ANNEX

INVESTMENT GUIDELINES FOR THE INVESTEU FUND

CONTENT

1. SCOPE 22

2. HORIZONTAL PROVISIONS 22

2.1. Contribution to Union policy objectives and Union added value 22

2.2. Market failures, suboptimal investment situations and additionality 23

2.3. Common requirements for the financing and investment operations 23

2.3.1. Implementing partners, financial intermediaries and final recipients 23

2.3.2. Types of financial product and requirements for ensuring common interest with implementing partners and financial intermediaries 25

2.3.3. Excluded activities 26

2.3.4. State aid considerations 26

2.4. Risk assessment 26

2.5. Currency of financing 27

2.6. Allocation principles per policy window 28

2.7. Geographical and sectoral diversification 28

2.8. Member State compartments in policy windows 29

2.9. Blending operations receiving support from the InvestEU Fund 29

2.10. Strategic investments 30

3. PROMOTING SUSTAINABLE INVESTMENTS 31

3.1. Climate and environment tracking and reporting 32

3.2. Sustainability proofing 33

3.3. Just Transition Scheme under InvestEU 33

4. USE OF THE EU GUARANTEE 34

4.1. General financial products 35

4.1.1. Use of the EU guarantee for debt-type operations 35

4.1.2. Use of the EU guarantee for equity-type operations 36

4.2. Thematic financial products 36

4.2.1. Use of the EU guarantee for debt-type operations 36

4.2.2. Use of the EU guarantee for equity-type operations 36

5. FINANCING PROVIDED BY THE IMPLEMENTING PARTNER 36

5.1. General financial products 37

5.1.1. Debt financing provided by the implementing partner 37

5.1.2. Equity financing provided by the implementing partner 37

5.2. Thematic financial products 38

5.2.1. Debt financing provided by the implementing partner 38

5.2.2. Equity financing provided by the implementing partner 38

6. POLICY WINDOWS 39

6.1. Sustainable Infrastructure window 39

6.1.1. Policy areas of intervention 39

6.1.2. Features of potential financial products 47

6.2. Research, Innovation and Digitisation window 49

6.2.1. Policy areas of intervention 49

6.2.2. Features of potential financial products 52

6.3. SME window 55

6.3.1. Policy areas of intervention 55

6.3.2. Features of potential financial products 56

6.4. Social Investment and Skills window 58

6.4.1. Policy areas of intervention 58

6.4.2. Features of potential financial products 62

1. SCOPE

These investment guidelines lay down the eligibility requirements for financial products and financing and investment operations under the policy windows of the InvestEU Fund pursuant Article 8(9) of the Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021 establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (1) (the ‘InvestEU Regulation’):

(a) the financial products referred to in Article 2(9) of the InvestEU Regulation and the financing and investment operations referred to in Article 2(10) of that Regulation must comply with the requirements laid down in the InvestEU Regulation and in these investment guidelines;

(b) the Investment Committee, when deciding in accordance with Article 24 of the InvestEU Regulation, must verify compliance with these investment guidelines.

These investment guidelines concern both the EU and Member State compartments set out in Article 9 of the InvestEU Regulation, unless otherwise specified in these guidelines. The definitions set out in Article 2 of the InvestEU Regulation apply also to these investment guidelines.

2. HORIZONTAL PROVISIONS

2.1. Contribution to Union policy objectives and Union added value

Financing and investment operations supported under the InvestEU Fund shall focus on investments that provide Union added value. The nature of the Union added value can vary for financing and investment operations under specific financial products as set out in each policy window in Section 6 of these investment guidelines. The Union added value of financing and investment operations under financial products can also result from risk diversification at financial product level across various sectors or geographies. Furthermore, Union added value can also be derived from the contribution to the resilience of the Union in areas of strategic importance as further set out in Section 2.10.

To achieve Union policy objectives in the policy areas supported by InvestEU, as set out in Article 3 and Annex II of the InvestEU Regulation in relation to the sectors therein, financing and investment operations may complement grant financing and other support in particular through blending operations and combinations. The InvestEU Fund may in particular complement relevant policy objectives of Horizon Europe (2), the Connecting Europe Facility (3) (CEF), the Digital Europe programme (4), the Single Market programme (5), the European space programme (6), the European Regional Development Fund (ERDF) (7), the Cohesion Fund (8), the European Social Fund+ (ESF+) (9), the Recovery and Resilience Facility (RRF) (10), the European Agricultural Fund for Rural Development (EAFRD) (11), the Creative Europe programme (12), the Asylum and Migration Fund (13), the Internal Security Fund (14), the European Maritime, Fisheries and Aquaculture Fund (EMFAF) (15), the Programme for the Environment & Climate Action (LIFE) (16), the ETS Innovation Fund (17), EU4Health (18), the Just Transition Fund (JTF) (19) and the European Defence Fund (20).

2.2. Market failures, suboptimal investment situations and additionality

In accordance with Article 209(2)(a) and (b) of the Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (the ‘Financial Regulation’ (21)) the EU guarantee shall address market failures or suboptimal investment situations and achieve additionality, as laid down in Section A of Annex V to the InvestEU Regulation (22).

2.3. Common requirements for the financing and investment operations

2.3.1. Implementing partners, financial intermediaries and final recipients

According to Article 2(13) of the InvestEU Regulation, implementing partners are eligible counterparts, such as financial institutions, with whom the Commission has concluded a guarantee agreement.

Implementing partners can provide financing directly (23) to final recipients or indirectly through private or public financial intermediaries.

Implementing partners may also become advisory partners to provide, directly or indirectly, technical assistance and capacity-building support to financial intermediaries and final recipients under the InvestEU Advisory Hub. Financial intermediaries may also provide technical assistance and capacity-building support to final recipients or may benefit from it themselves.

Direct operations concern direct financing by implementing partners to final recipients (24).

For indirect operations, the implementing partners may conclude agreements with financial intermediaries in accordance with Article 208(4) of the Financial Regulation. In the case of intermediated financing, pursuant to Article 208(4) of the Financial Regulation those financial intermediaries must be selected by the implementing partners following procedures equivalent to those applied by the Commission. Such procedures must respect the principles of open, transparent, proportionate and non-discriminatory procedures, and must avoid conflict of interests. They could, for example, take the form of a call for expression of interest. Indirect operations may also consist of providing financing through investment platforms as defined in Article 2(18) of the InvestEU Regulation.

In accordance with Articles 209(2)(a) and 219(3) of the Financial Regulation, financing and investment operations shall provide support only to final recipients deemed economically viable according to internationally accepted standards at the time of the Union financial support.

The eligible final recipients must be natural or legal persons including:

(a) private entities such as special-purpose vehicles (SPVs) or project companies, large corporates, midcap companies, including small midcap companies (25), and SMEs;

(b) public-sector entities (territorial or not, but excluding financing and investment operations with entities (26) giving rise to direct Member State risk) and public-sector type entities;

(c) mixed entities, such as public–private partnerships (PPPs) and private companies with a public purpose; or

(d) not-for-profit organisations.

The targeted final recipients under a financial product will be defined in the guarantee agreement.

Implementing partners must not be in any of the situations referred to in Article 136(1) or (4)(a) or (b) of the Financial Regulation. With regard to financial intermediaries and final recipients, the application of Article 136 must be specified in the guarantee agreements. Where financing and investment operations benefit final recipients that are large corporates, public-sector and public-sector-type entities that benefit from easier access to capital markets or bank financing or display lower levels of risk, the implementing partner must demonstrate high policy value added.

Based on the information received from the implementing partner, the Investment Committee shall verify that an InvestEU supported financing or investment operation submitted by an implementing partner or a combination of such operations submitted by more than one implementing partner:

(a) for direct operations, shall not exceed 50 % (27) of the total project cost;

(b) for indirect equity operations, shall not exceed 50 % of the fund size (28);

(c) for indirect debt operations, at least 20 % of the exposure shall be retained by the financial intermediary.

These requirements apply unless otherwise specified in these investment guidelines under Section 5.

For indirect operations, the implementing partner shall contractually require that a financial intermediary cannot include the same transaction with final recipients or other intermediaries in more than one portfolio supported by InvestEU.

For indirect equity operations, in respect of the requirement in point (b) above, the implementing partner shall request that potential financial intermediaries inform it about their intention to seek investment from another implementing partner and/or financial intermediary benefiting from the EU guarantee, subject to confidentiality requirements binding on the potential financial intermediaries.

Final recipients shall be contractually required to confirm that the combination of support from the InvestEU Fund and from other Union programmes does not exceed the total project cost, where applicable, and that InvestEU supported financing is not used to pre-finance a grant from Union programmes or that a grant from Union programme will not be used to reimburse InvestEU support.

Implementing partners shall ensure the visibility of the InvestEU support in accordance with Article 32 of the InvestEU Regulation as further specified in the guarantee agreements taking into account the nature of the financial product and of final recipients.

