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

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 173 and the third paragraph of Article 175 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

After consulting the Committee of the Regions,

Acting in accordance with the ordinary legislative procedure (2),

Whereas:

(1) The COVID-19 pandemic is a major shock to the global and Union economy and is having a major social and economic impact across Member States and regions. Due to the necessary containment measures, economic activity in the Union dropped significantly. The contraction in Union GDP in 2020 is expected to be around 7,4 %, far deeper than during the financial crisis in 2009. Investment activity has dropped significantly. Vulnerabilities such as the over-reliance on non-diversified external supply sources and a lack of critical infrastructure need to be addressed, in particular for small and medium-sized enterprises (SMEs), including micro-enterprises, for instance by diversifying and strengthening strategic value chains, to improve the Union’s emergency response as well as the resilience of the entire economy, while maintaining its openness to competition and trade in line with its rules. Even before the pandemic, while a recovery in investment-to-GDP ratios in the Union could be observed, it remained below what might be expected in a strong recovery and was insufficient to compensate for years of underinvestment following the 2009 crisis. More importantly, the current investment levels and forecasts do not cover the Union’s needs for structural investment to restart and sustain long-term growth in the face of technological change and global competitiveness, including for innovation, skills, infrastructure, SMEs and the need to address key societal challenges such as sustainability and population ageing. Consequently, in order to achieve the Union’s policy objectives and to support a swift, sustainable, inclusive, lasting and healthy economic recovery, support is necessary to address market failures and suboptimal investment situations and to reduce the investment gap in targeted sectors.

(2) Evaluations have underlined that the variety of financial instruments delivered under the 2014-2020 Multiannual Financial Framework period has led to some overlaps in their scope. That variety has also produced complexity for intermediaries and final recipients who were confronted with different eligibility and reporting rules. The absence of compatible rules also hampered the combination of several Union funds, although such combinations would have been beneficial in order to support projects in need of different types of funding. Therefore, a single fund, the InvestEU Fund, which builds on the experience of the European Fund for Strategic Investments (EFSI) set up under the Investment Plan for Europe, should be set up in order to provide more efficiently functioning support to final recipients by integrating and simplifying the financing offered under a single budgetary guarantee scheme, thereby improving the impact of Union support while reducing the cost to the Union payable from the budget.

(3) In recent years, the Union has adopted ambitious strategies to complete the internal market and to stimulate sustainable and inclusive growth and jobs. Such strategies include ‘Europe 2020 – A strategy for smart, sustainable and inclusive growth’ of 3 March 2010, ‘Action Plan on Building a Capital Markets Union’ of 30 September 2015, ‘Closing the loop – An EU action plan for the Circular Economy’ of 2 December 2015, ‘A European Strategy for Low-Emission Mobility’ of 20 July 2016, ‘Space Strategy for Europe’ of 26 October 2016, ‘Clean Energy for all Europeans’ of 30 November 2016, ‘European Defence Action Plan’ of 30 November 2016, ‘Launching the European Defence Fund’ of 7 June 2017, the Interinstitutional Proclamation on the European Pillar of Social Rights of 13 December 2017, ‘A new European Agenda for Culture’ of 22 May 2018, the ‘European Green Deal’ of 11 December 2019, the ‘European Green Deal Investment Plan’ of 14 January 2020, the ‘Strong Social Europe for Just Transitions’ of 14 January 2020, the strategy for ‘Shaping Europe’s digital future’, ‘A European Strategy for Data’ and the White Paper ‘On Artificial Intelligence - A European approach to excellence and trust’ of 19 February 2020, ‘A New Industrial Strategy for Europe’ of 10 March 2020 and ‘SME Strategy for a sustainable and digital Europe’ of 10 March 2020. The InvestEU Fund should exploit and reinforce synergies between those mutually reinforcing strategies by providing support for investment and access to financing. In addition, the Union has adopted Regulation (EU) 2020/852 of the European Parliament and of the Council (3).

