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InvestEU Programme (2021-2027)

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InvestEU Programme (2021-2027)

SUMMARY OF:

Regulation (EU) 2021/523 establishing the InvestEU Programme

WHAT IS THE AIM OF THE REGULATION?

It establishes the InvestEU programme comprising 3 building blocks:

the InvestEU Fund, providing an EU guarantee to support financing of and investment in internal EU policies;
the InvestEU Advisory Hub, supporting project development, access to finance and capacity-building assistance;
the InvestEU Portal, giving visibility to projects seeking finance and information on investment opportunities.

KEY POINTS

The InvestEU programme’s general aim is to support financing that contributes to:

competitiveness, including research, innovation and digitisation;
economic growth, sustainability and employment;
social resilience, inclusiveness and innovation;
scientific and technological advancement, including culture, education and training;
the integration of capital markets and a stronger internal market;
economic, social and territorial cohesion;
sustainable and inclusive recovery of the EU economy, including capital support for small and medium-sized enterprises (SMEs), after the Covid-19 crisis.

The programme uses 4 specific policy areas (through 4 dedicated ‘windows’), each with specific EU and national parts (‘compartments’) to address market failures or suboptimal investment situations:

sustainable infrastructure ranging from transport, energy and digital connectivity to the circular economy and innovative technologies;
research, innovation and digitisation, including product development and support for market enablers;
financing for SMEs, including innovative companies and those in the cultural and creative sectors;
social investment and skills covering microfinance, social enterprises, health, gender equality, education, training and other social services.

These are supported by:

a just transition scheme with investments to address the social, economic and environmental challenges of meeting the EU’s 2030 climate targets and 2050 goal of climate neutrality (see summary);
strategic investments in important projects of common European interest, such as defence, space, cybersecurity, the green transition, the digital transition and strengthening strategic value chains.

InvestEU has a budgetary guarantee of €26.2 billion (in current prices) funded by NextGenerationEU resources and the multiannual financial framework (2021-2027).

The guarantee can be increased by contributions from EU Member States and non-EU countries. It is split as follows:

€14.8 billion for measures to support the post-Covid-19 economic recovery under the EU’s Recovery and Resilience Facility set up under Regulation (EU) 2021/241 (see summary);
€11.3 billion for the 4 specific policy areas listed above.

The European Commission and the European Investment Bank Group (EIBG) form a partnership under which the EIBG has specific tasks, to:

support the implementation of the InvestEU programme;
foster its consistency, inclusivity, additionality* and efficient deployment.

Other national promotional banks and institutions and international financial institutions can take part in the programme.

The Commission will:

select implementing partners* in addition to the EIB;
conclude a guarantee agreement with each partner covering items such as the amount and terms of the financial contribution, payment conditions and key performance indicators.

To qualify for InvestEU Fund support, financing and investment operations must:

comply with various conditions set out in the EU’s Financial Regulation (Regulation (EU, Euratom) 2018/1046 — see summary);
contribute to the EU’s policy objectives and be an eligible area under Annex II (energy, transport infrastructure, environment and resources, digital connectivity, research, development and innovation, digital technologies, SMEs, cultural and creative sectors, tourism, rehabilitation of industrial sites, sustainable land and water use, bioeconomy, social investment, defence, space, seas and oceans);
not feature on the list of excluded activities in Annex V (B), such as gambling, tobacco, real estate, oil, fossil fuels or violations of human rights;
be consistent with the investment guidelines.

The InvestEU Fund may also support projects and operations in non-EU countries subject to certain conditions.

The EU guarantee:

may be used towards risk coverage for various types of financing (loans, guarantees, capital market instruments or other forms of credit) provided by the implementing partners;
covers for
- debt: all outstanding principal and interest due to the implementing partner, restructuring losses and losses from currency fluctuations, apart from the euro
- equity or quasi-equity investments: amounts invested and associated funding costs and losses from currency fluctuations, apart from the euro
- funding or guarantees by an implementing partner to another financial institution: amounts used and associated costs.

