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EU bank tackles investment gaps in #innovation and #development

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“Since its establishment in 1958 the EU bank, which celebrates its 60th anniversary this year, has invested over €1 trillion based on a cash contribution by the member states of just €14 billion” European Investment Bank (EIB) President Werner Hoyer said today (18 January).

“It is an excellent deal for Europeans. That trillion attracted other investment from the private sector, generating total investment of over three trillion euros. All this money went into making Europe more open, competitive, cohesive and fair, and into doing our part in global development over the decades”, stated Hoyer at the EIB Group’s annual press conference in Brussels. “60 years after it was founded, the EU bank’s mission to invest in viable projects across Europe and across the world, focusing on where investment is most needed, is more relevant than ever. But we are not complacent and continuously work to increase our impact”, he added.

The EU bank also continuously works to improve its governance. This week, the first Gender Action Plan was approved. It reflects the EIB Group’s commitment to supporting the rights of girls and women and their financial inclusion in the EIB’s activities in Europe and beyond.

In 2017, the EU bank:

  • Approved a record number of 901 projects, supporting small and medium-sized companies, fostering innovation, protecting the environment and helping to build crucial infrastructure, and;
  • provided 78.16bn to help deliver on EU policy goals in Europe and worldwide, supporting total investment of around 250bn by crowding in private capital.

Growth capital gap

The record number of projects reflects a stronger focus on smaller deals and increasing support for innovative companies to help them grow. By filling the gap in the European market for growth capital, the EU bank is helping to increase the continent’s competitiveness. In 2017, nearly 30bn of financing went to small and medium-sized companies and nearly 14 billion into innovation. The European Investment Fund (EIF), as part of the EIB Group, plays a crucial role in this area as the biggest single source of venture capital in Europe. The EIF committed 9.34bn of financing last year.

The EIB Group has also been increasing its advisory services aimed at identifying and developing investable projects. By the end of 2017, our ongoing advisory assignments have the potential to generate 40 billion euros of new investment. “Our specialists are working on these assignments mostly in cohesion countries, allowing us to reach a wider range of companies and public entities which need help in making their projects bankable,” Hoyer said.

Delivering on the Juncker Plan

Using the EU budget and the EIB’s own funds under the European Fund for Strategic Investments (EFSI), a guarantee facility managed by the EIB Group, the EU bank engaged in riskier investments, reducing the risk for private investors and addressing the reluctance to invest that had plagued the European economy during the financial crisis. By the end of 2017, EFSI, the financial arm of the Juncker Plan, had mobilised 257bn of investment. This means that EFSI is well on track to achieve 315bn of investment based on a guarantee of 21bn.

“EFSI is a great example of what the EU bank can do to help scarce public resources achieve more”, President Hoyer said. “It shows that the shift from grants and subsidies to loans and guarantees can be a powerful policy tool. We welcome the extension of the Juncker Plan approved earlier this year. Based on the lessons learned during this period and our strong track record, we offered to take on more responsibility under the post-2020 EU Multiannual Financial Framework.”

Increasing the impact of development finance

Development finance can benefit from a similar paradigm shift from grants and subsidies to loans and guarantees. The EIB has unique experience in crowding in private investment. “We have begun discussions with our shareholders, the EU member states, and the European Commission on bundling our development finance activities into a dedicated structure within the Group to deliver EU development policy more efficiently”, President Hoyer said.

“We want to enhance our impact and make sure we get better at partnering with others”. President Hoyer said. “There isn’t enough public money in the world to address global development challenges. Catalyzing private investments is the only way to finance the achievement of the Sustainable Development Goals,” he added.

“Multilateralism has been criticized and attacked recently. The EU bank remains committed to international and multilateral cooperation. No-one is stronger alone. In an interconnected world, it is absurd to think that we can achieve success in delivering global development and prosperity if we don’t work together”, he added.

The EU bank is already one of the largest multilateral development banks: in 2017, it invested almost 8bn, a tenth of its financing volume, in projects outside of the EU.

Tackling climate change

Two focus areas of its investment outside the EU are climate change and economic resilience. The EU bank is the biggest single multilateral financier of projects to fight climate change and mitigate the effects of this man-made global threat. In 2017, it invested 19bn for this cause, more than 27% of its total financing. It stands by its pledge to invest 100 billion euros in this area over the period 2016-2020.