2.3.2. Types of financial product and requirements for ensuring common interest with implementing partners and financial intermediaries

2.3.2.1. Prioritisation of policy objectives

Key performance indicators that demonstrate the achievement of policy priorities will be set in order to prioritise the policy objectives under each financial product. In addition, one or more of the following means will be used:

(a) target amounts for financing granted to certain policy priorities;

(b) specific dedicated criteria to target relevant final recipients;

(c) different coverage by the EU guarantee of risks for specific policy priorities;

(d) concentration limits per sector/geography;

(e) a duly justified performance-based mechanism to reflect the delivery of specific policy priorities;

(f) definition of milestones and targets linked to the allocation of additional EU guarantee tranches to new or existing financial products of an implementing partner; or

(g) any other appropriate means.

The prioritisation and applicable means will be specified in the guarantee agreement.

Furthermore, a close dialogue will be established between the Commission and each implementing partner to provide policy steer and review the pipeline of operations foreseen under the InvestEU Fund.

To ensure flexibility and responsiveness to potentially changing market and policy needs as required under each policy window, the Commission and the relevant InvestEU governance bodies may prioritise the eligible areas for financing set out in Annex II to the InvestEU Regulation based on the means described in this Section. The Commission may in particular:

(a) periodically review the project pipeline provided by implementing partners together with them. The project pipeline consists of aggregate information (or detailed information, subject to confidentiality commitments in place between the implementing partner and the final recipient, if so agreed in the guarantee agreement) regarding the projected amount of financing under the relevant policy areas, at sub-sector level, and geographical coverage of operations. More granular information will need to be provided for thematic products defined under Section 2.3.2.2 and for financing and investment operations benefiting from blending defined under Section 2.9.

(b) give guidance on the interpretation of eligibility criteria and prioritisation means referred to in these guidelines.

(c) review the performance and scope of the relevant financial products in order to optimise the achievement of the policy priorities referred to in these guidelines.

Within the framework set out in this Section 2.3.2.1, indicative targets focusing on specific policy objectives may be set under general financial products.

2.3.2.2. Financial products

Financial products may take the form of general financial products, thematic financial products, and joint general or thematic financial products.

General financial products shall support one or more policy areas covered under each policy window as further defined in Section 6 of these investment guidelines.

In duly justified cases, depending on the risk profile of the financing and investment operations targeting specific policy objectives, thematic financial products can be created under policy windows.

A thematic financial product shall focus on a clearly defined, higher Union added value policy area where the market failure or suboptimal investment situation cannot be addressed by general financial products because it significantly departs from the terms and conditions of these available general financial products. This may in particular be due to the high-risk profile of the financing and investment operations, which require higher EU guarantee coverage through asymmetric, limited or no risk sharing with the implementing partner. In any case, the financial contribution of the implementing partner shall comply with Article 13(4) and (5) of the InvestEU Regulation on a portfolio basis.

A thematic financial product shall be based on a market failure or suboptimal investment situation assessment, which shall be proportionate to the features of the proposed thematic financial product, to the extent that the product was not already covered by existing assessments and studies.

In addition to the pipeline review, the implementing partner shall provide specific information regarding eligibility to the Commission on each financing or investment operation under a thematic product, as laid down in the guarantee agreement.

A joint general or thematic financial product may be developed to address policy objectives falling under more than one policy window in a more efficient manner. Such products shall combine resources from two or more windows.

2.3.3. Excluded activities

The InvestEU Fund shall not support activities referred to in Section B of Annex V to the InvestEU Regulation.

2.3.4. State aid considerations

Member State resources involved in financing and investment operations supported under the InvestEU Fund under EU and Member State compartments may in certain instances qualify as State aid in the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (‘TFEU’). However, they are exempted from the notification requirement for State aid measures laid down in Article 108(3) TFEU if they meet the requirements, which are laid down in the General Block Exemption Regulation (29), in particular the InvestEU specific section thereof (30), or in another block exemption regulation (31). Any State aid that does not meet the requirements laid down in one of the block exemption regulations must be notified to the Commission pursuant to Article 108 TFEU.

2.4. Risk assessment

For all direct debt-type operations, the implementing partners shall carry out their standard risk assessment, involving the computation of the probability of default and the expected recovery rate and the classification according to the internal rating or grading system of the implementing partner, and report accordingly to the Commission.

To reflect the overall risk of the operation, such computation shall be performed without taking into account the EU guarantee and the financial contribution from the implementing partner. However, it must take into account the fact that some operations under thematic products may, under the rules and procedures of the implementing partner, fall outside the scope of its regular risk metrics. In such cases, adequate risk assessment shall be developed by the implementing partner in cooperation with the Commission as to ensure adequate risk reporting.

Information on the expected risk profile of debt-type operations shall also be submitted to the Investment Committee as part of the application for InvestEU Fund support. A debt-type operation is an operation that has the risk characteristics of debt, which may include instruments in the legal form of debt. Examples of debt include loans, financial leases, mortgages, letters of credit, guarantees, standby credit facilities, and securities issued on the capital markets such as bonds; these may be senior, mezzanine or subordinated and secured or unsecured.

For equity-type operations, the EU guarantee may be used to support investments in individual entities or projects (equity-type investments) by the implementing partners or through investments in funds (including funds of funds, co-investment vehicles or other types of intermediaries) or other types of financing vehicles presenting equity-type portfolio risks (equity-type portfolio).

An equity-type operation is an operation that has the risk characteristics of equity. This may include instruments in the legal form of equity, such as investments in common or preferred shares, and of quasi-equity or hybrid instruments, such as deeply subordinated loans with profit participations, mezzanine finance, venture loans, convertibles, warrants or other forms of equity kickers when exposing the holder to equity-type risk. For direct equity-type operations, the implementing partner shall carry out their standard assessment and report accordingly to the Commission. For operations that fall outside the scope of regular equity metrics, the implementing partner shall develop an adequate method of assessment in cooperation with the Commission so as to ensure adequate reporting.

The implementing partner shall use its standard risk assessment to determine whether an operation is classified as equity-type or debt-type, irrespective of its legal form and nomenclature, and shall report this accordingly to the Commission.

For intermediated operations, the implementing partners may rely on the standard procedures of financial intermediaries with respect to the assessment of the risk of the final recipients or the valuation of the operation, as applicable. The guarantee agreement will provide that the outcome of analysis performed by the implementing partners, based on the input received from financial intermediaries at portfolio level, shall be reported to the Commission so that it can assess the impact of such operations on the risk borne by the EU guarantee and the adequacy of the provisioning needs.

Financing and investment operations shall be mapped against a common rating system put in place in accordance with Article 11(1)(b)(ii) of the InvestEU Regulation. Relevant information on the risk assessment of a financing or investment operation shall be made available to the Investment Committee in line with Article 24(4) of the InvestEU Regulation and to the Commission for reporting purposes. The detailed requirements shall be laid down in the guarantee agreements, taking into account the interests of the EU as the guarantor and ensuring that appropriate protection is given to the confidentiality of private and/or commercially sensitive information.

2.5. Currency of financing

The EU guarantee to implementing partners shall be provided in EUR.

Financing to final recipients under financing and investment operations may be provided in any currency that has the status of legal tender in a Member State. Such financing may also contribute to the development of local capital markets.

Financing may also be provided in other tradeable currencies. However, implementing partners and financial intermediaries shall strive to avoid exposing final recipients to foreign exchange risk. As a rule, financing may be provided to final recipients in currencies other than the legal tender of the State where the final recipient is established, only when there is strong economic rationale for doing so. In such cases, the financing should be preferably granted in EUR.

2.6. Allocation principles per policy window

Financial products shall be established under the appropriate policy window, in accordance with the principles set out below:

(a) financial products to support financing and investment operations whose main objective is to achieve a positive social impact or skills development, fall under the Social Investment and Skills window;

(b) financial products to support portfolios consisting exclusively of SMEs and small midcaps on an intermediated basis in the form of debt or equity fall under the SME window, except for those falling under the scope of point (a). For direct operations, financial products to support portfolios consisting exclusively of SMEs and small midcaps as a general policy area as referred to in Article 8(1)(c) of the InvestEU Regulation shall be allocated to the SME window, while financial products targeting other specific policy areas are to be allocated to the window covering that area;

(c) financial products to support research, innovation or digitisation activities fall under the Research, Innovation and Digitisation (RID) window, except for those referred to in points (a) and (b);

(d) financial products to support infrastructure operations, related mobile assets, deployment of innovative technologies for which the risk is mainly on demand and sector specific market development shall fall under the Sustainable Infrastructure window, subject to the following conditions: (i) financial products related to social infrastructure (32) are to be allocated to the Social Investment and Skills window; (ii) financial products related to infrastructure for which the main risk lies in technology development and innovation activities are to be allocated to the RID window. However, financial products related to projects pursuing relevant sustainable infrastructure policy objectives may also be implemented and developed by SMEs and small mid-caps under the Sustainable Infrastructure window as long as the portfolios do not fall under point (b).

Capital support to SMEs in accordance with Article 3(1)(g) of the InvestEU Regulation may be provided through financial products falling under any policy window.

Joint financial products fall under two or more windows according to the relevant guarantee allocation mechanism as set out in the guarantee agreements. Such guarantee allocation mechanism may consist of a pro-rata sharing of each financing or investment operation defined ex ante among the relevant policy windows or other mechanism.