(4) At Union level, the European Semester of economic policy coordination is the framework for identifying national reform priorities and monitoring their implementation. Member States, where appropriate in cooperation with local and regional authorities, develop their own national multiannual investment strategies in support of those reform priorities. Those strategies should be presented alongside the yearly national reform programmes as a way of outlining and coordinating priority investment projects that are to be supported by national funding, Union funding, or both. Those strategies should also use Union funding in a coherent manner and maximise the added value of the financial support to be received in particular from the European structural and investment funds, the Recovery and Resilience Facility established by Regulation (EU) 2021/241 of the European Parliament and of the Council (4) and the InvestEU Programme.

(5) The InvestEU Fund should contribute to improving the competitiveness and socio-economic convergence and cohesion of the Union, including in the fields of innovation and digitisation, to the efficient use of resources in accordance with the circular economy, to the sustainability and inclusiveness of the Union’s economic growth and to the social resilience and integration of Union capital markets, including through solutions that address the fragmentation of Union capital markets and that diversify sources of financing for Union enterprises. To that end, the InvestEU Fund should support projects that are technically and economically viable by providing a framework for the use of debt, risk sharing and equity and quasi-equity instruments backed up by a guarantee from the Union budget and by financial contributions from implementing partners as relevant. The InvestEU Fund should be demand-driven, while at the same time focused on providing strategic, long-term benefits in relation to key areas of Union policy which would otherwise not be funded or would be insufficiently funded, thereby contributing to meeting the Union’s policy objectives. Support from the InvestEU Fund should cover a wide range of sectors and regions, but should avoid excessive sectoral or geographical concentration and should facilitate access to financing of projects composed of partner entities in multiple regions across the Union, including projects that foster the development of networks, clusters and digital innovation hubs.

(6) The cultural and creative sectors are key as well as fast growing sectors in the Union that can play an important part in ensuring a sustainable recovery, generating both economic and cultural value from intellectual property and individual creativity. However, restrictions on social contacts put in place during the COVID-19 crisis have had a significant negative economic impact on those sectors. Moreover, the intangible nature of assets in those sectors limits the access of SMEs and organisations from those sectors to private financing which is essential to be able to invest, scale up and compete at an international level. The InvestEU Programme should continue to facilitate access to finance for SMEs and organisations from those sectors. The cultural and creative, audiovisual and media sectors are essential for freedom of speech and cultural diversity and for building democratic and cohesive societies in the digital age, and are an intrinsic part of our sovereignty and autonomy. Investment in those sectors would determine their competitiveness and their long-term capacity to produce and distribute high-quality content to wide audiences across national borders.

(7) With a view to fostering sustainable and inclusive growth, investment and employment, and thereby contributing to improved well-being, to fairer income distribution and to greater economic, social and territorial cohesion in the Union, the InvestEU Fund should support investments in tangible and intangible assets, including in cultural heritage. Projects funded by the InvestEU Fund should meet Union environmental and social standards, including standards on labour rights. Interventions through the InvestEU Fund should complement Union support delivered through grants.

(8) The Union endorsed the objectives set out in the United Nations 2030 Agenda for Sustainable Development (the ‘2030 Agenda’), its Sustainable Development Goals (SDGs) and the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (5) (Paris Agreement) as well as the Sendai Framework for Disaster Risk Reduction 2015-2030. To achieve those objectives, as well as the objectives set out in the environmental policies of the Union, action pursuing sustainable development needs to be significantly stepped up. Therefore, the principles of sustainable development should feature prominently in the design of the InvestEU Fund.

(9) The InvestEU Programme should contribute to building a sustainable finance system in the Union which supports the reorientation of private capital towards sustainable investments in accordance with the objectives set out in the communication of the Commission of 8 March 2018 entitled ‘Action Plan: Financing Sustainable Growth’ and the communication of the Commission of 14 January 2020 on the European Green Deal Investment Plan.

(10) Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement, and the commitment to the United Nations Sustainable Development Goals, as well as the objective of EU climate neutrality by 2050 and the Union’s new 2030 climate targets, actions under this Regulation should contribute to the achievement of a target of 30 % of all MFF expenditure being spent on mainstreaming climate objectives and the ambition of 7,5 % of the budget reflecting biodiversity expenditures in 2024 and 10 % in 2026 and 2027, while considering the existing overlaps between climate and biodiversity goals. Actions under the InvestEU Programme are expected to contribute at least 30 % of the overall financial envelope of the InvestEU Programme to climate objectives.

