Investing for the Transformation of Europe

Governments undoubtedly have an important part to play in making the “green transition” a reality. According to the European Commission, the additional investments needed to reach the EU’s current 2030 climate and environmental policy goals are around €470 billion per year.^[1]

In the face of this challenge, many EU member states have consistently expressed concerns over issues such as energy security, complex regulation and excessive reliance on Asia for raw materials.

It is becoming increasingly clear that private markets must help fill an enormous funding gap.

Transformative real estate will play a pivotal role in European Transformation with buildings accounting for more than 40% of energy consumption and over a third of greenhouse gas emissions across the continent^[2] Even though the European Commission has proposed that by 2030 all new buildings must be zero emission, this still leaves the existing building stock, 85% of which will still be standing in 2050^[3]

A survey^[4] of central bank and national finance department officials found that retrofitting buildings was one of the best ways to stimulate growth and cut carbon emissions.

The innovation solutions needed to bring about change increasingly comes from smaller businesses, yet securing funding has been a major challenge. In particular, small- and medium-sized business SMEs have seen their access to bank loans fall significantly since the global financial crisis with only 10% of external financing comes from capital markets.^[6]

As a result, private investment via direct lending is now rightly gaining recognition as a vital means of allowing innovative SMEs to survive, thrive and fulfil their potential as the backbone of Europe’s economy. We believe it is key to European Transformation.