Each individual financing or investment operation proposed by the implementing partner shall be allocated to the respective financial product to which they correspond. For financing or investment operation meeting the criteria of more than one established financial product, such operation shall be allocated to the financial product under which its main objective falls, in accordance with Article 8(4) of the InvestEU Regulation.

In its submission of a specific financing or investment operation, the implementing partner shall propose the relevant financial product under the policy window to which the financing or investment operation shall be allocated.

2.7. Geographical and sectoral diversification

The volume of financing and investment operations covered by the EU guarantee in any three Member States should not account for more than 45 % of the amount of the financing supported by the InvestEU Fund across all implementing partners, in aggregate at the end of the investment period. This excludes financing and investment operations or the relevant parts of them covered under the Member State compartments.

In addition, every effort must be made to ensure that at the end of the investment period a wide range of eligible areas listed in Annex II to the InvestEU Regulation will be covered. That will include in particular nascent or under-developed markets, and will take into account financial products provided by the implementing partner. Any of the eligible areas for financing and investment operations set out in Annex II to the InvestEU Regulation may be covered by a financial product.

Investment platforms may be established to promote geographical diversification combining efforts and expertise of implementing partners with national promotional banks and institutions with limited experience in the use of financial instruments.

Under the Member State compartments, the geographical scope and specific ring-fencing will be included in the respective contribution agreements.

2.8. Member State compartments in policy windows

Member State compartments may be established to cover one or more applicable policy window or windows. They will constitute ring-fenced allocations from contributing Member States to ensure delivery of the policy objectives of the funds under shared management, of the RRF or for purposes laid down in the contribution agreement, depending on the origin of the amount contributed. The Member State compartments may, among other things, provide capital support for SMEs in accordance with Article 3(1)(g) of the InvestEU Regulation.

The financing and investment operations under the Member State compartments shall be delivered in accordance with the rules of the InvestEU Fund and comply with these investment guidelines and a contribution agreement pursuant to Article 10 InvestEU Regulation, including objectives of the contributing programmes.

Each Member State compartment (33) may provide support in the following scenarios in relation to the financial products set out in Section 2.3.2.2:

(a) an existing financial product designed for the EU compartment may also be implemented under the Member State compartment. The contribution shall be ring-fenced for the originating Member State(s) or region(s);

(b) tailor made financial products may be developed to address specific needs and specific final recipients of the originating Member State or region. Such financial product may be a new type of financial product or may significantly differ from an existing financial product developed for the EU compartment;

(c) a financial product may combine support from the EU and Member State compartments in a complementary manner.

Two or more Member States may conclude a joint contribution agreement with the Commission in accordance with Article 10(2) of the InvestEU Regulation.

2.9. Blending operations receiving support from the InvestEU Fund

Blending operations (34) defined in Article 2(5) and referred to in Article 6(2) of the InvestEU Regulation involve support from the InvestEU Fund. A proposal for a financing or investment operation which constitutes part of such a blending operation shall be submitted by the implementing partner for the approval of the Investment Committee.

The implementation of the blending operation shall take place under InvestEU rules. The blended element provided by the sectoral programme (35) can take the form of a grant or a financial instrument and shall comply with the eligibility rules of the sectoral programme. The blended element taking the form of a financial instrument can be combined and share the risk with the InvestEU guarantee, as further specified in the guarantee agreement. The relevant work programme (36) will constitute the financing decision on the blended element of the sectoral programme and will mention its form, objectives, the budgetary amount of the sectoral programme to be allocated to blending operations and the list of entities involved in the blending operation. A decision on the blended element from a sectoral programme is without prejudice to the decision of the Investment Committee on the EU guarantee under the InvestEU Regulation.

In the design and implementation of a blending operation special attention shall be paid to the efficiency and proportionality of the combined Union support. The guarantee agreement will indicate the financial product(s) under which blending operations can be submitted and the specific provisions applicable to blending operations. These may include indicative or mandatory ceilings of the respective tranches of Union support. Moreover, aggregate information (or if so agreed in the guarantee agreement, detailed information) on blending operations may be reviewed during the project pipeline discussions with the Commission. The scoreboard shall reflect whether a blending operation benefits from a grant component or a financial instrument from other Union programmes.

In addition to the pipeline review, the implementing partner shall provide specific information regarding eligibility to the Commission on each financing or investment operation benefiting from blending under a financial product, as defined in the guarantee agreement. For homogenous indirect financing or investment operations, specific eligibility criteria for transactions with final recipients may be defined in the guarantee agreement that may replace the need for such specific information.

2.10. Strategic investments

Financing or investment operations under InvestEU may contribute to activities that are of strategic importance to the Union as set out in Article 8(3) of the InvestEU Regulation. Such activities will be considered strategic investments if they:

(i) concern projects and final recipients associated with risks to the security or public order of the Union and its Member States, in particular investments in defence and space sectors and cybersecurity: — for defence, investments in defence technologies and products identified in the annual work programme for the European Defence Fund; — for space, investments in the following products: — atomic clocks (e.g. for Galileo positioning systems); — strategic launchers (i.e. space launch vehicles for Union-controlled space systems); and — space products defined in a list decided by the Commission on an annual basis and communicated to the Steering Board; — for cybersecurity, investments focusing solely on developing and deploying cybersecurity tools and solutions, including when these are part of deploying or upgrading digital networks and data infrastructure; or

(ii) contribute to the resilience of the Union in areas of strategic importance to it, as set out in Sections 6.1.1.8, 6.2.1.1 and 6.4.1.1, by upholding and strengthening strategic value chains and maintaining and reinforcing activities of strategic importance to the Union, including Important Projects of Common European Interest (IPCEI), in the areas of critical infrastructure, transformative technologies, game-changing innovations and inputs to businesses and consumers.

For direct operations, the implementing partner shall ensure that strategic investments respect the limitations laid down in the paragraphs below. For indirect operations, the implementing partner shall contractually require that the financial intermediary ensures compliance with the same limitations.

Limitations apply to final recipients falling under point (i) in the first paragraph, except in the case of direct operations below EUR 10 000 000 and transactions under indirect operations below EUR 10 000 000.

For the purposes of the limitations set out in this Section:

(a) ‘control’ means the ability to exercise a decisive influence on a legal entity directly or indirectly through one or more intermediate legal entities;

(b) ‘executive management’ means a body of a legal entity appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, or any other person having comparable decisional power, which is empowered to establish the legal entity’s strategy, objectives and overall direction, and which oversees and monitors management decision-making;

(c) ‘third country’ entity means a legal entity established in a third country or, where it is established in the Union, having its executive management in a third country. The location of establishment of the legal entity is determined by the location of its registered office.

A final recipient falling under point (i) shall not be controlled by a third country or third country entities and shall have its executive management in the Union.

If the final recipient falling under point (i) is involved in a strategic investment in the field of 5G connectivity, the measures and risk mitigation plans, pursuant to the 5G Cybersecurity Toolbox (37) shall also apply to its suppliers. Such suppliers notably include vendors of telecom equipment and manufactures and other third-party suppliers, such as cloud infrastructure providers, managed service providers, systems integrators, security and maintenance contractors and transmission equipment manufacturers.

Where the final recipient falling under point (i) is involved in a strategic investment in the field of defence, this limitation shall also apply to its suppliers and subcontractors.

The limitations concerning the absence of control by a third country or third country entity set out in the three paragraphs above do not apply for a particular financing and investment operation where the final recipient falling under point (i) can demonstrate that it is a legal entity for which the Member State in which it is established has approved a guarantee in line with the principles concerning eligible entities set out in the relevant provisions of the European Defence Fund (‘EDF’) Regulation (38) or the Commission waiver granted in accordance with principles concerning eligible entities set out in the relevant provisions of the Space Regulation (39). The implementing partner must notify the Commission of any derogation granted to the limitations set out in this Section 2.10.

Final recipients falling under point (i) shall not exclusively license or transfer intellectual property rights to related critical technologies and technologies instrumental to safeguarding the essential security interest of the Union and its Member States directly resulting from those strategic investments to third countries or third-country entities, unless approved by the Member State in which the final recipient is established.

This limitation shall cease to apply 5 years after the date of the final disbursement of the financing.

3. PROMOTING SUSTAINABLE INVESTMENTS

InvestEU, as an important part of the Sustainable Europe Investment Plan/Green Deal Investment Plan (40), will help deliver on the European Green Deal and on the Just Transition Mechanism. It will also contribute to building up the social dimension of the Union.

The InvestEU Regulation contains specific legal requirements concerning the contribution to climate and environmental objectives, as well as to the sustainability of financing and investment operations receiving the support of the EU guarantee. In the InvestEU context, sustainability refers to the impact on the three dimensions mentioned in the InvestEU Regulation: climate, environment and social.

Moreover, under Article 8(5) of the InvestEU Regulation, projects inconsistent with the climate objectives, according to the principles set out in the guidance on sustainability proofing, shall not be eligible for support.

The design of financial products under InvestEU shall take into consideration the contribution to the objectives of sustainability including through the scaling up of the green bond and sustainability bond market; the deployment of innovative and sustainable solutions in the areas of circular economy, bio-economy, blue economy, food and climate change; protection of environment and natural capital (air, water, nature, land and bio-diversity); the transition and decarbonisation of energy intensive industries, including through investments in digital technologies and circular systems; sectors needing support to be aligned with 2030 and 2050 climate objectives of the European Union; the need to address related negative impacts that may adversely affect in particular vulnerable citizens, including those in need of upskilling or re-skilling and adaptation to new forms of work and regions lagging behind in terms of creation of sustainable industries and services; as well as the promotion of gender equality and equality on other grounds.