(11) The contribution of the InvestEU Fund to the achievement of the climate target will be tracked through a Union climate tracking system to be developed by the Commission in cooperation with potential implementing partners, appropriately using the criteria established by Regulation (EU) 2020/852 for determining whether an economic activity is environmentally sustainable. The InvestEU Programme should also contribute to the implementation of other dimensions of the SDGs.

(12) According to the 2018 Global Risks Report issued by the World Economic Forum, five of the ten most critical risks threatening the global economy relate to the environment. Such risks include the pollution of air, soil, inland waters and oceans, extreme weather events, biodiversity losses and failures of climate-change mitigation and adaptation. Environmental principles are strongly embedded in the Treaties and many of the Union’s policies. Therefore, the mainstreaming of environmental objectives should be promoted in operations related to the InvestEU Fund. Environmental protection and the prevention and management of related risks should be integrated in the preparation and implementation of investments. The Union should also track its biodiversity-related and air pollution control-related expenditures in order to fulfil the reporting obligations under the Convention on Biological Diversity (6) and under Directive (EU) 2016/2284 of the European Parliament and of the Council (7). Investment allocated to environmental sustainability objectives should therefore be tracked using common methodologies that are consistent with methodologies developed under other Union programmes that apply to climate, biodiversity and air pollution management in order to allow the assessment of the individual and combined impact of investments on the principal components of natural capital, namely air, water, land and biodiversity.

(13) Investment projects that receive substantial Union support, in particular in the area of infrastructure, should be screened by the implementing partner to determine whether they have an environmental, climate or social impact. Investment projects that have such an impact should be subject to sustainability proofing in accordance with guidance that should be developed by the Commission in close cooperation with potential implementing partners under the InvestEU Programme. This guidance should appropriately use the criteria established by Regulation (EU) 2020/852 for determining whether an economic activity is environmentally sustainable, including the principle of ‘do no significant harm’, and consistent with the guidance developed for other programmes of the Union. Consistent with the principle of proportionality, such guidance should include adequate provisions for avoiding undue administrative burdens, and projects below a certain size as to be defined in the guidance should be excluded from the sustainability proofing. Where an implementing partner concludes that no sustainability proofing is to be carried out, it should provide a justification to the investment committee established for the InvestEU Fund (the ‘Investment Committee’). Operations that are inconsistent with the achievement of the climate objectives should not be eligible for support under this Regulation.

(14) Low infrastructure investment rates in the Union during the financial crisis and again during the COVID-19 crisis have undermined the Union’s ability to boost sustainable growth, its efforts towards climate neutrality, its competitiveness and convergence and the creation of jobs. This also creates the risk of consolidating imbalances and divergences and inequalities within and between Member States, impacting on long-term development at Union, national or regional level. Sizeable investments in Union infrastructure, in particular with regard to interconnection and energy efficiency and to creating a Single European Transport Area, are essential to meeting the Union’s sustainability targets, including the Union’s commitments towards the SDGs, and the 2030 energy and climate targets. Accordingly, support from the InvestEU Fund should target investments in transport, energy, including energy efficiency and renewable energy sources and other safe and sustainable low-emission energy sources, environmental infrastructure, infrastructure related to climate action, maritime infrastructure and digital infrastructure, including fast and ultra-fast broadband connectivity throughout the Union, to accelerate the digital transformation of the Union economy. The InvestEU Programme should prioritise areas that are under-invested, and in which additional investment is required. To maximise the impact and added value of Union financing support, it is appropriate to promote a streamlined investment process that enables visibility of the project pipeline and maximises synergies across relevant Union programmes in areas such as transport, energy and digitisation. Bearing in mind threats to safety and security, investment projects receiving Union support should include measures for infrastructure resilience, including infrastructure maintenance and safety, and should take into account principles for the protection of citizens in public spaces. This should be complementary to the efforts made by other Union funds that provide support for security components of investments in public spaces, transport, energy and other critical infrastructure, such as the European Regional Development Fund.

(15) Where appropriate, the InvestEU Programme should contribute to the objectives of Directive (EU) 2018/2001 of the European Parliament and of the Council (8) and Regulation (EU) 2018/1999 of the European Parliament and of the Council (9), as well as promote energy efficiency in investment decisions.