“The EIB is the world’s largest multilateral financer of climate action projects, and we are proud to continue. Last December, at the One Planet Summit convened by President Macron, we announced our partnership with the Global Covenant of Mayors, co-chaired by Michael Bloomberg and European Commission Vice President Maroš Šefčovič,” Hoyer said. “The partnership is an example of multilateral cooperation and climate action, in the face of public policy that is sometimes heading in the opposite direction.”

Helping address migration

At the request of the EU, the Bank launched at the end of 2016 the Economic Resilience Initiative, with a view to providing 6bn in additional investment in the EU’s Southern Neighbourhood and the West Balkans.

“From a humanitarian as well as from an economic perspective, the best solution is to invest into improving people’s living conditions, in order to generate hope and reduce the pressure on them to leave their homes”, Hoyer said.

After one year, the EIB has reached 25% of the additional 6bn volume, as targeted. Additional investment in the region will help improve living conditions and alleviate the causes and consequences of migration. More than half of the financing goes into the private sector, supporting jobs at small and medium-sized companies.

Pioneering new instruments in financing 

The EIB Group is not only the biggest multilateral lender, but also the biggest multilateral borrower worldwide. It is self-financed, with its lending activities being mainly funded via bond issuance in the international capital markets. The Bank successfully raised 56.4bn from investors around the world last year. Ten years after pioneering the first Green Bonds, we remain the largest issuer, with more than 20bn raised for climate projects since 2007.

Following up on the success of the Green Bonds, the EU Bank is considering introducing new kinds of bonds linked to the achievement of Sustainable Development Goals, with the aim of attracting more private capital to projects in developing countries.

The European Investment Bank (EIB) is the long-term lending institution of the European Union, owned by its member states. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

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Environment

European Development Days 2021: Driving the global debate on green action ahead of Kunming and Glasgow Summits

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The leading global forum on development co-operation, the European Development Days (EDD), began on 15 June to reflect on the road to the UN Biodiversity Conference (CBD COP15) in Kunming in October and the Glasgow COP26 in November 2021. More than 8,400 registered participants and more than 1,000 organizations from over 160 countries are preent at the event, which ends today (16 June), with two main topics: a green economy for people and nature, and protecting biodiversity and people. The forum includes the participation of high-level speakers from the European Union, Ursula von der Leyen, European Commission President; Jutta Urpilainen, Commissioner for International Partnerships; and Virginijus Sinkevičius, Commissioner for Environment, Oceans and Fisheries; as well as the United Nations with Amina Mohammed, Deputy Secretary-General; Henrietta Fore, UNICEF Executive Director; HRH Princess Laurentien of the Netherlands, President of Fauna and Flora International; Maimunah Mohd Sharif, UN-Habitat Executive Director.

This year's edition has placed a special emphasis on the views of young leaders with expertise and active contributions to find solutions for climate action. With an EDD virtual Global Village presenting innovative projects and ground-breaking reports from 150 organizations all around the world and special events on the impact of the COVID-19 pandemic, these two days are a unique opportunity to discuss and shape a fairer and greener future. The EDD's website and programme are available online as well as a full press release.

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Environment

Greening of transport 'must provide realistic alternatives'

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In an opinion adopted at its June plenary session, the European Economic and Social Committee (EESC) says that the energy transition must – without denying its objectives – consider the economic and social characteristics of all parts of Europe and be open to an ongoing dialogue with civil society organizations.

The EESC supports the greening of transport, but stresses that the energy transition must be fair and provide viable and realistic alternatives that take account of the specific economic and social territorial features and needs of all parts of Europe, including rural areas.

This is the main message of the opinion drafted by Pierre Jean Coulon and Lidija Pavić-Rogošić and adopted at the Committee's June plenary session. In its assessment of the 2011 White Paper on Transport, which aims to break the transport system's dependence on oil without sacrificing its efficiency and compromising mobility, the EESC takes a firm stand.

Limiting modes of transport is not an option: the aim should be co-modality, not modal shift. In addition, the ecological transition must both be socially fair and preserve the competitiveness of European transport, with full implementation of the European Transport Area, as part of the full implementation of the Single Market. Delays in this respect are regrettable.

Commenting on the adoption of the opinion on the sidelines of the plenary, Coulon said: "Curbing mobility is not an alternative. We support any measures aimed at making transport more energy efficient and reducing emissions. Europe is going through a period of headwinds, but this should not lead to changes of course in terms of social and environmental expectations of the various European initiatives."