Implementing partners are encouraged to support economic activities that are aligned with the criteria of Regulation (EU) 2020/852 (41).

Dedicated advisory services may be provided to project promoters, financial intermediaries or implementing partners (42), especially to build up the capacity to deal with sustainability proofing requirements and to build up a pipeline of projects addressing the above objectives.

3.1. Climate and environment tracking and reporting

As noted in Recital 10 of the InvestEU Regulation, the aggregate volume of financing and investment operations is expected to contribute at least 30 % of the overall financial envelope of the InvestEU Programme to climate objectives. In addition, a specific target of at least 60 % of the aggregate volume of financing and investment operations on climate and environment related objectives under the Sustainable Infrastructure window is laid down in Article 8(8) of the InvestEU Regulation for the EU compartment. The financing and investment operations are also expected to contribute to the overall Union biodiversity objectives.

Climate and environmental targets shall apply both to the EU and the Member State compartment of the InvestEU Fund. However, achievement of the targets (43) shall be calculated and monitored separately for the EU and the Member State compartments.

Implementing partners shall measure the contribution to climate and environmental objectives of the financing and investment operations they submit to the Investment Committee, in accordance with the Commission climate and environmental tracking guidance referred to in Article 8(7) of the InvestEU Regulation. Climate and environmental tracking under the InvestEU Fund will build on a coherent system for collecting, marking and aggregating relevant information from all implementing partners, while ensuring compatibility with a broader climate tracking methodology applicable to all relevant programmes financed through the Union budget. This system will have to use in an appropriate way the criteria for determining whether an economic activity is environmentally sustainable in accordance with the Regulation on the establishment of a framework to facilitate sustainable investment (44).

In order to monitor the achievement of the 30 % climate target and the 60 % cumulative climate and/or environment target for the Sustainable Infrastructure window, at the time of submission of a proposal to the Commission, the implementing partners shall provide the information needed in order to track the contribution to these targets, in accordance with the guidance issued by the Commission. The same information will also be submitted to the Investment Committee as part of the application for InvestEU Fund support.

Guarantee agreements will require the implementing partners to report annually to the Commission, at aggregate level, on the operations contributing to the climate and environment targets and, if applicable, separately per contributing fund under shared management in the Member State compartment. Such reporting will include relevant indicators, where applicable.

3.2. Sustainability proofing

In accordance with Article 8(5) of the InvestEU Regulation, financing and investment operations shall be screened by the implementing partner to determine if they support projects above a certain size (45) and, in such case, whether they have any significant environmental, climate or social impact. If so, they shall be subject to sustainability proofing in accordance with guidance developed by the Commission in cooperation with potential implementing partners. Where the implementing partner concludes that no sustainability proofing is to be carried out, it shall provide a justification to the Investment Committee.

The implementing partner will be responsible for performing the sustainability proofing based on information provided by the project promoters and in line with the Commission guidance. When applying for InvestEU support, the implementing partners shall provide a sustainability proofing summary, as applicable. With due regard to rules and practices regarding confidential and commercially sensitive information, including intellectual property, the sustainability proofing summary shall be made public after the Investment Committee has approved the use of the EU guarantee for a specific operation.

The Commission guidance will be developed in a way that is consistent with the guidance developed for other programmes of the Union, and on the basis of existing legislation (46)„ existing guidelines, tools and best practices to ensure climate resilience and assess environmental externalities (47), and by taking into account, in an appropriate way, the criteria for determining whether an economic activity is environmentally sustainable, as defined by the Regulation (EU) 2020/852, including the principle of ‘do no significant harm’. The proofing shall also contribute to verifying that InvestEU investment operations should aim at eliminating inequalities, or at least not contribute to maintaining or increasing existing inequalities.

3.3. Just Transition Scheme under InvestEU

As part of the Sustainable Europe Investment Plan/European Green Deal Investment Plan, InvestEU will contribute to the Just Transition Mechanism, with a dedicated InvestEU Just Transition Scheme (InvestEU JTS), implemented through InvestEU financial products. The InvestEU JTS shall support investments that address social, economic and environmental challenges deriving from the transition towards achieving of the Union’s 2030 climate target and its target of achieving climate neutrality by 2050. In order to be able to benefit from the InvestEU JTS, Member States shall set out in the relevant territorial just transition plan the sectors and activities envisaged to be supported, in accordance with the principles concerning the territorial just transition plans set out in the relevant provisions of the Just Transition Fund Regulation (‘JTF’ Regulation) (48).

The InvestEU JTS shall support economically viable investments by private and public-sector entities aligned with just transition objectives. Projects or final recipients shall be located in territories covered by an approved territorial just transition plan under the JTF Regulation. Moreover, projects or final recipients not located in these territories but contributing to meet their development needs may be supported, provided that funding for such projects is key to the transition of the territories with a territorial just transition plan. For instance, infrastructure projects that improve the connectivity of the just transition regions may be covered.

The InvestEU JTS shall support investments in line with the objectives (Article 3 of the InvestEU Regulation) and investment priorities (Article 8(1) and Annex II to the InvestEU Regulation) set out in the InvestEU Regulation and in these investment guidelines.

The InvestEU JTS can be implemented through any InvestEU financial product under the four policy windows. Due to the specificities of the just transition territories (e.g. economic disparities, labour market structure, absorption capacity etc.) and the impact on the economic outlook due to the COVID-19 pandemic, higher demand for financing can be expected under some financial products and limited or no demand under others. Considering these factors, dedicated incentives may be offered to implementing partners and financial intermediaries. They may take, where justified, the form of more advantageous risk sharing arrangements for the investment portfolios between the EU and the implementing partner, a lower remuneration of the EU guarantee or partial coverage of the administrative costs under the financing and investment operations contributing to the InvestEU JTS as defined in Article 13(2) of the InvestEU Regulation or another form agreed in a guarantee agreement in the context of one or more financial products. Dedicated advisory support may be offered, where appropriate, to relevant project promoters or financial intermediaries to support the development of a viable project pipeline.

Any reduction of the remuneration of the EU guarantee shall fully benefit final recipients.

The contribution from implementing partners to achieving investment objectives for the InvestEU JTS may vary depending on the nature of the financial product concerned.

Implementing partners shall track and report on the financing and investment operations or their relevant components supporting projects or final recipients under the InvestEU JTS. After the adoption of a relevant territorial just transition plan, such operations or their relevant components shall count as investment mobilised under the InvestEU JTS even if they were approved before the adoption of the plan, provided that the implementing partner verifies that they comply with the objectives of the relevant territorial just transition plan.

Financing under the InvestEU JTS shall not be combined with the public sector loan facility (49) (pillar 3), except for advisory support.

4. USE OF THE EU GUARANTEE

The EU guarantee may be used to cover different tranches of risk of financing or investment operations under different financial products or portfolios of financing and investment operations under financial products. The details of the use of the EU guarantee shall be set out in the guarantee agreement.

The EU guarantee may be pari passu with the risk position taken by the implementing partner or can cover a junior tranche, for example a First Loss Piece (‘FLP’) or a mezzanine tranche. For guarantee agreements covering more than one policy window, the losses occurring under financial products can be mutualised within one or among more policy windows, taking into account the risk sharing structure defined in the guarantee agreement.

The implementing partner’s share in the FLP counts towards the financial contribution of the implementing partner as defined in Article 2(7) of the InvestEU Regulation. Risk sharing in other forms, such as the implementing partner’s share in a mezzanine tranche, may count towards the financial contribution of the implementing partner, subject to conditions and calculation methodology laid down in the guarantee agreements.

The lifetime of a financial product and conditions for terminating it shall be defined in the guarantee agreement. Where appropriate, a possibility may be foreseen under a financial product at the level of the financing or investment operation to exit investments or dispose of exposures before the end of the lifetime of the underlying investments if the achievement of policy objectives can be ensured, while observing the Union’s and the implementing partner’s financial interests.

Without prejudice to the principles set out in this Section 4 that shall apply mutatis mutandis, the thickness of the junior or mezzanine tranche may also be set via a transfer rate mechanism, which will be specified in the guarantee agreement. That consists of applying an individual transfer rate to each financing or investment operation to determine the level of contribution for that operation to such junior or mezzanine tranche by the implementing partner and the EU guarantee.

The following principles shall apply to the use of the EU guarantee, unless otherwise specified in these investment guidelines under the relevant policy window Section. For the Member State compartment, the thickness of the FLP or mezzanine tranche may differ from the principles set out in this Section 4, as specified in the relevant contribution agreement signed between the Commission and the Member State.

4.1. General financial products

4.1.1. Use of the EU guarantee for debt-type operations

As a principle, subject to the provisions in Sections 4.1.1.1 to 4.1.1.3, for portfolios supporting debt-type operations under financial products, when the EU guarantee covers an FLP, the implementing partner shall take a share of at least 5 % in the FLP.