(16) Genuine multimodality is an opportunity to create an efficient and environmentally friendly transport network that uses the maximum potential of all means of transport and generates synergy between them. The InvestEU Programme should support investments in multimodal transport hubs, which – in spite of their significant economic potential and business cases – carry a significant risk for private investors. The InvestEU Programme should also contribute to the development and deployment of Intelligent Transport Systems (ITS). The InvestEU Programme should help to boost efforts to design and apply technologies that help to improve the safety of vehicles and road infrastructure.

(17) The InvestEU Programme should contribute to Union policies concerning seas and oceans through the development of projects and enterprises in the area of the blue economy, and the Sustainable Blue Economy Finance Principles. This may include interventions in the area of maritime entrepreneurship and industry, an innovative and competitive maritime industry, as well as renewable marine energy and circular economy.

(18) Although the level of overall investment in the Union was increasing before the COVID-19 crisis, investment in higher-risk activities such as research and innovation was still inadequate and is now expected to have suffered a significant hit as a result of the crisis. Research and innovation have a crucial role to play in overcoming the crisis, consolidating the resilience of the Union to tackle future challenges and creating the necessary technologies to achieve Union policies and goals. The InvestEU Fund should contribute to reaching the overall target of investing at least 3 % of Union GDP in research and innovation. The achievement of that target would require Member States and the private sector to proceed with their own reinforced investment actions in research, development and innovation, to avoid underinvestment in research and innovation, which is damaging to the industrial and economic competitiveness of the Union and the quality of life of its citizens. The InvestEU Fund should provide appropriate financial products to cover different stages of the innovation cycle and a wide range of stakeholders, in particular to allow the upscaling of and deployment of solutions at a commercial scale in the Union in order to make such solutions competitive on world markets and to promote Union excellence in sustainable technologies at a global level, in synergy with Horizon Europe to be established by a Regulation of the European Parliament and of the Council establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013 (the ‘Horizon Europe Regulation’), including the European Innovation Council. In that regard, the experience gained from the financial instruments, such as InnovFin – EU Finance for Innovators, deployed under Horizon 2020 to facilitate and accelerate access to finance for innovative businesses should serve as a strong basis to deliver this targeted support.

(19) Tourism, including the hospitality industry, is an area of great importance for the Union economy and is currently experiencing a particularly severe contraction as a result of the COVID-19 pandemic. That contraction is particularly damaging for SMEs and family businesses and has caused large-scale unemployment. The InvestEU Programme should contribute to strengthening the recovery, long-term competitiveness and sustainability of the sector, and its value chains, by supporting operations promoting sustainable, innovative and digital tourism including innovative measures to reduce the climate and environmental footprint of the sector.

(20) A significant effort is urgently needed to invest in and boost the digital transformation and to distribute the benefits of it to all Union citizens and businesses. The strong policy framework of the Digital Single Market Strategy should now be matched by investment of a similar ambition, including in artificial intelligence in line with the Digital Europe Programme to be established by a Regulation of the European Parliament and of the Council establishing the Digital Europe Programme and repealing Decision (EU) 2015/2240.

(21) SMEs represent over 99 % of businesses in the Union and their economic value is significant and crucial. However, they face difficulties when accessing finance because of their perceived high risk and lack of sufficient collateral. Additional challenges arise from the need for SMEs and social economy enterprises to stay competitive by engaging in digitisation, internationalisation, transformation in a logic of circular economy, innovation activities and skilling up their workforce. SMEs have been particularly badly hit by the COVID-19 crisis. Moreover, SMEs and social economy enterprises have access to a more limited set of financing sources than larger enterprises, because they typically do not issue bonds, and have only limited access to stock exchanges and large institutional investors. Innovative solutions such as the acquisition of a business or ownership stake in a business by employees are also increasingly common for SMEs and social economy enterprises. The difficulty in accessing finance is even greater for those SMEs whose activities focus on intangible assets. SMEs in the Union rely heavily on banks and on debt financing in the form of bank overdrafts, bank loans or leasing. Supporting SMEs that face the above challenges by making it easier for them to gain access to finance and by providing more diversified sources of funding is necessary to increase the ability of SMEs to finance their creation, growth, innovation and sustainable development, ensure their competitiveness and withstand economic shocks to make the economy and the financial system more resilient during economic downturns and to maintain SMEs’ ability to create jobs and social well-being. This Regulation is also complementary to the initiatives already undertaken in the context of the Capital Markets Union. The InvestEU Fund should therefore build on successful Union programmes, such as the Programme for the Competitiveness of Enterprises and SMEs (COSME); provide support to digital start-ups and innovative SMEs to enable them to better compete and scale up; provide working capital and investment throughout the life cycle of a company; provide financing for leasing transactions; and provide an opportunity to focus on specific, more targeted financial products. It should also maximise the firepower of public/private fund vehicles, such as the SME IPO (Initial Public Offering) Fund, seeking to support SMEs through channelling more private and public equity.

