requirements.

We mobilise significantly around amounts of private finance, even on a parity-pass-through basis as the level of project structures or pre-project finance structures or corporate balance sheets. I think that's still very effective, and I still think there's a huge role for MDBs to play in that signalling effect, in that halo effect that they provide at the project level to provide reassurance to the private sector even when there isn't formal structured credit enhancement. I think what's not quite honestly sustainable, sometimes where there is a mismatch of expectations between MDBs and the private sector or sometimes even between MDBs and their shareholders and political masters is the degree to which MDBs can actually structurally subordinate themselves to the private sector at the project level. I mean, it does happen, and we do see us taking on occasion subordinated positions in order to boost the risk returns available to the private sector in more senior positions, but it's incredibly capital intensive for MDBs.

It's often outside of our own risk appetite. It often requires us to support those positions ourselves with guarantees, special guarantees like we do from the European Commission or from our shareholders, which is very fiscally intensive. Sometimes I think there's a little bit of a dialogue of the deaf. The MDBs should be there to subordinate themselves to the private sector to provide comprehensive guarantees to the private sector to mobilise investment flows in emerging markets, when in reality we collectively just do not have the capital for that or the risk appetite for that consistent with our own commitments to remain AAA institutions. So I think we need to find other techniques where we are sharing due diligence, we are sharing credit assessments, we're sharing our environmental standards, we're sharing our data with the private sector without necessarily fully subordinating ourselves to the private sector. I think one good example, by the way, of what does work and what we see as an area where there's huge private sector interest is sharing our data.

You may be familiar with the global emerging market database, which is a consortium of all the MDBs coming together, sharing their credit experience in emerging markets over 50 years. EID runs the secretariat and the database for the consortium of MDBs, but we now see huge demand and interest from the private sector towards sharing that data. And what it frankly shows is that our experience of losses in emerging markets is much less than what you would expect when you see some of the rating agencies data. And obviously in some ways there's good reasons for that. We are multilateral development banks. We do play a particular role, and perhaps our borrowers are much less likely to default on us. But even in the non-sovereign space where we don't have formal preferred creditor status, what our data is showing is that risks in a lot of emerging market destinations are much better than certainly the perception in the private sector. And I do think this data and this experience is probably one of the best ways for us to actually mobilise more private sector investment into these markets.

Jason Mitchell:

Interesting. Wow. Thanks for calling out that data set. I wanted to change things a little bit, but the EIB strategy talks about how clean energy projects serve EU energy security needs, and the EIB Global will "evaluate foreign dependencies to inform project origination in sectors like renewable energy." If I'm honest, this sounds less like climate finance and more like securing Europe's green energy supply chains, which so be it. But when you're financing renewable energy in let's say North Africa or green hydrogen in Chile, whose energy security do you see the EIB serving? How do you see these projects contributing to local energy access, particularly for the 600 million Africans without reliable electricity, rather than effectively becoming green extraction corridors for European consumption?

Andrew McDowell:

Obviously, there's multiple objectives though that we are following, and depending on the locations, we are probably prioritising different objectives. We are financing renewable energy and energy access projects across Sub-Saharan Africa that frankly have no direct relationship with the EU's energy security, whether it's through interconnection or other economic interconnections. In fact, President von der Leyen from the European Commission just recently announced on the margins of the G20 Summit in Johannesburg that Europe would make an additional 15 billion Euro commitment to universal energy, clean energy access across Africa over the next two to three years, including a two billion commitment from EIB Global. And so that is very much driven by our motivation and mission to support access to clean renewable energy for Africans, for the purpose of economic development as well as Europe's own climate finance ambitions globally and its commitment to play its part in financing global public goods, including climate mitigation and adaptation.

But clearly there are other projects that are linked to Europe's own energy security, whether it be through green hydrogen supply chains, whether it be through interconnection with certain regions of the world, including North Africa that have exceptional conditions, good conditions for solar and indeed wind, as well as in some cases in some parts of the world hydro. And here we are really pursuing a win-win partnership. So we're pursuing projects of the highest environmental and social standards that create good jobs, that create wealth for local communities in local countries, but indeed have an energy security benefit for Europe through various interdependencies and supply chains. And in those projects, we do not apologise for making sure that Europe's energy security as well as local energy security is protected. And in the selection of the contractors, in the selection of the equipment, we want to make sure that we are building something consistent with EU regulation around energy security requirements. And that's obviously something you'd expect to hear from the European Investment Bank.