4.1.1.1. Coverage of individual operations

This Section 4.1.1.1 applies only to direct operations.

The EU guarantee may be used to partly cover an individual operation on a pari passu basis. In this case, the EU guarantee on an individual operation cannot exceed 50 % of the financing provided by the implementing partner. The implementing partner shall be obliged to retain a minimum of 20 % pari passu share on an individual operation for the purpose of alignment of interest.

The EU guarantee may also take other forms, including a subordinated position in respect of an individual operation. In this case, the EU guarantee on an individual operation is limited to 25 % of the overall amount of financing provided by the implementing partner (50). The implementing partner must take a share of at least 5 % in the subordinated position.

4.1.1.2. Coverage of portfolios of operations other than those referred to in Section 4.1.1.3

The EU guarantee may also cover an FLP or a mezzanine tranche in respect of the relevant portfolio of financing and investment operations financed by the implementing partner. Where the EU guarantee covers the FLP, the implementing partner must take a share of at least 5 % in the FLP.

The thickness of the FLP will be based on the expected risk profile of the operations under the guaranteed portfolio. It shall be limited to up to 30 % of the overall amount of financing provided by the implementing partner under a financial product. Under the Social Investment and Skills window, the thickness of the FLP may be increased with reference to an appropriate portion of the overall amount of financing.

4.1.1.3. Coverage of portfolios of capped and uncapped guarantees

For intermediated debt financing, both in the form of capped guarantees and in the form of uncapped guarantees, where remuneration from financial intermediaries is not sufficient to adequately remunerate the risk of the financing provided by the implementing partner, the EU guarantee may take a share of up to 100 % in the FLP set at expected losses level. For such intermediated debt financing in the form of capped guarantees, the thickness of the FLP covered by the EU guarantee may be set at up to 100 % of the financing provided by the implementing partner.

In duly justified cases, for uncapped guarantees offered by the implementing partner, the EU guarantee may cover losses above expected losses. In such cases, the portion of unexpected losses covered by the EU guarantee shall be priced, as specified in the guarantee agreement.

In exceptional cases of high policy value, for capped guarantees offered by the implementing partner, the thickness of the FLP covered by the EU guarantee may be set at a level higher than expected losses. In such cases, the portion of unexpected losses covered by the EU guarantee shall be priced, as specified in the guarantee agreement.

4.1.2. Use of the EU guarantee for equity-type operations

In principle, as regards portfolios supporting equity-type operations, implementing partners have to invest on a pari passu basis in each financing or investment operation at their own risk for a share that ensures sufficient alignment of interests, as defined ex ante under each financial product. The part of financing covered by the EU guarantee shall represent in aggregate up to 70 % of the overall equity-type financing provided by the implementing partner (which can be considered at a group level) on a pari passu basis under the different financial products and own risk financing shall represent at least 5 % of the overall equity-type financing provided pari passu by the implementing partner under any financing or investment operation.

In duly justified cases, risk sharing arrangements between implementing partners and the Commission may be on a non pari passu basis. For example, a subordinated use of the EU guarantee may be allowed for public goods with systemic market failures or for the failure to appropriately price externalities, such as first-of-a-kind operations or new market creation.

Only in exceptional cases, including those where there is a high concentration of risk, the EU guarantee may cover up to 100 % of the FLP (which will not be higher than 50 % of the overall financing provided by the implementing partner under such portfolio). In all cases, the revenue sharing between the implementing partner and the Commission shall be commensurate to their risk exposure.

4.2. Thematic financial products

4.2.1. Use of the EU guarantee for debt-type operations

The EU guarantee may cover an FLP in respect of the relevant portfolio of debt-type operations financed by the implementing partner. Given the characteristics of such financial products, the thickness of the FLP may be higher than 50 % of the target financing provided by the implementing partners. The implementing partner shall take a share of at least 5 % in the FLP in order to ensure alignment of interest. In duly justified cases, the alignment of interest may be ensured through other financial means specified in the relevant guarantee agreement.

In duly justified cases, the implementing partners’ contribution to the loss coverage ensured by the FLP can be provided progressively, as the portfolio matures and is de-risked. This contribution can be provided through the revenues originating from the guaranteed or other portfolio(s), or through other appropriate and innovative mechanisms.

4.2.2. Use of the EU guarantee for equity-type operations

The EU guarantee may cover an FLP in respect of the relevant portfolio of equity-type operations financed by the implementing partner; the thickness of the FLP may be higher than 50 % in respect of the relevant portfolio of operations financed by the implementing partner. The implementing partner shall take a share of at least 5 % in the FLP in order to ensure alignment of interest. In duly justified cases, the alignment of interest may be ensured through other financial means specified in the relevant guarantee agreement.

In duly justified cases, the implementing partners’ contribution to the loss-coverage ensured by the FLP can be provided progressively, as the portfolio matures and is de-risked. This contribution can be provided through the revenues originating from the guaranteed or other portfolio(s), or through other appropriate and innovative mechanisms.

5. FINANCING PROVIDED BY THE IMPLEMENTING PARTNER

The following principles shall apply to the financing provided by the implementing partner, unless otherwise specified in these investment guidelines under the relevant policy window Section.

5.1. General financial products

5.1.1. Debt financing provided by the implementing partner

5.1.1.1. General debt financing

The implementing partner may provide financing directly to final recipients, that is to say in the form of direct loans or other forms of direct debt financing, or through financial intermediaries.

5.1.1.2. Capped and uncapped guarantees

The following conditions shall apply to the financing and investment operations made under the EU compartment:

(a) the EU guarantee may be offered to the implementing partners in order for them to provide a capped or an uncapped guarantee for a portfolio of newly established financing transactions originated by a financial intermediary. Transactions with final recipients subject to collective insolvency proceedings or fulfilling the criteria under their domestic law for being placed in collective insolvency proceedings at the request of its creditors shall not be eligible for inclusion in these portfolios;

(b) in the case of a capped portfolio guarantee, the cap rate shall be established at the level of the expected losses of the new portfolio and shall be determined individually for each portfolio guarantee agreement signed with the financial intermediary (51). The expected losses shall be determined and documented on the basis of historical data and forward-looking estimations. In the absence of relevant data, the cap rate shall be set at a pre-agreed level and laid down in the guarantee agreement between the Commission and the implementing partner. The maximum permissible cap rate shall be 25 %. For the Social Investment and Skills window, the maximum permissible cap rate may be higher;

(c) in duly justified cases, the guarantee coverage up to the level of expected losses may be provided for free (for both capped and uncapped guarantees) while the risk taking above expected losses has to be priced by the implementing partner as may be defined in the guarantee agreement between the Commission and the implementing partner. In both cases, the reduction of the remuneration of the EU guarantee shall fully benefit the final recipients;

(d) the guarantee rate for the individual financing transactions included in the new portfolio shall typically be set at 50 % but this percentage may be increased for transactions of specific policy value;

(e) the financial intermediary shall be obliged to retain a minimum of 20 % of the exposure in relation to each financing transaction ranking pari passu with the guarantee provided by the implementing partner. In duly justified cases, a lower percentage may be specified in the guarantee agreement between the Commission and the implementing partner if consistent or compliant, as applicable, with State aid rules. Under the Social Investment and Skills window, the minimum exposure may be reduced to 5 % in duly justified cases;

(f) with regard to loss recoveries, the guarantee provided by the implementing partner shall rank pari passu with the financial intermediary. In the case of capped guarantees, if the amount of the losses exceeds the guarantee cap amount, a corresponding amount of loss recoveries may first be allocated to the more senior exposures; alternatively, an ex-ante estimated recovery rate may be applied;

(g) the minimum tenor of financing transactions that can be included in the portfolios is set at 12 months, except under the Social Investment and Skills window where it may be less.

5.1.2. Equity financing provided by the implementing partner

Equity and quasi-equity financing may be provided by implementing partners to final recipients directly (52) or through financial intermediaries, such as dedicated funds and investment vehicles, including co-investment vehicles. Intermediary funds or investment vehicles shall typically target minority participations in final recipients.

All of the following conditions shall apply to investments made under the EU compartment to financial intermediaries, as further set out in the guarantee agreements with implementing partners and, for the avoidance of doubt, they apply to the financing provided by the implementing partner under InvestEU (financing or investment operation), including the parts covered by the EU guarantee and by the financial contribution of the implementing partner:

(a) a financial intermediary receiving an investment under InvestEU (financing or investment operation) shall, as part of its investment strategy, commit to invest in final recipients eligible under the InvestEU Regulation an amount equal to at least the higher of: (i) 50 % of the intermediary’s aggregate invested amounts; and (ii) two times the amount drawn down under the EU backed investment for investment purposes, capped at 80 % of the intermediary’s aggregate invested amounts.