(22) As set out in the Commission’s Reflection paper on the social dimension of Europe of 26 April 2017, the Communication on European Pillar of Social Rights, the Union framework for the UN Convention on the Rights of Persons with Disabilities and the Communication on ‘Strong Social Europe for Just Transitions’ of 14 January 2020, building a more inclusive and fair Union is a key priority for the Union to tackle inequality and foster social inclusion policies in Europe. Inequality of opportunities affects in particular access to education, training, culture, employment, health and social services. Investment in the social, skills and human capital-related economy, as well as in the integration of vulnerable populations in the society, can enhance economic opportunities, especially if coordinated at Union level. The COVID-19 crisis has revealed a significant need for investment in social infrastructure. The InvestEU Fund should be used to support investment in education and training, including the re-skilling and upskilling of workers, inter alia in regions depending on a carbon intensive economy and affected by the structural transition to a low-carbon economy. It should be used to support projects that generate positive social impacts and enhance social inclusion by helping to increase employment across all regions, in particular among the unskilled and long-term unemployed, and to improve the situation with regard to gender equality, equal opportunities, non-discrimination, accessibility, intergenerational solidarity, the health and social services sector, social housing, homelessness, digital inclusiveness, community development, the role and place of young people in society as well as vulnerable people, including third country nationals. The InvestEU Programme should also support European culture and creativity that has a social goal.

(23) The COVID-19 crisis has had a particularly serious impact on women, from both a social and an economic perspective. Bearing that in mind, the InvestEU Programme should contribute to the achievement of the Union’s policies on equality between women and men, inter alia, by addressing the digital gap between them and by helping to encourage female creativity and entrepreneurial potential.

(24) To counter the negative effects of profound transformations of societies in the Union and of the labour market in the coming decade, it is necessary to invest in human capital, social infrastructure, microfinance, ethical and social enterprise finance and new social economy business models, including social impact investment and social outcomes contracting. The InvestEU Programme should strengthen nascent social market ecosystem to increase the supply of and access to finance to micro- and social enterprises and social solidarity institutions, in order to meet the demand of those who need it the most. The report of the High-Level Task Force on Investing in Social Infrastructure in Europe of January 2018 entitled ‘Boosting Investment in Social Infrastructure in Europe’ has identified a total investment gap of at least EUR 1,5 trillion in social infrastructure and services for the period between 2018 and 2030, including education, training, health and housing. This calls for support, including at the Union level. Therefore, the collective power of public, commercial and philanthropic capital, as well as support from foundations and from alternative types of finance providers such as ethical, social and sustainable actors, should be harnessed to support the development of the social market value chain and a more resilient Union.

(25) In the economic crisis caused by the COVID-19 pandemic, market allocation of resources is not fully efficient and perceived risk impairs private investment flow significantly. Under such circumstances, the key feature of the InvestEU Fund of de-risking economically viable projects to crowd in private finance is particularly valuable, inter alia in order to counteract the risk of an asymmetric recovery. The InvestEU Programme should be able to provide crucial support to companies in the recovery phase, including capital support for SMEs that were negatively affected by the COVID-19 crisis and were not already in difficulty in State aid terms at the end of 2019, and at the same time ensure a strong focus of investors on the Union’s medium- and long-term policy priorities such as the European Green Deal, the European Green Deal Investment Plan, the Strategy on shaping Europe’s digital future, the New Industrial Strategy for Europe, and the Strong Social Europe for Just Transitions, taking account of the principle of ‘do no significant harm’. It should significantly increase the risk-taking capacity of the European Investment Bank (EIB) Group and national promotional banks and institutions and other implementing partners in support of economic recovery.