Continuous consultation of civil society organizations

The EESC encourages an open, continuous and transparent exchange of views on the implementation of the White Paper between civil society, the Commission and other relevant players such as national authorities at different levels, stressing that this will improve civil society buy-in and understanding, as will useful feedback to policy makers and those carrying out implementation.

"The Committee draws attention to the importance of securing the support of civil society and stakeholders, including through participatory dialogue, as suggested in our previous opinions on this matter", added Pavić-Rogošić. "A good understanding and broad acceptance of strategic goals will be extremely helpful in achieving results."

The EESC also highlights the need for more robust social evaluation and reiterates the statement made in its 2011 opinion on the Social aspects of EU transport policy, urging the European Commission to put in place the necessary measures to ensure the harmonisation of social standards for intra-EU traffic, bearing in mind that an international level playing field is also needed in this respect. Establishing an EU Social, Employment and Training Observatory in the transport sector is a priority.

Monitoring progress in a timely and effective manner

With reference to the evaluation process for the 2011 White Paper, the EESC points out that the procedure was launched late and that the Committee was only involved because it expressly asked to be.

The Commission should have a clear plan for monitoring its strategic documents from the beginning and publish progress reports on their implementation on a regular basis, so that it is possible to assess in a timely manner what has been achieved and what has not and why, and to act accordingly.

In the future, the EESC wishes to continue to benefit from regular progress reports on the implementation of Commission strategies and to contribute effectively to transport policy.

Background

The 2011 White Paper Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system set the paramount objective of European transport policy: establishing a transport system that underpins European economic progress, enhances competitiveness and offers high-quality mobility services while using resources more efficiently.

The Commission has acted on almost all of the policy initiatives planned in the White Paper. However, the oil dependency of the EU transport sector, although clearly decreasing, is still high. Progress has also been limited in addressing the problem of road congestion, which persists in Europe.

Several initiatives in the context of the White Paper have improved the social protection of transport workers, but civil society and research organisations still fear that developments like automation and digitalisation could negatively affect future working conditions in transport.

The needs of EU transport policy are therefore largely still relevant today, in particular in terms of increasing the environmental performance and competitiveness of the sector, modernizing it, improving its safety and deepening the single market.

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Corporate tax rules

Big-tech companies to be given historical changes to their international tax agreements

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Recently, some of the richest landmarks and countries of the world, have come to an agreement concerning the closing of international tax loopholes that have been endorsed by the biggest multinational corporations. Some of these tech companies have the largest share prices within the stock market, such as Apple, Amazon, Google and so on.

While tech taxation has long been an issue that international governments have had to agree on between themselves, betting too shares similar problems, especially due to its increase in popularity and allowed legalisation globally. Here we have provided a comparison of new betting sites which follow through on the correct taxation laws and legalities necessary for international usage.

During the G7 summit- which our last reports spoke about the topic of Brexit and trade deals, representatives of the United States, France, Germany, United Kingdom, Canada, Italy and Japan, came to a unified agreement to support the global corporation tax rates of at least 15%. It was in agreement that this should happen as these corporations should pay taxes where their businesses are in operation, and to the land they operate in. Tax evasion has long been propagated using initiatives and loopholes found by corporation entities, this unanimous decision will put a stop to hold tech companies responsible.

This decision is believed to be years in the making, and the G7 summits have long wanted to reach an agreement to make history and reform the global taxation system for the rising innovation and digital age that is on the horizon. Making companies like Apple, Amazon and Google take accountability, will keep taxation in check for what is estimated to be the surge of their developments and involvement overseas. Rishi Sunak, the United Kingdom’s Chancellor of the Exchequer, has mentioned that we are in the economic crisis of the pandemic, companies need to hold their weight and contribute to the reformation of the global economy. Reformed taxation is a step forward in achieving that. Global tech companies such as Amazon and Apple have massively increased in shareholder prices for each quarter after the major drop last year, making tech one of the most sustainable sectors to obtain taxes from. Of course, not all would agree on such comments, being that taxation loopholes have long been a thing and issue of the past.

The deal agreed upon will put massive pressure on other countries during the G20 meeting that is to occur in July. Having a base of agreement from the parties of G7 makes it very likely that other countries will come to an agreement, with nations such as Australia, Brazil, China, Mexico etc. who are to be in attendance. Lower tax haven countries like Ireland will expect lower rates with a minimum of 12.5% where others may be higher depending. It was expected that the 15 percent tax rate would be higher at the level of at least 21%, and countries who agree with this believe that a base level of 15% should be set with possibilities of more ambitious rates depending on destination and region that multinational companies operate and pay taxes from.

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