53% Of European Companies Are Now Investing In Climate Action, Finds EIB Climate Investment Report

According to the EIB Climate Investment Report, 53% of European companies are now investing in climate action, which marks a 10 percentage point increase from 2021. Notably, Central and Eastern Europe have witnessed a considerable surge in such investments, alongside small and medium-sized enterprises. Energy-intensive manufacturers display a higher inclination towards climate investments compared to non-energy intensive firms. Despite this, companies are grappling with a high degree of uncertainty that is impacting their investment decisions concerning climate action.

According to the European Investment Bank (EIB) Climate Investment Report for 2022-23 (EIBIS Climate), the percentage of European firms involved in climate action, including energy efficiency, has surged since 2021, indicating a post-pandemic recovery that is expected to continue. The report reveals that the proportion of European companies investing in climate action has increased by 10 percentage points to an average of 53%. This growth has been particularly noticeable in regions such as Central and Eastern Europe, where it has increased by 15 percentage points, and small-medium enterprises, which have seen an 11 percentage point rise. Energy-intensive manufacturers exhibit greater enthusiasm for climate investments, with 48% of them already investing and 57% planning to do so.

Despite the positive trend, European companies have varied opinions about the effects of the climate transition on their operations. While 29% of them are optimistic, roughly 32% are pessimistic. The EIBIS Climate report cites high uncertainty as a significant obstacle to investing in energy efficiency, which has declined by 4 percentage points since 2021, and the situation is even more severe for climate action investments.

“Europe’s future depends on our ability to transform and embrace the digital and green transitions. This calls for bold investment in climate action and climate mitigation. EU firms have realised that climate change is not a distant reality anymore,” said EIB Chief Economist Debora Revoltella upon the release of the EIBIS Climate Report. “Many companies have and will continue investing in climate action to cope with soaring energy costs and play their part in the green transition. However, despite an increase in climate investment, ongoing uncertainty is weighing heavily on EU firms and dampening their readiness to invest in climate solutions.”

Recycling and energy efficiency are the most popular climate mitigation measures among EU firms, with 88% having adopted such practices. However, there are regional differences in mitigation investment, with Western and Northern Europe investing more than Southern Europe and Central and Eastern Europe.

The EIBIS Climate report indicates that an increasing number of firms are concerned about physical climate risks such as extreme weather events. Nearly 60% of European firms report facing such risks, but only 33% have taken any measures to safeguard their business against them. Southern Europe feels more vulnerable to physical risks.

Furthermore, the energy crisis has triggered a surge in investment in energy efficiency solutions, with around 40% of European firms investing in this area, up from 2021. Western and Northern Europe, energy-intensive manufacturing, and large firms are the leading regions, sectors, and company sizes, respectively, driving this trend.

The European Investment Bank (EIB) Investment Report is the bank's primary annual report, designed as a monitoring tool to provide a comprehensive overview of investment and its financing in the European Union. The report combines internal EIB analysis with external expert collaboration to explain key market trends and provide an in-depth examination of particular thematic areas. It incorporates data from the annual EIB Investment Survey, which gathers responses from approximately 12,500 European firms on a broad range of questions related to corporate investment and investment finance, as well as a survey of EU municipalities.

The EIB Climate Investment Report 2022-23 is a detailed analysis of the results of the EIB Investment Survey, with a particular focus on climate action by firms in Europe.