(26) The deep contraction in Union GDP resulting from the COVID-19 crisis renders adverse social effects inevitable. The COVID-19 pandemic has shown the need for strategic vulnerabilities to be urgently and efficiently addressed in order to improve the Union’s emergency response as well as the resilience and sustainability of the entire economy. Only a resilient, sustainable, inclusive and integrated Union economy can preserve the integrity of the internal market and the level playing field also to the benefit of the hardest-hit Member States and regions.

(27) The InvestEU Fund should operate through four policy windows that mirror the key Union policy priorities, namely, sustainable infrastructure; research, innovation and digitisation; SMEs; and social investment and skills.

(28) Although the SME policy window should primarily focus on benefitting SMEs, small mid-cap companies should also be eligible under it. Mid-cap companies should be eligible for support under the other three policy windows.

(29) As set out in the European Green Deal and the European Green Deal Investment Plan, a Just Transition Mechanism is to be established in order to address the social, economic and environmental consequences of reaching the Union’s 2030 climate target and its target of achieving climate neutrality by 2050. That mechanism would be composed of three pillars, namely a Just Transition Fund to be established by a Regulation of the European Parliament and of the Council establishing the Just Transition Fund (the ‘Just Transition Fund Regulation’) (pillar 1), a dedicated just transition scheme under the InvestEU Programme (pillar 2) and a public sector loan facility to be established by a Regulation of the European Parliament and of the Council on the public sector loan facility under the Just Transition Mechanism (the ‘Public Sector Loan Facility Regulation for 2021-2027’) (pillar 3). That mechanism should focus on the regions that are most affected by the transition given their dependence on fossil fuels, including coal, peat and oil shale or greenhouse gas-intensive industrial processes, and that have less capacity to finance the necessary investments. The just transition scheme should also provide support for financing to generate investment to the benefit of just transition territories. The InvestEU Advisory Hub should provide for the possibility for the respective territories to benefit from technical assistance.

(30) To implement pillar 2 under the Just Transition Mechanism, a dedicated just transition scheme under the InvestEU Programme should be established horizontally across all policy windows, supporting additional investment to benefit the territories identified in territorial just transition plans, established in accordance with the Just Transition Fund Regulation. That scheme should enable investments in a wide range of projects, in line with the eligibility criteria of the InvestEU Programme. Projects in territories identified in territorial just transition plans, or projects that benefit the transition of those territories, even if they are not located in the territories themselves, may benefit from the Scheme, but only when funding outside the just transition territories is key to the transition in those territories.

(31) It should be possible to support strategic investments, including important projects of common European interest, under any policy window, particularly in view of the green and digital transitions and the need to enhance competitiveness and resilience, promote entrepreneurship and job creation and strengthen strategic value chains.

(32) Each policy window should be composed of two compartments, that is to say an EU compartment and a Member State compartment. The EU compartment should address Union-wide or Member State specific market failures or suboptimal investment situations in a proportionate manner. Operations supported should have a clear Union added value. The Member State compartment should give Member States as well as regional authorities via their Member State the possibility of contributing a share of their resources from the funds under shared management to the provisioning for the EU guarantee and of using the EU guarantee for financing or investment operations in order to address specific market failures or suboptimal investment situations in their own territories, including in vulnerable and remote areas such as the outermost regions of the Union, as to be set out in the contribution agreement, in order to achieve objectives of the funds under shared management. The Member State compartment should also give Member States the possibility of contributing other additional amounts, including those made available pursuant to Regulation (EU) 2021/241, to the provisioning for the EU guarantee and of using the EU guarantee for financing or investment operations for the purposes laid down in the contribution agreement, which should include, where relevant, the purposes of measures under a recovery and resilience plan. This could, inter alia, allow for capital support for SMEs that were negatively affected by the COVID-19 crisis and were not already in difficulty in State aid terms at the end of 2019. Operations supported by the InvestEU Fund through either EU or Member State compartments should not duplicate or crowd out private financing or distort competition in the internal market.

