Group headed by Europe’s Prodi issues recommendations on financing social infrastructure

Report commissioned by the European Long-term Investors Association

Romano Prodi, the former President of the European Commission and Italian prime minister, has today presented the final report from the High-Level Task Force on Financing Social Infrastructure in Europe to Jyrki Katainen, European Commission Vice-President.

The report from the task force, set up by the European Long-term Investors Association (ELTI), makes recommendations on boosting private and public investment in European social infrastructure, such as education, health and social housing. It estimates a gap of up to €150bn per year of investment.

RI understands that the European Commission could likely take up recommendations to work more closely with national banks in using public funds to attract private investment and launch thematic or geographic investment platforms to bundle social infrastructure projects.

Other recommendations include the promotion of labelling of social investments, data collection on infrastructure and favourable tax and incentives schemes supporting social investment.

Focusing on institutional investors, the report says despite their trend of looking for new sources of long-term, inflation-protected returns, institutional allocation to infrastructure is only around 2% on average globally and in Europe.

It says it is necessary to have better measurement of how infrastructure investments perform, look at regulatory constraints and provide a reliable pipeline of projects to increase this figure.The High-Level Task Force on Social Infrastructure was set up last year by ELTI, the Brussels-based group, chaired by Prodi and Christian Sautter, the former French economics minister.

Other members of the task force included senior figures from the European Commission, the Cassa Depositi e Prestiti, Italy’s national investment bank, the European Investment Bank and ELTI.

ELTI’s members include a range of European development banks, including Germany’s KfW and the National Bank of Greece. It works with the Long-Term Investors Club (LTIC). LTIC was set up in 2009 by a group of European institutions comprising France’s Caisse des Dépôts, and the EIB to encourage long-term investment thinking.

The final report from the task force was written by economists and policy makers Lieve Fransen, Gino del Bufalo and Edoardo Reviglio, who co-chaired working groups.

It was launched today at an event in Brussels, with speeches from Prodi, Katainen and Sautter.

In the report, Sautter writes: “Large pension funds and other long-term private investors could channel a small fraction of their assets into safe investments with a low financial return but a strong social profile.

“Offering investors projects that have been assigned a quality label, grouped together and restructured is a way of inducing them to broaden their focus somewhat beyond the narrow measure of financial returns on investment.”