(b) investments by implementing partners in funds shall typically not represent more than 25 % of the fund size. In cases of high policy value added, investments representing up to 50 % of the fund size may be allowed, except under the Social Investment and Skills window or in exceptional cases of technology transfer funds under other policy windows where it may be up to 75 % of the fund size. In the case of fund of funds, these limits apply at the level of the investee funds;

(c) investments in funds dedicated to green and digital investments at European level by three or more implementing partners may be in aggregate up to 75 % of the fund size;

(d) for co-investment vehicles and schemes, a specific set of rules will be laid down in the guarantee agreements with the implementing partners;

(e) investments by implementing partners under InvestEU shall be made on a pari passu basis with other public and private investors and on a market conform basis. Market conformity requires that a minimum of 30 % of all investments into a fund or into the fund’s underlying projects shall be made by private investors in a comparable situation with the remaining investors and on a pari passu basis (53). The requirements in this paragraph may not apply for the purpose of investment in areas of specific policy relevance for the EU, as further specified in the relevant guarantee agreement with an implementing partner;

(f) investment in funds by implementing partners under InvestEU shall normally be made at the first closing of the fund; investments at subsequent closings are only possible where duly justified;

(g) financing and investment operations shall be long term and have durations typically ranging from 5 to 20 years;

(h) investments in final recipients that are eligible in accordance with the relevant financial product shall take the form of primary investments (54). Secondary investments may also be considered eligible where duly justified, as specified in the guarantee agreement.

5.2. Thematic financial products

5.2.1. Debt financing provided by the implementing partner

The implementing partner may provide financing to final recipients in the form of direct loans or other forms of direct debt financing or via financing intermediaries to target the relevant higher Union added value policy area.

5.2.2. Equity financing provided by the implementing partner

Equity and quasi-equity financing may be provided by implementing partners to final recipients directly (55) or through dedicated funds and investment vehicles. Investment in funds or other investment vehicles, and platforms supported by the EU guarantee may, in duly justified cases, also rank in a subordinated manner compared to other investors.

6. POLICY WINDOWS

6.1. Sustainable Infrastructure window

6.1.1. Policy areas of intervention

The sustainable infrastructure window aims to support financing and investment operations in sustainable infrastructure in the areas referred to in Article 8(1)(a) of the InvestEU Regulation. Without prejudice to provisions on excluded activities (Section 2.3.3 of these investment guidelines) and InvestEU Fund allocation principles set out in Section 2.6, any relevant area linked to sustainable infrastructure listed in Annex II to the InvestEU Regulation is eligible for support under the sustainable infrastructure policy window. That support mainly relates to points 1, 2, 3, 4, 9, 10, 11, 13(d), 14 and 15 of Annex II to the InvestEU Regulation, some of which are further described in a non-exhaustive and indicative way in Sections 6.1.1.1 to 6.1.1.8. The eligible areas may be prioritised in line with Section 2.3.2.1.

While respecting the general target of 60 % of investment contributing to Union objectives on climate and environment, financing provided by the implementing partners shall seek to ensure a sufficient degree of diversification between sectors taking into account the financial products implemented by the implementing partner.

The sustainable infrastructure policy window may also channel support from sectoral programmes (Section 2.9 on blending). Moreover, support to investments under the sustainable infrastructure policy window may be combined with support from funds under shared management or from the RRF.

Support under the sustainable infrastructure policy window is set to add value by providing access to finance in any of the following instances:

(a) achieve policy targets and objectives related to sustainable development defined on a European scale. For example, this relates to the simultaneous promotion of economic, environmental, and social objectives, such as adherence to environmental, social, and governance(‘ESG’) principles (56);

(b) support the development of infrastructure as an asset class by promoting the consistent application of high sustainability standards (including accessibility (57)), transparency and comparability in the areas of project preparation, financing techniques and products, monitoring and data;

(c) promote projects that have macro-regional and/or cross-border impact, where the costs and benefits are distributed among multiple Member States or where costs occur at national or local level, while benefits are realised transboundary or on a Union scale;

(d) support projects that internalise environmental and socioeconomic costs and benefits stemming from EU policy priorities. This would, for instance, relate to contributions to modal shift and the use of sustainable fuels in transport, the contribution to material and energy efficiency, renewable energy, air or water quality improvements, environmental protection, promoting long-term protection and restoration of biodiversity, sustainable infrastructure and nature-based solutions, support to bioeconomy, greenhouse gas emissions reductions, cultural heritage management, tourism, energy performance of buildings etc. This would also include support to the renewal and retrofitting of transport mobile assets solutions;

(e) promote trans-European network infrastructure, equipment and innovative technologies that serve, for example, as a public good for the energy and transport system, etc. Such projects may also be key enablers for higher levels of investment in renewables, energy efficiency and demand response, healthcare (e.g. e-health and care solution), public administration (such as e-public services) and alternative fuelled and cooperative, connected and automated mobility;

(f) promote sustainable digital connectivity and data platforms and infrastructures across the Union and projects supporting a broad range of communications and information technology-related products and services, promoting EU-international connectivity when needed, where sustainability includes attention to the circularity of infrastructure and equipment;

(g) promote the development and operation of sustainable (in-orbit and ground-based) space infrastructure that enables space services and space-based applications;

(h) promote projects where the benefits depend on other investments in the value or supply chain or network and/or entail a high ‘first mover’ risk;

(i) promote interoperability in cross-border infrastructure and services, including digital platforms and services;

(j) promote deployment of and synergies with research infrastructure, including e-infrastructures, across the Union. This must focus on the market development of facilities, resources and services that are used by communities to foster innovation;

(k) address efficient functioning of the internal market by promoting market-based investment under various regulatory regimes (58);

(l) achieve critical mass as well as groups and aggregate projects in order to attract private investors.

Support to the policy areas described in Sections 6.1.1.1 to 6.1.1.8 may be complemented by accompanying measures that aim to help public authorities and project promoters develop capacity for defining investment strategies, blending financing, planning and grouping projects.

6.1.1.1. Development of the energy sector

Support to the generation, supply or use of clean and sustainable renewable energy shall focus on projects with high perceived risk and capital intensity enabling the further integration of renewables in all sectors (power generation, heating and cooling, transport) as well as other zero and low-emission energy sources and solutions. It may indicatively include renewables projects of cross-border or offshore nature (see also Section 6.1.1.7), projects targeting the decarbonisation of buildings, the use of renewables in industrial processes, low-carbon gas (such as low-carbon, clean hydrogen or biomethane, in line with the Hydrogen Strategy (59)) production and supply (at commercial scale), advanced bio-fuels, biomass and other sustainable alternative fuels projects and on-site storage. Support should also be given to locally led renewables projects, such as those headed by energy communities, often integrated with energy efficiency improvements. Support to the energy sector may contribute where appropriate, to the objectives of Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (‘RED II’ (60)) and Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action (‘Governance Regulation’ (61)), as well as promote energy efficiency in investment decisions, including through the Union renewable energy financing mechanism (62).

Support under energy efficiency and energy savings will include projects in line with the Union’s commitments under Agenda 2030 and the Paris Agreement, and further the objectives in Directive 2012/27/EU (63) (reducing energy demand through energy saving measures and demand-side management, applying circular economy principles, supporting district heating and energy generation in co-generation projects that reduce energy consumption and prevent emissions of greenhouse gases and other pollutants). Support will include projects in line with the Renovation Wave Strategy (64), in particular its three focus areas: tackling energy poverty and worst-performing buildings; renovating public buildings, such as administrative, educational and healthcare facilities and decarbonising heating and cooling. Projects that modernise the heating and cooling systems of buildings should be supported as they are essential to decarbonise the EU building stock. The deployment of local renewable energy potential is also key to reduce the EU’s dependence on imported fossil fuels. It will include energy efficiency renovations of existing buildings that target or achieve an increase of their energy performance as determined through one or more of the criteria laid down in Article 10(6) of Directive 2010/31/EU on the Energy Performance of Buildings (65), e.g. through the improvement achieved due to such renovation by comparing energy performance certificates issued before and after renovation, and construction of highly energy efficient new buildings only when exceeding national nearly zero-energy buildings standards (given the legal deadline for all new buildings in the EU to be nearly zero-energy buildings from 31 December 2020), including the modernisation of buildings thanks to smart ready technologies and their integration into a connected energy, storage, digital and transport system including through the deployment of infrastructure for e-mobility in line with Directive 2010/31/EU (66). Support will also include projects addressing life-cycle energy performance of buildings as well as projects applying the Level(s) European indicator framework for sustainable buildings (67). It will also target a reduction of energy intensity of enterprises through improved efficiency of processes or production of products with lower carbon footprint as well as the development of innovative zero and low emission heat supply systems and combined production of electricity and heat.

Development, smartening and modernising of sustainable energy infrastructure shall target the transmission and distribution level. It will also include supporting Projects of Common Interest (PCIs), as established in the Regulation on guidelines for trans-European energy infrastructure (68), digitalising and modernizing energy grids to facilitate a greater uptake of renewables, as well as projects relating to demand-side flexibility and the energy storage.

Support from the InvestEU will also promote the deployment of low-emission technologies: projects that include carbon capture, transport, storage and/or use (CCUS) technologies and infrastructure for the production of renewable electricity, heat and cold, low-carbon gases (such as hydrogen) or industrial processes, as well as bio-energy plants and manufacturing facilities enabling the energy transition, or carbon removals.