(33) The Member State compartment should be specifically designed to allow the use of funds under shared management or other additional amounts contributed by Member States, including those made available pursuant to Regulation (EU) 2021/241 to provision a guarantee issued by the Union. That possibility would increase the added value of the EU guarantee by providing support under it to a wider range of final recipients and projects and diversifying the means of achieving the objectives of the funds under shared management or recovery and resilience plans, while ensuring a consistent risk management of the contingent liabilities by implementing the EU guarantee under indirect management. The Union should guarantee the financing and investment operations provided for in the guarantee agreements concluded between the Commission and implementing partners under the Member State compartment. The funds under shared management or other additional amounts contributed by Member States, including those made available pursuant to Regulation (EU) 2021/241, should provide the provisioning for the guarantee, following a provisioning rate determined by the Commission and set out in the contribution agreement concluded with the Member State, based on the nature of the operations and the resulting expected losses. The Member State would assume losses above the expected losses by issuing a back-to-back guarantee in favour of the Union that should remain in place as long as any financing and investment operations under that Member State compartment are outstanding. Such arrangements should be concluded in a single contribution agreement with each Member State that voluntarily chooses such option. The contribution agreement should encompass the one or more specific guarantee agreements to be implemented within the Member State concerned on the basis of the rules of the InvestEU Fund, and any regional ring-fencing. The setting out of the provisioning rate on a case-by-case basis requires a derogation from Article 211(1) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (10) (the ‘Financial Regulation’). This set-up provides also a single set of rules for budgetary guarantees supported by funds that are managed centrally or by funds under shared management, which would facilitate their combination. The provisioning for an EU guarantee relating to a Member State compartment underpinned by other additional amounts contributed by Member States, including those made available pursuant to Regulation (EU) 2021/241, should constitute external assigned revenue.

(34) A partnership between the Commission and the EIB Group should be established, drawing on the relative strengths of each partner to ensure maximum policy impact, deployment efficiency, and appropriate budgetary and risk management oversight, which should support effective and inclusive direct access to the EU guarantee.

(35) The Union represented by the Commission should be in a position to participate in a capital increase of the European Investment Fund (EIF) in order to allow the EIF to continue supporting the European economy and its recovery. The main aim of the increase would be to allow the EIF to contribute to the implementation of the InvestEU Programme. The Union should be able to maintain its overall share in the EIF capital. A sufficient financial envelope to this effect should be foreseen in the Multiannual Financial Framework for 2021-2027. On 3 December 2020, the Board of Directors of the EIF decided to propose to the shareholders an increase in the authorised capital of the EIF that would result in a cash injection of EUR 1 250 000 000. The price of the new shares is based on the net asset value formula agreed among the shareholders of the EIF and consists of the paid-in part and the share premium. In accordance with Article 7 of the EIF Statutes, for each subscribed share, 20 % of the nominal value must be paid in.

(36) The Commission should seek the views of other potential implementing partners along with the EIB Group on investment guidelines, the climate tracking system, the sustainability proofing guidance documents and common methodologies, as appropriate, with a view to ensuring inclusiveness and operationality until the governance bodies have been set up, after which the involvement of implementing partners should take place within the framework of the Advisory Board and the Steering Board of the InvestEU Programme.

(37) The InvestEU Fund should be open to contributions from third countries that are members of the European Free Trade Association, acceding countries, candidates and potential candidates, countries covered by the European Neighbourhood Policy and other countries, in accordance with the conditions agreed between the Union and those countries, in particular in view of the positive impact of such opening on the Member States’ economies. This should allow continuing cooperation with the relevant countries, where appropriate, in particular in the fields of research and innovation as well as SMEs.

(38) This Regulation lays down a financial envelope for other measures of the InvestEU Programme than the provisioning of the EU guarantee, which is to constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (11), for the European Parliament and the Council during the annual budgetary procedure.

(39) EUR 2 672 292 573 in current prices of the EU guarantee should be provisioned by resources from the additional allocation provided in accordance with Article 5 of and Annex II to Council Regulation (EU, Euratom) 2020/2093 (12) corresponding to an amount of EUR 1 000 000 000 in 2018 prices. An amount of EUR 63 800 000 in current prices of the total allocation to the InvestEU Advisory Hub of EUR 430 000 000 in current prices should be provided from that amount.

