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Brussels forum focuses on improving funding efficiency for eco-innovators

28/07/2011

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The 9th ETAP Forum in Brussels focused on improving understanding between companies, financiers and policymakers to ensure greater support for eco-innovative entrepreneurs in Europe.

‘Financing the eco-innovators’ was the theme of the 9th European Forum on Eco-Innovation, which attracted nearly 300 high-level stakeholders from industry, financial organisations and policy makers. The event was a joint initiative of the Belgian EU presidency and the European Commission.

“There is a strong need to improve resource efficiency and maintain Europe’s lead in a major and growing global market,” said William Neale, Member of Cabinet for Janez Poto─Źnik, European Environment Commissioner. “Eco-innovation needs to be central to policy and is at the heart of change. We need to mobilise private finance, establish a new risk/reward paradigm and channel the right support in the right direction.”

Finance is crucial to commercialising eco-innovative products and services. All innovative companies – in the main small and medium-sized enterprises (SMEs) – find difficulties in early-stage funding. It is even harder for those developing new ideas essential to meet the technological and societal challenges of environmental and climate change. Uneven competitive conditions mean they require both public and private financial support. Moreover, financial organisations often do not understand the technologies – and the entrepreneurs themselves may lack basic business skills.

While public authorities can provide support through green public procurement and skills training, banks and venture capital organisations have an important role as do large corporations in encouraging the creativity and flexibility offered by eco-innovative SMEs. Europe has a multitude of financial instruments focused on eco-innovation but it is important to fine tune and improve them. This is crucial as financial programmes are being established at EU level for the coming decade.

Key messages included not only the need to improve access to the funding that is already available but also to adapt existing instrument to match better the needs of eco-innovative SMEs – often through smaller scale funding and debt facilities. Governments should also ensure greater policy stability as investors are looking five to ten years ahead for their returns. Greater public support should also be achieved through leveraging of financial resources to increase funding efficiency.

A major outcome was a series of recommendations for the new financial perspectives of the EU and its Member States and as part of the Europe 2020 strategy for smart, sustainable and inclusive growth. These included:

  • Stability in regulation, policy framework and public procurement to attract investors;
  • Development of a range of financing options for eco-innovative SMEs, including debt and smaller scale financing as venture capital is very selective and not able to address the needs of all eco-innovators;
  • Review and reduction in red tape for public support;
  • Development of more flexible risk-sharing conditions to engage more financial actors – namely banks – in this crucial policy area;
  • Better understanding of the role business angels can play to support eco-innovation as they operate differently than venture capitalists;
  • Intelligent use of public funding through leveraging, using it as a complement to private finance;
  • Greater involvement of large corporations and understanding of how they can contribute to the financing of eco-innovation; and
  • Need to look at the international dimension of eco-innovation financing to meet the challenges of global competition in this area.

“Eco-innovation is part of the Europe 2020 strategy,” concluded Timo Mäkelä, Director for International affairs, environmental financing and eco-innovation, European Commission Environment DG “It has a key role combining ambitious policies with job creation. The environmental challenges are known in the EU and globally, and will be big drivers. We need EU-level programmes – not just financial – to promote eco-innovation.”

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