The European Investment Bank (EIB) Climate Investment Report for 2022-23 (EIBIS Climate) shows that the rise in the share of firms engaging in climate action (including energy efficiency) accelerated in 2021, a post-pandemic rebound that is expected to continue. Over the last year, the share of European firms investing in climate has increased by 10 percentage points, reaching 53% on average. The increase has been particularly pronounced in regions such as Central and Eastern Europe (up 15 percentage points) and in small-medium enterprises (up 11 percentage points). Energy-intensive manufacturers have a stronger appetite for climate investments than non-energy intensive firms: 48% of them are currently investing, while 57% are planning to invest.
Whilst European companies are fuelling the climate transition, they have mixed views on the impact of the climate transition on their business. While 29% of them are optimistic about the transition, around 32% are pessimistic. EIBIS Climate shows that high uncertainty is dampening readiness to invest in energy efficiency (down 4 percentage points compared to 2021); this impact is even higher when considering investments in climate action.
88% of EU firms have taken up climate mitigation measures, with recycling and energy efficiency being the most popular. Overall, Western and Northern Europe has invested more in mitigation than Southern Europe and Central and Eastern Europe.
EIBIS Climate reveals is that more firms feel exposed to physical climate risks such as extreme weather events. Almost 60% of European firms report facing physical risks, while only 33% of them said that they had taken at least one action to protect their business from those risks. Southern Europe feels more exposed to physical risks.
The survey also reveals that the energy crisis has spurred investment in energy efficiency solutions. Around 40% of European firms invest in energy efficiency, a share that went up from 2021. Western and Northern Europe, energy-intensive manufacturing and large firms lead the trend among regions, sectors, and company sizes, respectively.
“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.