On 4 October, the international economic policy think tank Bruegel will organise an event on the potential impediments to long-term investment in the EU. Various factors such as accounting rules, market failures, prudential regulation and fiscal disincentives can discourage long-term investment. As stated by Grégory Claeys, Research Fellow at Bruegel, “this can be problematic because long-term potential growth of advanced economies like Europe relies mainly on productivity gains which are derived from investments in innovation, infrastructures, human capital and knowledge“. A panel discussion featuring Sophie Barbier Director for European Affairs at Caisse des Dépôts et Consignations, Miguel Gil-Tertre, member of the Cabinet of Vice-President Katainen, Sandra Rigot, Professor at Paris 13 University and Edoardo Reviglio, Cassa Depositi e Prestiti’s Chief Economist, will be followed by a Q&A with the audience chaired by Grégory Claeys.
On July 22, 11 MEPs from the long-term investment Intergroup wrote to Vice-President Dombrovskis and called for the Commission’s opposition to recent draft proposals from the Basel Committee on the revision of the standardized approach for credit risk. A major concern is related to the calibration for specialized lending, including for infrastructure financing which could reach 150% in some instances. A figure to be put into perspective as the Basel Committee considers that unrated corporate exposures should be risk weighted at 100 %, even while their loss rate is generally higher than for infrastructure project finance loans.
A solution to protect the financing of infrastructure projects by banks without compromising financial stability could reside in a model in which “the eligible infrastructure assets could be restricted to projects within the EU and, outside the EU, to sectors with high recovery rates, low volatility and complying with the investment guidelines of long-term investors.“
The Long-term Investment and reindustrialisation Intergroup will keep mobilizing to defend the imperative financing of infrastructures in the EU.
On June 29, the Long-Term Investment and Reindustrialisation Intergroup held a lunch-debate in the European Parliament on long term investments in the railway sector.
This lunch-debate, sponsored by the European rail industry (UNIFE) and the Community of European Railway and Infrastructure Companies (CER), was the occasion to discuss the barriers for investment in the railway sector and the merits of the European Fund for Strategic Investment (EFSI) to address them.
On June 28, the Long-term investment and reindustrialisation Intergroup of the European Parliament held a conference on the follow-up of the Juncker Plan in the presence of more than 200 participants, including Members of the European Parliament (MEPs), officials from the European Commission, the European Investment Bank (EIB), as well as representatives of the industrial and the financial sector, regional development banks and representatives of the civil society.
As of 16:30 Welcome and registration
17:00 Welcome Address
Dominique RIQUET, MEP, Chair of the Long Term Investment Intergroup
Jacques DE LAROSIERE, Former Governor of the Banque de France, Managing Director of the International Monetary Fund and Honorary President of Eurofi
Jyrki KATAINEN, Vice-President of the European Commission for Jobs, Growth, Investment and Competitiveness
18:00 2 Case studies
Raphael LANCE, Head of Renewable Funds at Mirova, on the Langmarken onshore wind farm located in Värmland County, Sweden
Giulia GREGORI, Strategic Planning Manager at Novamont, on the development of an integrated supply chain in the field of biochemicals and bioplastics, Italy
18:15 Additionnality – risk is good!
Moderator Simona BONAFE, MEP, Vice-Chair of the Long Term Investment Intergroup
Klaus TRÖMEL, Secretary General, European Investment Bank
Lutz-Christian FUNKE, Senior Vice-President, Managing Affairs and Communication, KfW Bankengruppe
Antonella BALDINO, Head of Development Finance. Cassa Depositi e Prestiti
Benjamin ANGEL, Director for Treasury and financial operations, Dg Ecfin, European Commission & Member of the EFSI Steering board
Laurence MONNIER, Head of infrastructure debt, Aviva
19:20 Investment platforms – small is beautiful…
Moderator Adina-Ioana VALEAN, Vice-President of the European Parliament, Vice-Chair of the Long Term Investment intergroup
Laurent ZYLBERBERG, Director of Institutional, International and European Relations, Caisse des Dépôts et Consignations & Chairman of the Management board, Marguerite Fund
Klaus TRÖMEL, Secretary General, European Investment Bank
Wilhelm MOLTERER, Managing Director of the European Fund for Strategic Investments
Joanne SEGARS, Chief Executive of the Pensions and Lifetime Savings Association, former Chair of PensionsEurope
20:20 Closing remarks
Introduction by Burkhard BALZ, MEP, Vice–Chair of the Long Term Investment Intergroup
Markku MARKKULA, President of the European Committee of the Regions
As of 20:40 Cocktail
On June 16, Roberto Gualtieri, Chairman of the Economic and Monetary (ECON) Committee of the European Parliament, wrote to Commissioner Hill to express the concerns of the ECON Members of the IFRS Working Group over the International Financial Reporting Standard IFRS 9 potential negative impact on long term investments.
As the ECON Committee is soon to enter the three-month long regulatory scrutiny period for the endorsement of IFRS 9, many questions are left unanswered:
- Will the extension of the volume of financial assets measured at fair value increase pro-cyclicality?
- How will the new loan loss provisioning rules impact the bank’s equity levels and financial stability?
- How will IFRS 9 interfere with prudential requirements for banks?
- Regarding the misalignments of IFRS 9 with the accounting standard on insurance contacts IFRS 4, will the European Commission follow EFRAG’s advice to allow for all regulated insurance companies in the EU to adopt the deferral approach proposed by the IASB?
As the EU is in a dire need for long-term investments, the European Parliament wants to prevent any risk of having new regulation jeopardize investors’ ability to manage their assets in a positive fashion for the whole economy.
