Investing in the Long-Term

Featured in the April 2020 edition of the EUROFI magazine, ELTI President Laurent Zylberberg expresses his views on the long-term vision of investment and the role of National Promotional Banks and Institutions (NPBIs).

In the context of the future recovery, National Promotional Banks and Institutions (NPBIs) are firmly committed to promoting sustainable development by increasingly integrating these concepts into their operations. Ensuring a robust economic recovery compatible with sustainable development is at the very heart of NPBIs’ mission, namely to provide the right balance between today’s constraints and tomorrow’s challenges, with activities being aimed at improving economic, environmental and social living conditions — on a local, national, European and global level and from a long-term perspective. ELTI members committed more than 50 bn EUR of financing for sustainable projects in 2018.

Such a fundamental task involves the development of sustainable, self-supporting economic structures. Therefore, NPBIs strive to deliver financial solutions which enable our industries and economies to cope with today’s and tomorrow’s huge challenges. Close to the European citizens, NPBIs remain beacons for trust and confidence. In this perspective, the long-standing co-operation of NPBIs with the EIB Group, the Council of Europe Development Bank or the EBRD allows for a more effective impact of European initiatives as well as of the financing provided by NPBIs. Working together is not an option, it’s a must. NPBIs are part of the missing link between citizens and our European common future.

Following the commitment to achieve climate neutrality by 2050, carbon-neutral projects need to be implemented and financed today. With this in mind, NPBIs are committed in achieving the success of this endeavour. The role of Long-Term Investors has become more important today than ever since infrastructure investment projects have an average lifetime of around 30 years whilst projects which require long planning phases – and financed today, might run longer than 2050.

NPBIs commitment towards Sustainable Finance has several dimensions:

• Environment, Energy, Climate, Social, Health and more: Beyond the fields of environmental improvements (energy efficiency, transport, infrastructure), NPBIs partners benefit from financing innovation as well as social projects (student loans, municipal financing, affordable housing, health projects).

• Green, Environmental and Social Bonds: Bonds with an amount of more than 3.5 bn EUR were issued from ELTI members in 2018.

• Market experience at local, regional and national level: The European Green Deal relies on ESIF as a source of funding in order to cover “every corner of the EU”. NPBIs will be essential players in making this happen, by contributing to financial leverage, combining national funds with EU promotional instruments and by providing their market experience at local, regional and national level.

• Cooperation between members and with International Financial Institutions: Cooperation is a key strategy in addressing the challenges of our sustainable future. ELTI members are already engaged in projects such as the “Joint Initiative on Circular Economy”, the “Clean Ocean Initiative” or the “Marguerite Fund”, all of which have a strong crossborder dimension.

• Know-how transfer between members: The financing of Sustainable projects requires specific know-how to adapt financing programmes to the state-of-the-art technology in order to reach projects on the ground.

• Providing support to public authorities: ELTI welcomes the initiative of the European Commission to reach a common understanding about Sustainable Finance, ultimately streamlining the flows of private investors’ capital towards sustainable projects.

ELTI members are actively engaged in discussions on the Sustainable Finance Action Plan of the European Commission by participating in the High-Level Expert Group and in the Technical Expert Group and they will be deeply involved into the revision of the Action Plan in fall 2020. All ELTI members have provided emergency measures to tackle the economic crisis, we proved our agility and capability to answer quickly to major challenges. Let’s do it together for the long-term!