The European Green Deal (EGD) has been called by the Commission’s President Von der Leyen the “man on the moon moment” for the European Union. Yet, a new report by Counter Balance shows fundamental flaws on the financing pillar of the EGD that make it unlikely to properly contribute to addressing the key - and intertwined - challenges of our times, from the need for a fair and just recovery, to tackling the health, social, climate and environmental emergencies. Key findings are:
- The €1 trillion investment package that’s supposed to finance the EGD - the so-called “Sustainable Europe Investment Plan” (SEIP) - is an undersized and wobbly investment plan: the overall €1 trillion figure is merely a political announcement and does not reflect what the EU will actually invest. Most of the instruments under the SEIP are simply the continuation of already existing investment programmes, there is only limited new or fresh money under it.
- A strong bias in favour of the private and financial sector: The focus on bankable projects and leveraging private resources has come at the expense of playing a stronger role in furthering transformative policy orientations. The approach of turning projects into bankable ones ignores the fact that a majority of the needs for ecological transition will simply not be bankable and offer any return on investment. The sustainable finance agenda associated with the SEIP also risks to reinforce the financialisation of our economies, at the expense of the real economy.
- A top-down approach with strong challenges on transparency and accountability: Looking at how the InvestEU programme and the European Investment Bank (EIB) will operate under the SEIP, it is clear that decisions about loans and various financial instruments are unlikely to be taken in a transparent, accountable and participatory manner. Corruption, fraud and misuse of funds are also a matter of concern that largely remain unaddressed.
In the report, Counter Balance sketches out a tentative proposal for another approach to EU public investments and the financing of the EGD, one working towards the decarbonisation, de-financialisation and democratisation of our economies and societies.
Xavier Sol, Director (Counter Balance):
“As we are facing numerous emergencies on the climate, social and sanitary front, we call on a fundamental transformation of how public investments are designed at European level. It is high time to reclaim public finance for the common good. The financing pillar of a flagship European initiative - the European Green Deal - should become a laboratory for another kind of public finance”.
Clara Bourgin, Policy & Advocacy Officer (Counter Balance ):
“The solutions to the climate crisis should not only be green but also contribute to a true transformation of our societies and economies. Public finance under the Green Deal should go into reinforcing essential public services accessible for all and make funding more accessible to small-scale and community-led projects, especially those centred around public ownership and control”.