6.1.1.2. Development of sustainable transport infrastructures, equipment and innovative technologies

Support for the development of sustainable transport infrastructures, equipment and innovative technologies will be directed at the development of sustainable and safe transport infrastructures, superstructures, mobility solutions and equipment, and innovative technologies, in accordance with the Union’s transport priorities, the Sustainable and Smart Mobility Strategy (69) and the commitments taken under the Paris Agreement. That will include projects supporting development of the trans-European transport network (‘TEN-T’) infrastructure, the rehabilitation and upgrading of existing infrastructure and interconnection levels components across all modes, including its urban nodes, maritime and inland ports, airports, multimodal terminals and their connection to the main networks and the telematic applications laid down in the TEN-T Regulation (70);

Support will, in priority, target projects in the TEN-T core network, as identified in the core network corridor work plans that address missing links, bottlenecks or cross-border connections. Whenever relevant, it will include: rehabilitation and upgrading of existing of rail, road, waterborne and aviation infrastructure, safety upgrades, using appropriate safety management procedures, and environmental performance upgrades, including the deployment of digital transport management systems like ITS (71), RIS (72), ERTMS (73), SESAR, including on-board equipment, and digital transport infrastructure for interoperable data sharing and reporting across modes and sectors. It will also include the development and deployment of new transport technologies and services, e.g. in relation to connected and autonomous modes of transport, integrated ticketing and less polluting inland and maritime means of transport (including the prevention of oil-spills from ships). It will also include support to adapt the TEN-T network to cater for military mobility needs, to the extent that such infrastructure meets the need of both civilian and military purposes (dual-use).

Support will also target TEN-T infrastructure projects that provide for the use of at least two different modes of transport, in particular multi-modal freight terminals and logistics platforms, and passenger transport hubs. Support will also target multimodal connections and last mile sections allowing freight or passenger traffic to be shifted to more sustainable transport modes such as rail transport, public/collective transport, inland navigation or short sea shipping.

Support may be given to smart and sustainable urban mobility projects in particular multi-modal hubs for passenger transport, active modes, inland waterways and innovative mobility solutions, digital transport infrastructure for the seamless and effective connection of travel modes, infrastructure for active and zero-emission mobility. Projects aiming at promoting the shift to sustainable modes of transport must focus on improving the safety of users and non-discriminatory accessibility including with regard to passengers with reduced mobility. Projects will also aim to improve road safety, in line with the Union’s objective of eliminating fatalities and serious injuries on European roads by 2050, paying particular attention to vulnerable road users such as cyclists and pedestrians.

The renewal and retrofitting of transport mobile assets must prioritise non-discriminatory projects for the purchase of rolling stock and vessels for use in rail, inland waterways and maritime transport. For rail and inland navigation, it will also include investments in current rolling stock and vessels, e.g. digital RIS equipment, noise reduction, equipping with ERTMS and with digital automatic couplers. It will also include projects in the aviation, shipping, maritime and inland waterways, sectors taking into account the circular economy principles and aiming at transition towards sustainable alternative fuels, reduction of pollution of any kind and helping the industry to comply with upcoming commitments related to greenhouse gas emissions, including back-up for zero-emission ships and the replacement of old aircrafts and vessels with new generation ones achieving significant emissions reductions, based on full life-cycle emissions. In addition, vessels and zero- and low-emission road vehicles are eligible (see paragraph below on alternative fuels infrastructure).

Support to railway infrastructure, other rail projects, inland waterway infrastructure, mass transit projects and maritime ports and motorways of the sea may be given to investments that prevent or reduce emissions of greenhouse gases and toxic pollutants, or noise levels. Those investments may also target port reception facilities and other means enabling environmental protection measures, and investments in combined sustainable infrastructure, including the deployment of small-scale infrastructure for alternative fuels and other solution reducing ports’ overall carbon footprint. Investments in the greening of airport infrastructure and related services (such as ground handling, ground traffic operations, aircraft on the ground) that prevent or reduce emissions or noise levels may be supported.

Support may be given for the deployment for all modes of transport of recharging and refuelling infrastructure for electricity, hydrogen and liquefied or compressed natural gas blended highly with bio-methane (> 50 %), deployment of fleets of low- and zero-emission road transport vehicles, and platforms for smart connectivity and interoperable services. When renewing road vehicle fleets, they should also fulfil the applicable high safety standards. When deployed through retrofitting, those vehicles must be retrofitted to the standard of zero emission at tailpipe. Support may be given for the deployment of zero- and low-emission vessels and fleets using sustainable alternative fuels (including LNG) and aircraft using sustainable energy sources. Retrofitting of vessels will enable maritime and inland shipping to use sustainable alternative fuels or electricity. Priority for related investments will be given to (i) deployment of publicly accessible refuelling and recharging infrastructure, taking into account the circular economy principles; (ii) refuelling and recharging infrastructure for use by fleets of public authorities or of operators for the discharge of public service obligations under a public service contract; and (iii) deployment, in public service and private fleets, of light- and heavy-duty zero- and low-emission vehicles, zero- and low-emission vessels and fleets running on sustainable alternative fuels, or low-emission aircraft running on sustainable energy sources. Road infrastructure must be accessible to the public without any limitation and will provide for possibility of easy to use ad-hoc payments (e.g. bankcard payment) so that vehicle users can charge without the need of entering into a service contract with the operator concerned. Moreover, available static and dynamic data will be made available through common or national access points. These public accessibility requirements will not apply in the case of charging or filling infrastructure in privately managed or operated depots that serve a captive fleet. Support may be given for the development, production and supply infrastructure for sustainable alternative fuels for aviation, land and waterborne transport, implementing EU transport decarbonisation policies (such as ReFuelEU Aviation, FuelEU Maritime).

Support may be given for other smart and sustainable mobility projects in urban and rural areas, targeting road safety; accessibility; emission and noise reduction; and the development and deployment of new transport technologies and services such as in relation to connected and autonomous modes of transport or integrated ticketing.

The InvestEU Fund support can be granted to measures designed to upgrade, achieve or maintain compliance with standards, including environmental and safety standards, and projects to maintain or upgrade existing transport infrastructure, rehabilitation of existing transport infrastructure or safe parking areas and facilities.

6.1.1.3. Environment and resources

The InvestEU Fund is expected to mobilise investments related to natural capital and circular economy (74). In that respect, besides the greening of investments in traditional infrastructure areas listed in this Section 6.1.1.3, investments include for example mobility projects targeting air pollution and noise, nature, energy consumption and accidents.

Support for water, including drinking water supply and sanitation, flood protection, networks efficiency, leakages reduction, infrastructure for the collection and treatment of waste water, coastal infrastructure and other water-related green infrastructure, which will comprise of investment projects and accompanying services supporting the implementation of Union environmental policies concerning land-based and marine water resources and related ecosystem services set out in, for example, Directives 2008/56/EC (75), 2000/60/EC (76) and 2007/60/EC (77), Council Directives 98/83/EC (78), 91/271/EEC (79) and 91/676/EEC (80), Regulation (EU) 2019/1009 (81) and Regulation (EC) No 1107/2009 (82). Particular importance must be given to (i) ensuring access to water supply and sanitation for all Union citizens by completing and maintaining infrastructure for drinking water and wastewater treatment that complies with energy efficiency and leakage prevention criteria; and (ii) ensuring compliance with the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC), including measures foreseen in the river basin management plans and flood risk management plans, notably investments ensuring good ecological status of rivers, renovating or upgrading of existing hydropower to increase efficiency and reduce ecological impacts, and reducing diffuse pollution from agriculture, aquaculture, and industrial sources, water efficiency solutions, water re-use in any sector and nature-based solutions to reduce flood risks.

Support for waste management infrastructure, i.e. infrastructure necessary to support the transition to a more circular economy in Member States notably shifting upwards in the implementation of the EU waste hierarchy, with waste prevention at its pinnacle. Without prejudice to the exclusion criteria set out in Annex V to the InvestEU Regulation, investment projects should cover the implementation of waste management plans and waste prevention programmes (based on the amended Waste Framework Directive 2008/98/EC (83)), the establishment and support of re-use and repair networks, and the setting up of functional waste separation and collection schemes, and recycling facilities (including for municipal biowaste and textiles for their separate collection).

Investment in the enhancement and restoration of eco-systems and their services, which must focus on projects that promote the conservation, restoration, management and enhancement of natural capital for biodiversity and adaptation benefits, including by means of green and blue infrastructure projects. It will include ecosystem-based solutions to challenges, such as those related to air and climate systems, sea, land, soil, forestry, agriculture, water and waste, and transport and energy. Support will also include measures aimed at pursuing the goals of the ‘biodiversity’ (84) and ‘farm to fork (85) strategies through the improvement of food-production value chains (where these do not fall within the scope of the SME window). Cross-border projects shall be in particular encouraged as well as projects that promote sustainable cultural heritage. Support may also include the rehabilitation of industrial sites (including contaminated sites) and restoration for sustainable use.

Support for sustainable development in urban, rural, coastal, offshore areas development and wider bioeconomy – this should involve infrastructure projects not covered in other areas and focused on a geographical area, including investments in nature and nature-based solutions aimed at the prevention or control of emissions of greenhouse gases, toxic pollutants, noise and other impacts or natural capital dependencies whilst promoting the transformation towards a circular economy. It will include infrastructure projects aimed at promoting inclusive and accessible smart cities and their networks, regions and sectors. This will also encompass projects aimed at fostering bioeconomy through investment in bio-based industries, marine and terrestrial solutions that substitute for energy intensive or fossil materials, aquaculture and blue and green biotechnology. Support may also concern seas and oceans, through the area of the blue economy and its finance principles, in particular through renewable marine energy and circular economy.