On April 28, Michel Dantin, MEP and Vice-Chair of the European Parliament Intergroup on “Climate Change, Biodiversity, and Sustainable Development” together with Dominique Riquet, MEP and President of the “Long-Term Investment and Reindustrialisation Intergroup” welcomed policy-makers and stakeholders in the European Parliament in Brussels to the conference “The Need for Long-Term Investments in the Water Sector” to discuss the matter alongside the Dutch EU Presidency, the European Commission, the EIB and OECD.
Materials of the speakers :
On March 21st, the Long-Term Investment and Reindustrialisation Intergroup of the European Parliament held a conference dedicated to the long term financing of digital network infrastructures in the European Union, in the presence of more than 200 participants, including Members of the European Parliament (MEPs), officials from the European Commission and Permanent Representations of Member States, as well as journalists and representatives of the civil society, in particular from the digital sector. The conference documents, including the minutes, can be downloaded below.
Materials of the partners :
On February 24, MEP Burkhard BALZ, member of the Bureau of the Long-term Investment and Reindustrialisation Intergroup, and ten MEPs from the Committee on Economic and Monetary Affairs (including ECON Chairman Roberto GUALTIERI, the group coordinators and Rapporteurs for CRR) wrote to Commissioner HILL to call for the extension of the lower capital requirements that credit institutions and investment firms benefit from when exposed to credit risk for SMEs.
“The SME supporting factor” is a tool which has proved already very useful to tackle the difficulties SMEs face regarding to financing. At a dire time for the European economy, it is essential to make it easier for 99.8 % of the European companies to finance their development and create jobs.
On February 17, the long-term investment and reindustrialisation intergroup of the European Parliament held a conference with over 200 participants on long-term investment in relation with climate change, taking stock of what has been achieved and what still needs to be done after the COP21.
In his introduction, MEP and intergroup President Dominique Riquet pointed out that “our main issue relates to how we can mobilize the financial sector to operate the low carbon transition. Regulators shall use all their fiscal, budgetary (i.e Juncker Plan or financing the “Plan Energies pour l’Afrique”) and normative tools at their disposal to meet this challenge. Sustainable might mean profitable”. French economist Michel Aglietta stressed that “Climate challenge is not a matter of tonnes of carbon”, but that it “cannot be met independently from other challenges such as anemic growth, unemployment, financial instability and rising inequalities”. He proposed that “Europe shall rebuild a political endeavor by proposing to the world a Marshall plan for Climate, to break away from the threat of secular stagnation”. Former French Minister for Ecology, Energy and Sustainable development Jean-Louis Borloo stated that “we need a Marshall Plan to electrify Africa. We invite Europe to elaborate a Juncker Plan II on extra-EU investments with a focus on Africa.”
As moderator of the roundtable on financing the transition towards a lower carbon economy, MEP Gilles Pargneaux said that “After the success of the Climate summit in Paris, we have a clear path for a low-carbon economy. It’s time to deliver now. Private companies are major actors to this paradigmatic shift as well as public institutions which must, at least, set aside 100 billion dollars a year as of 2020.” Kjetil Tonning, Vice-President of FIEC, the European Construction Industry Federation, pointed out that “the construction industry can provide the solutions for the climate change challenges. The biggest contribution we can make to a lower carbon economy is the reduction of emissions from buildings by reducing their energy consumption.” Philippe Méchet, Senior executive Vice-President of EDF, said that “EDF is the electricity provider with the lowest carbon emissions in Europe and aims at being the champion of low-carbon growth. Strongly committed to the Energy transition, we believe the priority now must be to restore very rapidly a significant CO2 price in order to make the transition happen”.
“In the fight against global warming, we all face the same problems, but local contexts largely differ in economic, social and legal terms. Municipalities in Europe require adjusted mechanisms to develop bankable projects in energy efficiency, renewables and clean transport to advance in the implementation of the Paris climate agreement’ declared Kata Tutto, member of the Committee of the Regions. Benjamin Quatre, Director at the French Banking Federation, said that “the best way to fight against climate change would be through tailored market financing”. He recommended in particular the introduction of “a regulatory bonus for green bonds in order to speed up the development of this market. This would be a way for Europe to stay one step ahead in this area”.
In his final remarks, Dominique Ristori, Director General for Energy at the European Commission, declared that “energy will play a crucial role in implementing the COP21 deal, while offering a tremendous opportunity to position European energy companies in the lead of the new global market for clean energy technologies. To make it happen, we need to reinforce the bridge between investors and project promoters all around Europe.” Finally, he concluded by stating that “2016 will be a key year of delivery of the Energy Union in order to achieve a secure, sustainable and competitive energy”.
Background information : The Intergroup is designed to support and promote the issue of long-term investment in perspective of future legislative work. Its creation followed a campaign conducted by organizations from the public and private financial spheres and contributors to the real economy. Three major national promotional banks and institutions, Cassa Depositi e Prestiti, the Group Caisse des Dépôts et Consignations and KfW Bankengruppe, have played a particularly active role. The intergroup is chaired by Dominique Riquet (ALDE-FR), Simona Bonafé (S&D-IT), Adina-Ioana Valean (PPE-RO) and Burkhard Balz (PPE-DE). Currently, the Intergroup has reached 80 members has received the support of some forty professional federations and stakeholders. Today’s conference has been organised with the contribution of the European Construction Industry Federation (FIEC), the French Banking Federation (FBF), Electricité de France (EDF) and the Caisse des Dépôts Group (CDC).