Investing in the ecosystem of the future
Europe’s future hinges on empowering citizens for climate action, modernising infrastructure, and bolstering defence for lasting security.
We must give EU citizens the tools to tackle climate change in their everyday lives.
We must renew Europe’s critical infrastructure and networks.
We must invest in our defence and build our own sovereignty to prevent future aggressions.
More than any other place on earth, our Union has been defined by its ability to respond to crises. Tackling climate change, regaining peace on our continent, and ensuring our sovereignty in an increasingly polarised world may not necessarily constitute new challenges – but they are all of an unprecedented magnitude.
After decades of underinvestment in our critical infrastructure and as public finances remain constrained by the needs of an ever- aging population, none of the objectives highlighted above will be met if we are unable to mobilise private capital from a wide range of sources, from within Europe and beyond.
From superconductors to the circular economy, and from defence investments to energy grids, there is no time to lose if we want to ensure that large infrastructure, private equity, and venture capital funds can contribute to the task. Funds that help make a difference should be incentivised while EU law should act as a driver to further investments in sectors that matter the most.
Priority 10
Ensure there is a straightforward, seamless, and compatible EU sustainability disclosure framework
Priority 11
Attract private capital finance to the EU’s most critical sectors, from infrastructure (digital, climate, transport, energy) to defence
Priority 12
Improve the cross-border EU investment environment
Priority 10
Priority 11
Priority 12
Priority 10
Priority 11
Priority 12
Ensure there is a straightforward, seamless, and compatible EU sustainability disclosure framework
Tackling climate change is the challenge of our century. The monumental effort and ongoing investment it demands should never be underestimated.
To address this issue, the financial industry can incentivise the development of fund structures that empower EU citizens to directly invest their savings in climate solutions.
Impact is the new black: Many private equity and venture capital firms are launching impact funds, aiming to drive social and/or environmental outcomes, in addition to financial returns. An example of this is Summa Equity’s €2.3 billion impact fund, the largest European impact fund investing close to date.
ESG disclosure rules, should reflect the diversity in the financial services sector. They should allow frontrunning ESG and impact investors to show their ambition and push the boundaries of what they can achieve, while ensuring others are also incentivised to continue their ESG journey.
European legislators must address the complexity that exists between the pieces of the ESG disclosure regulatory puzzle, at political and/or technical level. To achieve the desired progress and level of transparency, all pieces must fit seamlessly together, notably between how corporates, fund managers and investors interact with their respective reporting regimes.
Required changes
- Amend SFDR and CSRD legislation to achieve a double objective: ensuring that the best- performing companies and funds are incentivised for their efforts while allowing those still at an earlier stage of their ESG growth journey to seamlessly pursue their ever-improving path.
Success criteria for EU economy
Currently approximately one in three of Invest Europe membership’s funds are categorised as sustainable, by 2029, this should be at least two thirds.
Attract private capital finance to the EU’s most critical sectors, from infrastructure (digital, climate, transport, energy) to defence
Photovoltaic solar panels in Spain, a high-speed train line in the centre of France, a telecom network in Sweden: all of these projects would not have existed, among thousands of others, if it were not for the support of infrastructure and private equity funds.
As the EU is seeking to commit additional capital to its energy, transport and digital grids – and develop new ways of production through the circular economy, all sectors will require a significant increase in the number of investments. This is now also true for investments in defence or dual-used products – which are increasingly needed to protect our continent from global disruption and external threats.
In that context, much more can be done to increase the ability of investors to commit capital to long- term key strategic projects. Importantly, because of the long-term nature of these investments, safeguards need to be provided to ensure that infrastructure investors do not risk losing their investment due to changing government priorities. Without this, investors may choose to invest in more stable environments with more certainty over the life of their investment.
Required changes
Create a European Infrastructure strategy designed to incentivise private infrastructure.
Develop a high-level forum bringing together investors and regulators to exchange on how public finance can be best leveraged to attract private finance in high value projects.
Improve the cross-border EU investment environment
Strong cross-border flows are needed to ensure that finance is directed most easily to the best EU businesses, making them more competitive against their international counterparts.
To maintain their validity, the role of EU and national authorities is essential to create the right conditions for cross-border investments. The current system for intra-EU investment puts European investors at a disadvantage compared to foreign investors as built-in protection for foreign investors against government decisions does not apply to them.
On top of this, the layer of EU and national laws and discrepancies between sectorial EU laws, can represent a significant challenge to any cross-border investments, often determining whether these investments take place or not. Beyond the concept of a “one law in, one law out”, EU authorities should therefore concentrate further on the interoperability of EU rules.
Required changes
Enhance investor protection, including from regulatory changes, for those making cross-border and long-term commitments in key strategic sectors
Assess annually how EU and national rules collectively fit with each other – with the aim of lowering complexity that may deter cross-border and foreign investments.
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Explore our 12 priorities
Priority 1: Take down barriers that prevent pension funds and insurers from financing our digital and climate transition
Priority 2: Redirect EU citizens’ savings to productive asset classes through changes to EU passport and reporting requirements
Priority 3: Attract foreign capital to the Union
Priority 4: Complete the Capital Markets Union
Priority 5: Leverage existing funding initiatives and create an EU Champions Fund
Priority 6: Secure tax policies that are simple to adhere to, promote growth and incentivise cross-border fundraising & investments
Priority 7: Develop a programme of EU regulations to promote talent mobility and the digitalisation of Europe
Priority 8: Reshape EU company law to incentivise equity investments
Priority 9: Develop a flexible, opt-in EU insolvency law on top of the existing EU-wide rules
Priority 10: Ensure there is a straightforward, seamless, and compatible EU sustainability disclosure framework
Priority 11: Attract private capital finance to the EU’s most critical sectors, from infrastructure (digital, climate, transport, energy) to defence
Priority 12: Improve the cross-border EU investment environment
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Key policy areas
Key policy areas for private equity and venture capital