Environment

EU helps eco-innovative SMEs hook up with investors

10/11/2016

A wide range of SMEs and investors gathered in Tallinn, Estonia, from 26-28 October 2016 to explore new financing opportunities for eco-innovative SMEs that are moving to a circular economy business model. The 20th European Forum on Eco-innovation brought together representatives from nearly all EU financing instruments, as well as many private investors, with SMEs seeking external funds to roll out green products and services.

“These companies don’t just make business out of the environment: they are key agents of change and enablers of an economy-wide transition,” said Joanna Drake, Deputy Director-General of the European Commission’s Directorate-General for the Environment  in her opening address to the conference.

Europe’s more than 23 million SMEs have created 85% of new jobs in the EU over the last five years. About a quarter of them already offer green products or services. But a Eurobarometer survey showed that nearly 60% say that a lack of external financing is preventing more eco-innovation. Eco-innovative SMEs struggle to access capital and markets.

One problem is a persistent lack of understanding among SMEs of what investors want and vice versa, discussions at the Forum revealed. For example, investors need to understand that cleantech is not IT and may require quite substantial capital investments, SMEs said. SMEs need to familiarise themselves with the world of finance and, on average, probably double their time and cost estimates, investors said.

In Tallinn, both communities suggested that the European Commission could help them understand each other better, through match-making events such as one held at the Forum for example. They also identified a need for better communication of the many EU funding programmes that already exist – many SMEs remain unaware of the opportunities available to them.

Those that have taken advantage of EU funds described how they can help bridge the difficult gap from research to commercial proposition, and boost a company’s credibility and network at the same time.

But direct support and awareness-raising will not be enough to deliver the circular economy in Europe, many stakeholders said. For that, the EU needs to change its economic paradigm. Policymakers need to phase out fossil fuel subsidies, promote eco-products and work to change consumer mindsets. “Governments still think linear,” said Frido Kraanen, Principle Director for Societal Impact at PGGM, a Dutch pension service provider.

The Estonian Environment Minister Marko Pomerants was optimistic however: “Soon we will drop the prefix ‘eco’ from innovation,” he predicted. “People are demanding more.”

The European Forum for Eco-Innovation is designed to boost the uptake of innovations in the EU by sharing best practices from business and policy. It brings together experts from science and engineering, policy, finance, civil society, academia and business.

This edition of the Forum was organised by the European Commission’s Directorate-General for the Environment, the Ministry of Environment of Estonia and the European Commission’s Executive Agency for SMEs (EASME). It comes nearly one year after the European Commission issued the Circular Economy Package, consisting of a Circular Economy Action Plan and revised waste legislation.

At the Forum, the European Commission delivered another six Environmental Technology Verification (ETV) statements – which ascertain the performance of innovative environmental technologies – to bring the total number of verified technologies to date to 15. The Forum also hosted the biennial European Business Awards for the Environment (EBAE) ceremony. These Awards celebrate companies at the forefront of eco-innovation, or that have a respect for the environment at the core of their business principles.

Additional activities included a business-to-investors match-making event organised by EASME and a “hackathon” run by Garage48, an Estonian non-profit organisation created by six entrepreneurs to boost the local start-up community in Eastern Europe and emerging regions like North Africa.

For further information

European Forum for Eco-Innovation website: http://ec.europa.eu/environment/ecoinnovation2016/1st_forum/

European Commission’s circular economy webpage: http://ec.europa.eu/environment/circular-economy/index_en.htm