European legislators have raised fears over governance and accountability shortcomings at the planned mega-fund that it’s hoped will boost the EU economy by channelling finance, partly, into energy efficiency and environmental infrastructure as part of a bold ‘Capital Markets Union’ plan from the European Commission.
And it has emerged that a planned portal that is being introduced alongside the European Fund for Strategic Investments (EFSI) will have an operational budget of €100m over five years.
The EFSI is being rushed through the European legislative process – the first investments are expected in June – as part of the ambitious initiative from European Commission chief Jean-Claude Juncker. The €21bn fund will leverage investment from outside institutions, up to a mooted €315bn.
The new fund and the associated investment hub are important because the project represents, at a stroke, both a major new channel, and source, of climate finance.
But the EFSI fund itself is already coming under scrutiny for a lack of governance and accountability. The European Parliament’s Committee on Constitutional Affairs has identified “shortcomings” in terms of its transparency, the overall institutional structure and the EU’s legal framework.
Danuta Huebner, the Polish MEP who is herself a former member of the decision-making European Commission, in a report for the Committee, also called for the investment hub (the European Investment Advisory Hub,or EIAH) to also be “subject to stricter accountability rules”.
And a separate joint report from the Parliament’s budgets and economy committees has made it clear that the parliament “should be strongly involved” in appointing EFSI’s management: “More concretely, the Managing Director and the Deputy Managing Director shall be elected from a shortlist presented to the European Parliament. The same should apply to the experts of the Investment Committee.”
In addition, the Internal Markets committee’s ‘rapporteur’ Pascal Durand has called for the fund to include an explicit reference to micro-enterprises, as well as “social economy enterprises” such as cooperatives, associations, foundations and mutual societies.
Meanwhile, the operational budget of the EIAH investment portal that is being planned alongside the fund, which will provide advisory support to project identification, preparation and development across the EU, has been revealed.
The EIAH, the exact nature of which is still unclear, will not come cheap, according to the compromise text thrashed out ahead of a member-state level Council meeting yesterday (March 10).
“The Union shall contribute up to a maximum amount of €20m per year towards covering costs of the EIAH operations during the period ending on 31 December 2020 for the services provided for by the EIAH,” the text states.