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Volkswagen's emissions scandal and the European Investment Bank


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In September 2015, news broke that Volkswagen had installed defeat-devices in its diesel cars to rig emission tests, resulting in some models emitting pollutants up to 14 less in emission tests than what they did on the street.

Shortly after, Bankwatch uncovered that the European Investment Bank, the world's largest public lender, supported the world's largest car producer with 19 loans worth EUR 4.3 billion between 2005 and 2015.

Fourteen of the 19 loans were intended for improving fuel efficiency and reducing emissions. Out of them five were classified under the bank's so-called ‘climate action’ lending.

Between 2005 and 2015, the EIB lent European automakers EUR 20.4 billion. Cars of seven of these companies showed considerably higher emissions in more stringent tests.
The underlying data for this graph can be seen and downloaded here. The source data is available on the EIB's website.

 

 

EIB reluctant to disclose information


Since September, Bankwatch is requesting the disclosure of information on the EIB's loans to Volkswagen, in particular such that helps assess the bank's performance in making sure its funds were not being misused.

In January 2016, the EIB's president Werner Hoyer admitted that the bank cannot rule out that one of the loans to Volkswagen in 2009 has been used to finance a cheating device to rig emission tests.

Yet, by March 2016, the EIB has not been very forthcoming and the disclosed information is still not satisfactory.

Warnings from the past


Already in 2009, when billions of EIB funds were disbursed to European carmakers (including VW) in response to the financial crisis, Bankwatch warned that the EIB must ensure that the stated environmental goals of the loans, namely cutting carbon emissions from cars, are indeed implemented.

First tranche of EIB car "crisis" loans requires scrutiny, warn Bankwatch and Greenpeace
Press release | March 12, 2009

Trying to squeeze blood out of a stone

Bankwatch first contacted the European Investment Bank (EIB) in late September 2015 with a detailed request (pdf) to disclose information on 12 of its loans to the VW Group.

Almost two months later, and after failing to meet an extended deadline, the bank sent only finance contracts related to two outstanding VW loans. Much of these documents had been redacted by the EIB.

In view of the profound public interest in the case, the highly insufficient responses were particularly disconcerting. Bankwatch therefore asked the bank's Board of Directors in a letter (pdf) to urge the bank's management to disclose the relevant information.

On December 18, 2015, three weeks after a final confirmatory application, the last available resort within the EIB's transparency policy, the bank provided redacted versions of all twelve finance contracts signed with the VW group and of the completion reports provided by VW to the EIB at the closure of each project. (See all documents in this Google drive folder.)

 

 

Many files were still heavily redacted, making it difficult to interpret the information. For two loans Bankwatch therefore filed a second confirmatory application on January 25.

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Latest developments


 

Bankwatch in the media | September 30, 2015

The Volkswagen Group received more than €4 billion in loans from the European Investment Bank over the last decade, with much of the money going to research aimed at developing cleaner engines.

The world’s largest carmaker is embroiled in a global scandal after installing so-called defeat devices in 11 million of its diesel cars to cheat on emissions standards tests, a scandal that has cost the CEO his job, opened the company to a potential fine of $18 billion in the U.S., pummelled the stock price, and prompted investigations across Europe.

Volkswagen, VW
Press release | March 12, 2009

The European Investment Bank (EIB) has today extended EUR 3 billion in soft loans to eight European carmakers for the development and production of cleaner vehicles. CEE Bankwatch Network and Greenpeace call on the EIB to ensure that money goes to initiatives with a true impact on cutting carbon emissions from cars and not just to small-scale greenwash projects.

Publications

Advocacy letter | January 25, 2016

Following the revelations around Volkswagen cheating emission tests, Bankwatch requested information from the European Investment Bank about its loans to the car maker. After delays, incomplete disclosure, and a frist confirmatory application, the bank released on December 18, 2015 redacted finance contracts between the EIB and VW as well as redacted completion reports provided by VW to the EIB at the closure of each project. (See all documents here.)

Advocacy letter | November 24, 2015

Following the revelations around Volkswagen cheating emission tests, Bankwatch requested information from the European Investment Bank about its loans to the car maker. After some delays, the bank released only part of the requested information, despite the profound public interest in the case.

Advocacy letter | November 12, 2015

In late September, shortly after news of VW's emissions manipulation broke, CEE Bankwatch Network contacted the European Investment Bank (EIB) with a detailed request to disclose information about its immense support to VW Group. In view of the profound public interest in the case, the highly insufficient responses we have received so far are particularly disconcerting. In this letter, Bankwatch therefore asks the EIB's board of directors to turn to the bank's Management Committee for the public disclosure of information related to EIB loans for the Volkswagen Group.

Advocacy letter | November 9, 2015

The dieselgate scandal is symptomatic of a ‘better regulation’ agenda in favour of cutting compliance costs and replacing the role of the public regulator with corporate co- and self-regulation. More than 35 civil society organisations have signed this letter calling for immediate and transparent investigations; EU oversight in the process of type approval for motor vehicles; strengthened enforcement of environmental legislation at EU and Member State level; the suspension of fraudulent companies from the EU lobby register until it has been demonstrated that they comply with EU law.

Advocacy letter | September 25, 2015

Following revelations about Volkswagen cheating in emissions tests and about the European Investment Bank's substantial support for VW - including loans for research and development of cleaner engines, Bankwatch requested information on EIB loans to the car maker.

The bank provided highly insufficient responses. Read more here >>