Jason Mitchell:

Yeah, absolutely. Under the climate bank roadmap, the EIB committed that at least 50% of its financing would support climate action and environmental sustainability. The new strategic orientation talks a lot about continuing the commitment to the climate bank roadmap, but it doesn't really provide specific climate finance targets for EIB Global. Given that you're now explicitly prioritising sectors like health education, critical raw materials extraction and private sector development based on EU commercial interests, what is the actual climate finance target that we should think about for EIB Global? Are you maintaining the 50% threshold outside the EU or has that shifted to favour a more flexible transversal focus?

Andrew McDowell:

I mean, you're right to say that the different individual constituent parts of the EIB group, including global, including our inside EU operations, including the European Investment Fund, have not individually set out different targets for climate finance. What we have done is collectively through the Climate Bank roadmap set as an overall group target that at least 50% of our overall financing, which will be about 100 billion this year will be for climate action and the other environmental sustainability goals. I've mentioned before, the one trillion euro mobilisation commitment and the commitment for Paris alignment of all of our operations. So that applies to EIB Global, and we will have to make our proportionate contribution to that group target as we have done in recent years.

And as I've mentioned, we have delivered, in fact, a 60% or just under 60% share of our financing went towards climate action last year. I expect to see something similar for this year's turns. We published the final results in January, but I'd expect to see something similar. So I see no deprioritization of this in our business. I think, yes, we've identified nine sectors that we will focus on and prioritise over the coming years, but there's an opportunity for climate action in pretty much all of those sectors. So climate action and climate finance is not a separate category in itself. It's something that's transversal across the operations, so we'll pursue across those nine sectors.

Jason Mitchell:

I want to dig in a little bit more to this. The new strategy talks about climate adaptation in several different forms, technical assistance for adaptation and the water resilience programme to give two examples, but the emphasis seems to focus on mitigation infrastructure like clean energy transport and digital connectivity. And I think you'd agree adaptation and resilience are where vulnerable countries face the largest financing gap. Given that adaptation projects are typically harder to finance commercially and generate lower returns, how do you think about balancing this idea of mutually beneficial partnerships and EU commercial interests such that it doesn't necessarily marginalise adaptation finance precisely when climate impacts are accelerating in the global south? How do you think, in other words, addressing the structural barriers, whether it's risk perception, revenues, uncertainty, or fragmented governance that often holds back adaptation funding, particularly in low income and climate vulnerable countries? Sorry if that's a big question, but as I said-

Andrew McDowell:

It is a big question, and I think it's an important question. And so at the group level, again, we have increased the commitment to climate adaptation in the new climate bank roadmap as you may have seen. So the share of the overall climate financing that would go towards adaptation has increased from 15 to 25%. And again, for EIB Global, we're already delivering at those levels. So more than a third of our climate finance last year went into adaptation projects. And the reason why that was for EIB Global is a big share of our financing outside of the EU is going into water projects over recent years. In fact, this year that share will even grow further. And water projects in areas like water extraction, sanitation, water distribution often meet our requirements which are aligned with the rest of the MDPs for adaptation for obvious reasons. So I think there's an area of anything that will grow in the coming years.

In fact, it is an area that does neatly fit into the kind of concept of win-win partnerships because what we also see in fact is a lot of European companies and European technologies are very competitive around the world in the area of water. And we see a lot of interest in our partner countries towards attracting European foreign direct investment in the water space, which we're obviously very happy to support. So I don't see the acknowledgement in our strategy that we need to find these areas of win-win partnership as in any way being a trade-off with our commitment to also support what adaptation. Similar in the transport sector, again, we see significant areas of investments in ports, in roads, in railways that will meet our adaptation requirements in terms of infrastructure resilience, where we also see significant European commercial interest. And again, we like that win-win partnership as part of our new strategy, and we think of anything that will grow in the coming years.

Jason Mitchell:

Yeah, really, really interesting. How is EIB Global balancing, I guess, the urgency of expanding renewable infrastructure with the social and political complexities of the just transition specifically, especially in countries where fossil fuels still underpin a lot of the livelihoods as well as fiscal stability?

Andrew McDowell:

Look, this is a complex challenge, and obviously we remain committed to play our part in those countries that have signed out to just energy transition partnerships. In fact, in Johannesburg also, I mentioned that I was there in the margins of the G20 and in the presence of President von der Leyen and President Ramaphosa. President Costa from the European Council signed a very large loan with Transnet, the South African railway and ports operator, a very large loan in the context of South Africa's just energy transition partnership commitment. So this is 350 million euro loan that is part of EIB's commitment to deliver a billion euro in financing. For South Africa's JETP, we've done similar operations in Colombia and Vietnam recently. And as you know, those transition partnerships are explicitly designed to support a fair and just transition that is not just environmentally sustainable, but socially sustainable, but it is a challenging area.

