Extension of the European Fund for Strategic Investments (EFSI) - Frequently Asked Questions
What is new in EFSI 2.0?
EFSI 2.0 extends the lifetime of the EFSI until 2020, covering the period of the current Multiannual Financial Framework. It also increases its target to mobilise at least half a trillion euro of investments by 2020.
Based on experience and lessons learned to date, EFSI 2.0 also introduces several technical improvements to the EFSI and the European Investment Advisory Hub.
In EFSI 2.0 there is a more precise definition of "additionality" for projects that receive EFSI backing. The EFSI's investment decisions will be explained in more detail and these explanations will be published online. This will help show that the chosen projects would not have been financed at the same time or to the same extent without the EFSI support.
The EFSI support will now be explicitly available for sectors such as sustainable agriculture, forestry, fishery and aquaculture. This is in line with a greater overall focus on sustainable investments across sectors to help to meet COP21 targets and helping the transition to a resource efficient, circular and low-carbon economy.
An important objective of EFSI 2.0 is to enhance the fund's geographical coverage and to reinforce its take-up in less developed regions. Therefore, the European Investment Advisory Hub will concentrate its efforts and resources on projects that contribute to the sectorial and geographical diversification of the EFSI.
Finally, the transparency of investment decisions will be increased. The Investment Committee will explain its decisions in even more detail, giving the reasons why it believes a transaction fulfils the criteria for EFSI backing. The Committee will publish a scoreboard of indicators for each operation after signature, excluding commercially sensitive information.
Why are you extending the EFSI?
The results so far show that the Investment Plan and the EFSI are working. The EFSI is supporting innovative investment projects as well as financing for small businesses across the EU.
The EFSI needs to be reinforced in order to continue mobilising private investments in key sectors for Europe, where market failures or sub-optimal investment situations remain. Extending the EFSI's lifetime and increasing its fire power will help to close the investment gap in the EU, to avoid disruptions in financing and to assure project promoters that they can still prepare projects with a longer time horizon.
Why was it necessary to reinforce the additionality of the investments by the EFSI? How will it be done in practice?
In EFSI 2.0 there is a more precise definition of "additionality" for projects that receive EFSI backing. The EFSI's investment decisions will be explained in more detail and these explanations will be published online. This will help show that the chosen projects would not have been financed at the same time or to the same extent without the EFSI support.
Projects under the EFSI need to address sub-optimal investment situations and market gaps as part of the eligibility criteria. In addition, projects may present certain specific elements this will be seen as giving a strong indication of additionality. Notably, projects that are classified as EIB special activities, projects that involve physical or e-infrastructure linking or extending the link between two or more Member States or presenting an exposure to specific risks, in particular country-, sector- or region-specific risks or the risks associated with innovation, will be considered to give such an indication.
How will the EFSI's sectorial coverage be enhanced?
The focus of the EFSI will be extended to more sectors, such as sustainable agriculture and industries in less-developed regions and transition regions. More emphasis will also be placed on providing technical assistance to projects in different sectors, with particular attention to projects that contribute to climate action in line with the COP21 objectives as well as projects involving cross-border infrastructure investments.
The European Investment Advisory Hub will provide technical assistance together with National Promotional Banks and other local actors. It will concentrate its efforts and resources on projects that contribute to the sectorial and geographical diversification of the EFSI.
And how will the EFSI's geographical coverage be improved concretely?
In EFSI 2.0, there is a stronger emphasis on leveraging local knowledge to facilitate EFSI support across the EU. The role of the European Investment Advisory Hub will be reinforced to provide more targeted technical assistance services at local level across the EU. The Commission will encourage the EIB to extend its local outreach in the Member States.
In addition, it is becoming easier to combine EFSI financing with support by other sources of EU funding - including European Structural and Investment (ESI) Funds. Revisions to the cohesion policy framework are currently being negotiated, and they will make such blending of financial instruments easier.
What is being done to ensure that EFSI projects are sustainable and in line with COP21 objectives?
Environment and resource/energy efficiency are already very prominent sectors under the EFSI. EFSI 2.0 will focus even more on sustainable investments in all sectors to contribute to meeting COP21 targets and to help to deliver on the transition to a resource efficient, circular and low-carbon economy. From now on, at least 40% of EFSI projects under the infrastructure and innovation window should contribute to the Commission's commitments on climate action in line with the COP21 objectives. Projects with SMEs and mid-caps will not be counted towards this target. In addition, the European Investment Advisory Hub will further support the preparation of climate-friendly projects, in particular in the context of COP21.
Are there any changes to how projects are selected? What role will the scoreboard play?
The EFSI Investment Committee will need to explain its decisions and give the reasons for granting support under the EU guarantee for each operation. These explanations will be made publicly accessible.