Support under climate change actions, climate adaptation and mitigation, including natural hazard disaster risk reduction, will include infrastructure projects aiming at climate change adaptation and increasing the resilience to current and future climate. This will include, among others, the protection of low-lying areas, coastal areas and other measures related to sea-level rise, flood prevention, improved and sustainable use of water supply and drought prevention, and adaptation of infrastructure to extreme temperature. This can also include innovative technologies that contribute to the environmental climate resilience or social sustainability objectives of the Union, or to both, and meet the environmental or social sustainability standards of the Union.

Support to projects and enterprises that implement circular economy systems, including the sustainable use of raw materials, in line with the goals of the Circular Economy Action Plan (86). That support will include, among others, projects integrating resource efficiency aspects in the production and product life cycle and all strategies aimed at ensuring that the value and lifespan products, assets and of material resources is maximised, as well as infrastructure and services fostering industrial symbiosis and asset sharing between industrial plants across sectors and urban and rural communities. This shall also include application of circular business models that lead to dematerialisation, servitisation and more intensive and efficient use of products and resources, internalising or eliminating negative externalities. Investment projects should also encompass actions covering the entire value chain of secondary raw materials, including closed loop systems, elimination of legacy toxic and problematic chemicals and substances from feedstock processing to recycling. Particular attention will be paid to sectors that use the most resources and where the potential for circularity is high, i.e. electronics and Information and Communication Technologies (ICT), batteries and vehicles, packaging, plastics, textiles, construction and buildings, and food, water and nutrients.

Support to operations that support the decarbonisation of and substantial reduction of emissions of energy-intensive industries, including closed-loop systems and deployment of innovative low-carbon emission technologies including energy storage, carbon capture, transport, storage and/or use (CCUS) as well as operations that promote the decarbonisation of the energy production and distribution chain by phasing out the use of coal and oil, and gradual substitution of natural gas by low-carbon gases. It shall also promote closed loop circular systems in energy-intensive processing of materials, such as steel, aluminium, plastic and cement, to eliminate impurities that result in value loss in recyclates.

6.1.1.4. Development of sustainable and secure digital connectivity infrastructure

Support to the development of sustainable and secure digital connectivity infrastructure must focus on projects supporting broad range of communications and information technology-related products and services. That support may include, for example, projects supporting a universal (i.e. including rural/peripheral areas) roll-out of infrastructure, deployment of very high capacity digital networks, including through the deployment of wired and wireless connection systems including fibre and 5G connection systems, and investments needed to reach the Union’s strategic digital connectivity objectives as defined in the Communication on Connectivity for a Competitive Digital Single Market (87).

It will also target projects aimed at increasing the capacity and resilience of Union networks (e.g. quantum-secured communication networks, interregional and international connectivity, including through land-based, submarine cables, satellite systems, data centres and public protection and disaster relief networks), and at supporting the digital transformation of key public services.

It will also target the rollout of sustainable and high capacity interconnected cloud infrastructures in the EU (such as the deployment of software defined infrastructures for workload balancing optimisation among clouds and; green connectivity networks for interconnecting cloud infrastructures) as well as foster best-in class energy efficient European data centres supported by the retrofitting of data centres for both large and small companies (such as new cooling systems and power management solutions).

Digital connectivity infrastructures, for example those aiming at optimising transport and energy infrastructures, optimising energy consumption in buildings, reducing waste and pollution and optimising the use of natural resources via digital solutions, will also constitute suitable investment targets.

In doing so, it should target projects aiming at reduction or avoidance of greenhouse gas emissions and at deploying infrastructure that is designed to be durable, reparable, upgradeable and recyclable, in accordance with the European Green Deal.

6.1.1.5. Development of sustainable space infrastructure

Support to sustainable development and modernisation of new and existing in-orbit and ground infrastructure. That will enable the greening of the space industry for launchers and spacecraft (e.g. satellites) and associated ground segments. This includes the manufacturing, assembly, testing, operation, maintenance and launch facilities towards the development of greener spacecraft, launch systems and associated facilities. A cleaner use of space through spacecraft de-orbiting and de-commissioning is also included.

Support to the Union space programme components and related services, as well as support to the ‘space strategy for Europe’ (88) objectives to maximise the benefits for the Union’s society and economy. That will enable the development of dedicated services and applications meeting existing and emerging users’ needs, including in priority areas of climate change, sustainable development, connectivity and security.

6.1.1.6. Development of sustainable tourism infrastructure

Support to the development of sustainable tourism infrastructure and services must contribute to strengthening the sector’s long-term competitiveness by supporting projects fostering a shift towards sustainable, innovative and digital tourism.

6.1.1.7. Offshore development for decarbonisation

Support in this areas must contribute to the generation of offshore electricity to meet the future energy demand. It must also alleviate the multiple demands on the EU’s land resources by improving the productivity of aquatic and marine resources like for instance, the production and use of algae, and other new sources of protein that have the potential to relieve the pressure on agricultural land.

Support must focus on the deployment of:

(a) floating wind farms;

(b) developments to convert ports from transport nodes to hubs for servicing offshore industry;

(c) cabling for an offshore grid with a particular focus on AC connections from turbines to hubs which then use DC interconnectors to shore;

(d) devices for wave and tide energy;

(e) offshore aquaculture.

6.1.1.8. Strategic investment in critical infrastructure

Strategic investment under the Sustainable Infrastructure window may target projects contributing to the stability, operational security and resilience of the critical infrastructure parts, whether physical or virtual, or supply chains to the critical infrastructure, or directly to the critical elements of infrastructure, in particular in view of the Union’s green and digital transitions.

Supported operations may also target companies, including SMEs, producing goods and services instrumental for the operation and maintenance of any of the critical infrastructure priorities as listed in this Section 6.1.1.8.

Investment operations concerning critical infrastructure may target operations defined as European Critical Infrastructures pursuant to Council Directive 2008/114/EC (89), as selected by Member States pursuant to its Article 3. Support may target supply chains for clean energy, namely the manufacturing capacity of equipment for renewable energy technologies (such as solar PV, wind energy, hydropower, renewable hydrogen, etc.).

Operations supported may also target supply chains for the European aviation, rail, road, inland waterways transport and maritime shipping, including supporting investment in the integration of modes and production capacities.

For digital infrastructure, strategic investments are those closely linked to the objectives of resilient and secure provision of digital communication services, including critical elements of very-high capacity connectivity and 5G networks, quantum communication, the internet of things, media, online service platforms, secure cloud computing, data processing and storage, and to the underlying value chains behind these infrastructures and services. Given the various architectures and constantly evolving technological solutions, including those relevant for cybersecurity (90), it is necessary to screen the evolving needs of the digital transition and relevant security and technological autonomy and resilience dimensions of such transition related to the data transfers, use and storage. Support to projects related to digital electoral infrastructure and sensitive facilities shall have as the main objective their reinforced security, resilience and protection against malicious and disruptive action, including in particular disinformation, data theft, and cyberattacks.

Investments in communication and media infrastructure are also considered strategic to the extent that they contribute to independent European content production in line with the objective to protect the Union’s democratic values and Member States’ sovereignty in the digital age, and the production, intellectual property protection and monetisation of European content globally.

Projects related to critical infrastructure for space must support the update of existing Union space programme components and the development of new Union space infrastructure and services. In particular, it shall target: (i) autonomous, reliable and cost-effective access to and use of space enabled by European launchers, including innovative concepts such as re-usability, advanced manufacturing, new space transportation systems; (ii) space surveillance and protection of assets, (iii) satellite communication and connectivity, (iv) other evolving needs.

Operations supported may also target the resilience and competitiveness of space systems and technologies, addressing the vulnerability of the value chains.

Support to defence industry infrastructure may include the upgrade of existing or the installation of new infrastructures needed to support from a technological and industrial perspective the life cycle of defence technologies and products or training facilities. These infrastructures refer not only to the traditional air, land and sea domains, but also to emerging ones such as information, space and cyber. They may also be used also for the R & D, demonstration, testing and certification of defence systems or technologies, including developed in the context of the European Defence Fund, as well as dual-use systems and technologies. Multinational projects open to users from other Member States should be supported. Support may also target projects oriented to implement pan-European digital and cyber capacities and infrastructure related, for instance, to virtual engineering development environments, digital test beds and labs, new collaborative combat environment, supercomputing, artificial intelligence (AI) and related advance digital skills for defence (e.g. digital shipyard; digital model, or twin, of military systems).

In the area of critical raw materials (CRMs) supported investments may include projects and beneficiaries contributing to increased Union autonomy and resilience in industrial ecosystems for e-mobility, batteries, renewable energies, pharmaceuticals, digital applications and defence. CRM-linked priority investment areas may include magnet development, recovery of rare earths from used magnets, rare earth refining, primary ores and recycled mining waste (bauxite, iron ore, coal waste). Other CRM needs may emerge in the future.

In order to ensure a safe and sustainable food supply, relevant investments for example into transport, logistics, decentralised food chain infrastructure and the setti