Creating a predictable and simple framework to support businesses

In order to successfully manage the transformation and make the European economy competitive, a reliable and stable support framework is required. This must be flanked by other instruments, such as guarantees. The most important concern in promotional policy at European level is the marketability of funding products in practice. The public banks are committed to provide simplified access to promotional funding. Therefore, we are calling for more uniform standards in order to reduce the bureaucratic burden for providing promotional support - both with regard to the proof of use by funding recipients and with regard to the legal use-of-proceeds.

EU funding programmes should be optimized to ensure that the funds provided can be used in a timely manner. Strictly linking all processes to the respective EU funding period regularly results in the need for extensive readjustments to the programmes, which ultimately cause delays in the use of funding. In 2023, for example, promotional banks were still working on the final invoices for the funding periods that had already expired at the end of 2020. Creating rules and requirements that are largely independent of the 7-year funding periods, would be a significant improvement to the status quo.

Checking bureaucratic requirements for marketability

Expectations for simplifying and streamlining the various programs were particularly high for the InvestEU programme. In past EU promotional periods, public banks have proven to be reliable and competent partners when it comes to implementing European promotional programs at a national level (e.g. guarantees provided via the EIF under the programmes COSME or InnovFin). Unfortunately, no contract has yet been concluded with a German promotional bank, although they have been involved as intermediaries for years in the past. However, the implementation of InvestEU guarantees in Germany in simple, marketable funding offers is proving to be difficult, particularly due to the increased complexity and bureaucratic burden.  We therefore advocate for a stronger focus on the practical feasibility of comparable initiatives.

Creating a more stable framework for cohesion policy

The same applies to European cohesion policy with its structural funds (ESIF): the complexity of the provisions has already reached a very high level, which is at odds with the efficient use of European structural funds. With regard to the new programming of structural funds, existing procedures should therefore only be changed in exceptional cases. The benefits and the additional burden on the administering should also be weighed up and the experience gained in practice should be taken into account. In addition, we suggest uniform standards for contract design, as this can also contribute to marketability.

Better coordination between promotional programmes and more flexibility in their use

The various strands of European promotional policy and programmes should be better coordinated. This applies in particular to the programes and objectives of European funding, which should at best be aligned in a compatible manner. We therefore also advocate greater flexibility in the use of ESIF funds in order to maintain proportionality. Simplifying the State aid regime would also help to ensure that funds can be used and drawn down quickly and efficiently.

This is also a lesson learned from past crises and developments on the global markets. We are observing that the usual competition rules of the free market are being observed less. This applies not only to East Asian markets, but also to the USA and its Inflation Reduction Act. In order to ensure Europe's competitiveness, the efficient use of public funds (also in combination with private investment) is essential.  This can be an important factor for the long-term competitiveness of the European internal market in order to continue to exist as a production site for key climate-neutral technologies or to become a lead market for climate-neutral production.

Thinking holistically about transformation, transition and social sustainability

For a successful transformation towards a climate-neutral European economy, financing is a major challenge in many sectors. Although instruments such as green bonds can be used to finance green economic activities such as renewable energy, especially the non-green, emission-intensive sectors will require massive investment on the path towards climate neutrality in the coming years. Therefore, a sole focus on financing taxonomy-compliant economic activities is insufficient to reach our emission reduction goals. In addition, the taxonomy does not yet cover many economic activities and sectors. Financing needs beyond the scope of the taxonomy could be addressed through appropriate transition plans. More broadly, these transition finance needs should be taken into consideration in the further regulatory development of the sustainable finance framework. The same applies to urgently needed social investments.

Social investments must be recognized in the same way as transformation and transition finance

In addition to ecological needs, securing funding for social infrastructure is a key factor in the success of the transformation. In particular, overlapping crises and a large investment backlog at municipal level underline the need for social investment. Attention must also be paid to the social compatibility of the economic and social upheavals associated with the transformation. Legislation sometimes focuses exclusively on ecological financing requirements and regulations. A reliable, voluntary framework must be created for necessary social investments. This should offer incentives without imposing complex verification or reporting obligations.