The scoreboard, which is already a useful tool for the Investment Committee in making its investment decisions, will from now on be publicly available as soon as a project has been signed, excluding commercially sensitive information. Its publication will provide additional transparency in the selection of the EFSI projects against measurable criteria. The Steering Board will establish a minimum score for each pillar in the scoreboard, to facilitate the assessment of projects.
The role of the European Investment Advisory Hub is mentioned in different contexts. What exactly will its role be under EFSI 2.0?
The European Investment Advisory Hub will continue to provide technical for project financing within the EU. However, under EFSI 2.0, its role will be enhanced. Notably, the Hub will focus on contributing actively to the sectorial and geographical diversification of the EFSI. It will also support the European Investment Bank and national promotional banks or institutions in originating and developing operations, in particular in less-developed and transition regions and help to structure demand for EFSI support, where necessary. The Hub will pay particular attention to supporting the preparation of projects involving two or more Member States and to projects that contribute to achieving the objectives of COP21. It will also contribute to the establishment of investment platforms and provide advice on the combination of other sources of EU funding with the EFSI to a greater extent.
The Hub will not be acting alone. It will strive to conclude at least one cooperation agreement with a national promotional bank or institution per Member State. Where a Member State does not have a national promotional bank or institution, the Hub will be ready to provide, at the request of the Member State concerned, pro-active advisory support on the establishment of such a bank or institution.
Finally, a local presence of the Hub will also be provided where necessary, with a view to providing tangible, pro-active, tailor-made assistance on the ground.This local presence may be provided through agreements with national promotional banks or where necessary local staff presence.
Is the governance of the EFSI changing?
A fully independent Investment Committee will continue to decide which projects will be backed by the EU guarantee, without interference by the EIB, the Commission or any other public or private contributors. There will be more transparency on Investment Committee's financing decisions, who will be required to explain them, publish the scoreboard of indicators supporting them and state the reasons for granting support under the EU guarantee for each operation. Since the EFSI operates within the EIB, any project supported by the EFSI will continue to require final approval by the EIB Board of Directors.
The Steering Board, composed of Members from the Commission and the EIB, decides on the overall strategic orientation of the EFSI. Under EFSI 2.0 the European Parliament will appoint an additional independent, non-voting member to the Steering Board.
Furthermore, the roles of the Managing Director, responsible for the day-to-day management of the EFSI, and the Deputy Managing Director supporting him have been enhanced. Both can now attend the Steering Board meetings as observers. In addition, the Managing Director is now also requested to report on the work of the Investment Committee and answer questions regarding its work, to the European Parliament and the Council.
Can institutions other than the European Investment Bank access the EFSI guarantee?
The European Investment Bank already works in close partnership with national promotional banks and other institutions to provide financing and technical support. In EFSI 2.0, further cooperation and partnership between the EIB and other entities is encouraged. For example, the EIB could delegate the appraisal, selection and monitoring of small-sized sub-projects that fall under the umbrella of an EIB-authorised framework to financial intermediaries or approved eligible vehicles, in particular investment platforms and national promotional banks or institutions. This will help facilitate the financing of small projects.
What will happen to the EFSI post-2020?
For the period after 2020, the Commission intends to put forward proposals to ensure that strategic investment continues to evolve at a sustainable level. In his State of the Union speech in 2016, President Juncker confirmed the Commission's commitment to doubling the EFSI, in terms of duration and financial capacity, providing the necessary certainty to promoters and allowing for it to be continued in the future. Any such legislative proposal will be based on the conclusions of both an independent evaluation and a Commission review of the achievements of the Investment Plan for Europe and the EFSI within it.
Will projects with a timeframe longer than 2020 be financed by EFSI? How will this be done as EFSI will only be extended until 2020?
Yes, projects which will last beyond 2020 can be financed as the EFSI will remain in place to honour its previous commitments for projects extending beyond 2020, as well as to receive its share of the profits on ongoing investment projects. However, if the Commission and EU co-legislators decide not to extend the EFSI beyond 2020, it would stop taking on new projects at that stage.
What are you doing to support projects with a social dimension in EFSI 2.0?
Social projects are widely supported by the EFSI both in terms of large projects and risk financing for small businesses. For example, the European Investment Fund has invested €10 million into a social impact bond scheme that will support the integration of between 2,500 and 3,700 migrants and refugees into the Finnish labour market through the provision of training and job-matching assistance.
In EFSI 2.0, the focus and scope of social investing is further enlarged. Social services have been added to the list of eligible sectors for EFSI financing, and the EIB Group and the Commission will continue to develop new ways to support social enterprises in Europe.
More information:
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-The EFSI's results so far including a break-down of operations by country are available on the Investment Plan website
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