We do see obviously the need to support hydropower in certain regions of the world, and we are extremely attentive to the implications of projects of that skill for individual communities and distinctive groups within certain countries. And we spend an awful lot of our due diligence effort and time making sure that communities are fairly treated in the context of those major projects. I think this is something that all the MDB, multilateral development banks, have to balance and get their trade-offs right. But I have to say we do see our borrowers also recognising that to make these projects bankable, they also need to demonstrate that they have processes in place, they have governance in place for community consultation, community engagement and community gain to be quite frank.

And we see an awful lot of innovation now in the projects that we support where community gain is assured in various forms, sometimes in the form of reduced power costs for local communities that are affected by the projects, sometimes in the form of commitments to job creation in the local community, sometimes other forms of community gain in the forms of better infrastructure and community infrastructure, schools, hospitals, and so on for the communities that are affected by the projects. But I do see an increasing amount of attentiveness from our borrowers towards making sure that this works. And I think one of the things our borrowers increasingly recognise is one of the greatest threats to the bankability of their projects is lack of community support. And we see this in the area of resource extraction, for example, critical raw materials where we see an increasing awareness by borrowers that one of the biggest challenges for those projects is making sure that communities are satisfied, that there's going to be no implications for the quality of their water in the local regions, there's going to be no other environmentally destructive practises by such projects because otherwise these projects are not going to be politically sustainable, which will have implications for their bankability.

So this is an area of constant attention by EIB Global. I can't say we've always got everything right. There's always going to be complaints. We have a very transparent complaints process where we haven't got this balance right, a very independent process for adjudicating over it, and that's something we're very committed to maintaining.

Jason Mitchell:

Thanks Andrew. I've got two more questions, and I want to step back a little bit and look at the broader development finance picture. By that, I mean we're clearly seeing a fundamental shift away from the US led multilateral system to a new, many say, multipolar reality where development funding is expected to fall. I've seen numbers between 15 to 22% in 2025. With others pulling back, how does the EIB plan to position Europe, not just as a gap filler, but as the architect of a new model for development finance that can compete with bilateral approaches from China and others?

Andrew McDowell:

I mean, honestly, I'm not sure we can fill the gaps. I mean, there are obviously cuts taking place to development aid, whether it's from the United States or indeed across Europe, and that cannot be replaced by increased debt finance or cannot be offset by debt finance from a multilateral development bank. And that is just a political reality. But we do see certain areas where our clients, our partner countries are asking us to step in with debt where that's appropriate to replace. For example, in many cases, the US Development Finance Corporation, DFC, which has reprioritized its own business over the course of the last year away from climate financing and is no longer supporting, for example, renewable energy projects in many of our partner countries. And we have been asked, and we have agreed to step in in many cases with either coming into the projects to completely replace DFC or to increase the share of our financing and the project structure.

I think in terms of as an architect or a co-architect for a new model of development finance, we are seeing major developments obviously at the European level in terms of what the European model of development finance will look like in the coming years under the global gateway strategy. And obviously we are one of the constituent parts of that and that are inputting into the design of that. And clearly there's going to be an element of trying to find the sweet spot between development finance and the needs of our borrowers with Europe's own interests in terms of its own commercial security, economic and environmental interests. And that is going to be, I think, a model of a new development finance model that's going to be with us for some time.

But I still would like to think even in the context of that model, that one of the value propositions that we bring or one of the reasons why countries will still want to work with us even as we acknowledge that we're trying to serve a broader agenda, is that we will never finance projects that don't make sense for them. We will never finance white elephant infrastructure projects and lumber our partner countries with debt that is not sustainable to support projects that make no economic or social sense for those countries. Even as we think about these multiple objectives, we will retain always our mission and values as a multilateral development bank that we will only support good projects that are environmentally and economically and fiscally sustainable for the partner countries. And that trust is extremely important to us that we have the trust of our borrowers to do the due diligence in a fully independent way and to make sure these are good projects that we're supporting. I think that's something that is there at the moment. I think we are trusted by our borrowers, and that's something we're very committed to maintaining.