The regulation establishes a governance structure which consists of the following.

The Advisory Board meets at least twice a year and advises the Commission and the Steering Board on the design of financial products, market developments, conditions and failures and suboptimal investments.
The Steering Board provides strategic and operational guidance for the implementing partners, applies the Commission’s risk methodological framework and oversees the implementation of the InvestEU programme.
The Scoreboard contains various indicators that implementing partners provide, such as a description of the proposed financing and impact of the investment, so the Investment Committee can carry out an independent, transparent and harmonised assessment of requests for use of the EU guarantee.
The Investment Committee is a fully independent body of experts that examines the financing and investment proposals submitted under the 4 ‘windows’ and checks whether they meet the regulation’s conditions and whether they would benefit from support under the EU guarantee.
Policy checks are carried out by the Commission to confirm proposed financing and investment operations from implementing partners, apart from the EIB, comply with EU law and policies.

The InvestEU Advisory Hub, established by the Commission:

provides advisory support to identify, prepare, develop, structure, procure and implement investment projects;
helps project promoters and intermediaries to implement their financing and investment activities;
acts as a central point of entry, managed by the Commission, for project development assistance for public authorities and project promoters, including additional information on investment guidelines;
is available to public and private project promoters, including SMEs and start-ups, public authorities, national promotional banks and institutions and financial and non-financial intermediaries.

The InvestEU Portal, established by the Commission:

is an easily accessible and user-friendly database providing relevant information for each project;
provides a channel for promoters seeking finance to make their projects visible to potential investors.

The regulation establishes accountability, monitoring, evaluation and transparency requirements as follows.

Accountability. The European Parliament or the Council may ask the Chairperson of the Steering Board to report on the InvestEU Fund’s performance and reply orally or in writing to questions.
Monitoring and reporting. Annex III contains a detailed list of key performance and monitoring indicators. Implementing partners use these in their 6-monthly reports to the Commission, which in turn reports annually on the InvestEU programme’s performance. The EIB reports annually on investment barriers.
Evaluation. The Commission:
- will submit an interim evaluation report on the programme to the European Parliament and the Council by 30 September 2024
- will present the 2 institutions with its final evaluation report, in particular on use of the EU guarantee, by 31 December 2031 at the latest. It will also send its conclusions to the European Economic and Social Committee and the European Committee of the Regions.
Transparency. Implementing and advisory partners must acknowledge EU funding by providing targeted information to multiple audiences, including the media and the public. The Commission organises information and communication activities.

The regulation:

gives the Commission the power to adopt delegated acts;
amends Regulation (EU) 2015/1017 on the European Fund for Strategic Investments (see summary).

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 1 January 2021.

BACKGROUND

The InvestEU programme brings under one umbrella many different forms of EU financing. This makes funding for investment projects simpler, more efficient and more flexible and helps meet the EU’s twin goals of a green transition and digital transformation.
The EU guarantee is used to leverage substantial private and public long-term funds to contribute to Europe’s economic and social recovery by aligning investors with EU policy priorities.
Member States may use InvestEU to implement their national plans under the Recovery and Resilience Facility.
It is estimated the guarantee could mobilise total investment across the EU of over €372 billion by 2027, of which 30% will go towards climate policies.
The InvestEU programme builds on the successful model of the investment plan for Europe, known as the Juncker Plan, which mobilised more than €500 billion between 2015 and 2020.

For more information, see:

InvestEU (European Commission).

KEY TERMS

Additionality: under EFSI (the European Fund for Strategic Investments), this term means support for operations which address market failures or suboptimal investment situations and which could not have been carried out in the period during which the EU guarantee can be used, or not to the same extent, by the EIB Group or under existing EU financial instruments without EFSI support.

Implementing partner: an eligible counterpart, such as a national or international financial institution or promotional bank with whom the Commission has concluded an agreement.

MAIN DOCUMENT

Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021 establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (OJ L 107, 26.3.2021, pp. 30-89)