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Keynote speech given recently (28 October 2022) by Commissioner McGuinness at EU Sustainable Investment Summit 2022 ‘Be bold, take initiatives: financing the transition and accelerating innovation'.

Good afternoon.

I think we all know too well the difficult challenges that are facing Europe and the world.

Energy prices have risen because of Putin's brutal invasion of Ukraine.

And that comes on top of the climate crisis that we urgently need to address.

So the stakes are high.

And the answer is to be bold, and to take the initiative.

We need to harness the power that we already have at our disposal.

In the EU, we have a regulatory agenda which is specifically designed around sustainable finance, and we have the EU budget.

But we should also look to new areas, new initiatives, and new ways of doing things to find a path towards a sustainable and innovative Europe.

The European Green Deal is our plan to address the climate crisis: it sets a target of climate neutrality by 2050.

But most of the technologies that will allow us to be net zero in 2050 are not there yet.

For example, we will need advanced batteries and long-term storage.

That will help us electrify more sectors and back up renewable energy sources.

And we need to scale up the use of green hydrogen to help decarbonise transport.

New technologies need constant financing support, and we know that getting access to finance can be difficult.

And then innovative forms of financing need to reach the right scale.

Because the amounts we need to invest are enormous.

Over this decade alone, Europe will need around an estimated €390 billion of investment every year to meet the 2030 target to reduce emissions in both energy and transport.

And we'll need another €130 billion for other environmental goals like tackling pollution and restoring biodiversity.

We need finance, we need a lot of it, and it needs to come from a wide range of sources.    

So how can we help open up these sources of finance?

Now first, we are already using our regulatory power in the European Union to direct investment towards the green transition.

We have put in place tools to signpost the road we need to take with the EU sustainable finance agenda.

And the idea is to identify environmentally sustainable investments and to increase transparency on sustainability.

So to start with, we need a common definition of what sustainability means.

For this, we have the European Union Taxonomy, a classification system that identifies criteria for an economic activity to be considered sustainable.

And that includes things like ‘best in class' aluminium manufacturing, energy efficient data centres, or recovering material to re-use from waste.

By doing this, we help point investors and project promoters towards credible sustainable investments, including in innovations that are in the vanguard when it comes to reaching net zero.

The Taxonomy underpins the EU Green Bond Standard, which will allow companies to raise financing for green projects.

And it will give investors a credible label that they can rely on.

We also have the recently agreed Corporate Sustainability Reporting Directive.

This strengthens the rules on companies' reporting on their social and environmental impact.

Our work increases transparency on green and sustainable investments.

It protects investors from greenwashing, so that misleading, vague, or false claims about sustainability do not undermine growing interest in this market.

And it will allow investors to direct their money where it is most needed, and to find suitable sustainable investments.

Second, we are harnessing the power of the EU budget to invest in sustainability, and to mobilise investment in innovation.

And here I want to focus on InvestEU.

It offers support to financial institutions and investors by covering part of the financing risks through guarantees.

It also offers advice on developing and implementing green projects.

InvestEU supports a wide range of investments: from long-term infrastructure investments and finance for start-ups, to innovative solutions and social investments.

And InvestEU also includes direct financing – like financing for the development, construction and operation of solar plants in Greece.

If we want to get to our 2050 goals, we need to support sustainable and innovative projects.

And this is a top priority of InvestEU.

We expect InvestEU to mobilise around €110 billion for climate-related projects by 2027.

InvestEU is a great example of how public support can help mobilise private finance.

And the world of private finance has vast potential to support this transition to sustainability.

The traditional routes are loan finance by banks and long-term investors, and equity finance by investment funds.

They will be hugely important to drive investment in innovation and the transition.

But alongside these more established paths, we're also seeing new ways emerging for raising finance for sustainable projects.

Take the EU Covenant of Mayors for Climate and Energy as one example.

It was launched in Europe in 2008, and it now brings together more than nine thousand local governments from across 57 countries to invest in clean solutions.

Raise Green is an example of an impressive initiative taken by individuals, with a simple principle at its very core: to match offer and demand for climate financing online.

And this allows citizens to invest their savings in sustainable projects proposed by the platform.

So there are many initiatives taken by individuals, groups of citizens, by mayors of cities and so on.

We're seeing public funds combined with private finance in different forms: underwriting some private risks to help attract investors to higher-risk, innovative investments.

Combining private and public guarantees is a smart way to help scale up economically viable projects and long-term investments, such as the renovation of buildings.

This can include the pooling of resources from public budgets and philanthropic investors or foundations.

Green bonds or project bonds are another way to mobilise finance for green investments – whether that's for companies, a portfolio of projects or even one large investment.

And no source is too small.

Crowdfunding platforms, which allow people to pool smaller-scale finance, can be a very effective tool to finance projects.

We also see a lot of promise in local and regional finance initiatives that collect funding for investments with a positive environmental or social impact at local level, or at regional level.

So in the European Commission, we are using our regulatory power to direct investment towards innovation and sustainability.

And we're directly funding climate solutions through the EU budget.

But we also stand ready to support new ways of mobilising finance for the green transition and innovative investments.

Because we need to use all the tools we can in the fight against climate change.

And that means thinking in new and bold directions, beyond the traditional ways of doing things.

I've talked about some of the new ideas on financing that are already in the mix.

But I am sure the panel that will follow will have many more ideas.

And I encourage all of you participating and listening today to spark new ideas with each other.

So that together, we can take the action we need to get to net zero by 2050.

And that date is closer than we might think, so now is the time for action.

Thank you.