Jason Mitchell:

Yeah, I personally have seen some of those white elephant projects. So the idea of trust and your commitment not to finance those really resonates. So last question, talk about how the traditional North-South development model could evolve from here. The EIB Globals concentric circles framework looks like it allocates resources based on proximity to Europe rather than development need. This sounds a little bit like a break from the traditional post-war multilateral development model towards one where development banks act more as tools to advance EU economic growth. I alluded to this in earlier question, but what does this mean, I guess, in the context of this North-South relationship for countries and regions that don't align with European strategic interests? So they simply de-prioritised in this new era of, again, to go back to this kind of phrase, mutually beneficial partnerships.

Andrew McDowell:

Yeah, Jason, you're referring, I think, to a concept that we put into our strategy where we are narrower in the policy logics that underpin operations in some regions further away from Europe than in other regions. But to be absolutely clear, this is not about de-prioritising regions with the greatest development need. On the contrary, I think what you'll see in those so-called concentric circles in the strategy is, for example, in Sub-Saharan Africa, we very clearly maintain that a justifiable policy logic for those operations is to finance the necessary economic and social infrastructures needed for development. So this isn't about shifting our resources away from countries in the greatest need, this is just about being very focused and clear about what drives us to do operations in different parts of the world. And it is true when we are financing operations, perhaps closer to the EU, for example, in the candidate in Ukraine, the candidate countries, perhaps even in our own neighbourhood in the Mediterranean, we will have a broader set of policy logics that make sense because some of our operations will be about integrating those countries and those markets into the European single market space.

They will be about digital interconnection, energy interconnection, transport interconnection, which are policy logics that don't make any sense if you're talking about Latin America or Asia or Sub-Saharan Africa. So it's not about not working with those countries in various need. On the contrary, it's just about being very clear what underpins and drives our approach to different regions of the world in terms of policy logics. So we have made it very clear in the document we will continue to support, particularly in Sub-Saharan Africa countries in severe risk of debt distress, that we would continue to provide high levels of concessionality for least developed countries, particularly those obviously under IMF programmes. We've gone to some length to set out the kind of instruments that we have available, including exceptionally long tenors up to 30 years and grace periods up to 10 years in our loan structures, as well as grant aid to support those countries in greatest need and at greatest risk of debt distress in collaboration with other MDPs in the IMF.

So these are areas that we maintain a very strong commitment to with the support of the European Commission and our member states. In terms of where the Northside development model goes in the future though, I mean, all I can say is what we do hear from our partner countries is that they do want this win-win partnership. They don't want this traditional, almost post-colonial donor-benefactor model of development. They want us to support our own economic growth, they want us to support private sector trade and investment relations between them and Europe. They still see Europe as open. They see Europe as being committed to fair and sustainable trade and investment relations, and they want our financing to help support that, including bringing European capital, European technology, and European companies to engage in their countries. Often, it is interesting, we inquire as our borrower countries about why we don't see more European contractors in the delivery of some of the projects that we're financing.

And the response often is, we wish you would bring the European contractors, we wish you would work with us in making our countries attractive to those European contractors because we want to see more European commercial presence. And I think this is one of the unique roles that EIB can play because EIB uniquely in the MDB community is not only operating in countries across the world outside of the EU, but is working inside of EU in all 27 member states with the private sector. And I think one of the value propositions that we can bring uniquely in the MDB community is that offer to connect our borrowers and connect our projects with the European sector that we work with inside of EU in order to deliver on that win-win partnership. And that's the model, the Northside development model that so many of our partner countries are asking us to build.

Jason Mitchell:

Interesting. No, thank you for the clarification. I really appreciate that. So it's been fascinating to talk about the forces that are reshaping European development finance at a moment of great geopolitical and climate driven upheaval, and how the EIB Global is redefining its tools from climate strategy and blended finance to energy security, just transition, adaptation and results-based lending to fill gaps that markets and MDBs aren't addressing. So I'd really like to thank you for your time and insights. I'm Jason Mitchell, head of Responsible Investment Research at Man Group here today with Andrew McDowell, Director General of EIB Global. Many thanks for joining us on a sustainable future, and I hope you'll join us on our next podcast episode. Andrew, thank you so much for this. This was just incredibly interesting.

Andrew McDowell:

It's been my pleasure, Jason, been great to reconnect. Thank you for the invitation.

Jason Mitchell:

Hi, I'm Jason Mitchell. Thanks for joining us and special thanks to our guests and of course everyone that helped produce this show. To check out more episodes of this podcast, visit us at www.man.com/ri-podcast.