(40) The EU guarantee of EUR 26 152 310 073 in current prices for the EU compartment is expected to mobilise more than EUR 372 000 000 000 of additional investment across the Union and should be indicatively allocated between the policy windows.

(41) On 18 April 2019, the Commission declared that ‘without prejudice to the prerogatives of the Council in the implementation of the Stability and Growth Pact (SGP), one-off contributions by Member States, either by a Member State or by national promotional banks classified in the general government sector or acting on behalf of a Member State, into thematic or multi-country investment platforms should in principle qualify as one-off measures within the meaning of Articles 5(1) and 9(1) of Council Regulation (EC) No 1466/97 (13) and Article 3(4) of Council Regulation (EC) No 1467/97 (14). In addition, without prejudice to the prerogatives of the Council in the implementation of the SGP, the Commission will consider to what extent the same treatment as for the EFSI in the context of the Commission communication on flexibility can be applied to the InvestEU Programme as the successor instrument to the EFSI with regard to one-off contributions provided by Member States in cash to finance an additional amount of the EU guarantee for the purposes of the Member State compartment.’.

(42) The EU guarantee underpinning the InvestEU Fund should be implemented indirectly by the Commission relying on implementing partners with outreach to financial intermediaries, where applicable, and final recipients. The selection of the implementing partners should be transparent and free from any conflict of interest. The Commission should conclude a guarantee agreement allocating guarantee capacity from the InvestEU Fund with each implementing partner to support its financing and investment operations that meet the InvestEU Fund eligibility criteria and contribute to meeting its objectives. The management of the risk related to the EU guarantee should not hamper direct access to the EU guarantee by the implementing partners. Once the EU guarantee is granted under the EU compartment to implementing partners, they should be fully responsible for the whole investment process and the due diligence related to the financing and investment operations. The InvestEU Fund should support projects that typically have a higher risk profile than the projects supported by the normal operations of the implementing partners and that could not have been carried out during the period in which the EU guarantee could be used, or could not have been carried out to the same extent, by other public or private sources without support from the InvestEU Fund.

(43) The InvestEU Fund should be provided with a governance structure, the function of which should be commensurate with its sole purpose of ensuring the appropriate use of the EU guarantee, in line with ensuring the political independence of investment decisions. That governance structure should be composed of an Advisory Board, a Steering Board and a fully independent Investment Committee. The overall composition of the governance structure should strive to achieve gender balance. The governance structure should not encroach upon or interfere with the decision-making of the EIB Group or other implementing partners, and should not be a substitute for their respective governing bodies.

(44) An Advisory Board consisting of representatives of the implementing partners, representatives of Member States, one expert appointed by the European Economic and Social Committee and one expert appointed by the Committee of the Regions should be established in order to exchange information and exchange views on the take-up of the financial products deployed under the InvestEU Fund and to discuss evolving needs and new products, including specific territorial market gaps.

(45) In order to be able to constitute the Advisory Board from the start, the Commission should appoint the representatives of the potential implementing partners for a temporary period of one year. Thereafter, the implementing partners having signed guarantee agreements would take over that responsibility.

(46) A Steering Board composed of representatives of the Commission, representatives of implementing partners and one non-voting expert appointed by the European Parliament should determine the strategic and operational guidance for the InvestEU Fund.

(47) The Commission should assess the compatibility of financing and investment operations submitted by the implementing partners with all Union law and policies. The decisions on financing and investment operations should ultimately be taken by an implementing partner.

(48) The Investment Committee composed of independent experts should reach a conclusion on the granting of support from the EU guarantee to financing and investment operations fulfilling the eligibility criteria of the InvestEU Fund, thereby providing external expertise in investment assessments in relation to projects. The Investment Committee should have different configurations to cover different policy areas and sectors in the best way possible.

(49) An independent secretariat hosted by the Commission and answerable to the chairperson of the Investment Committee should assist the Investment Committee.

(50) In selecting implementing partners for the deployment of the InvestEU Fund, the Commission should consider their ability to fulfil the objectives of the InvestEU Fund and to contribute their own resources, in order to ensure adequate geographical coverage and diversification, to crowd in private investors and to provide sufficient risk diversification and solutions to address market failures and suboptimal investment situations. Given its role under the Treaties, its capacity to operate in all Member States and the existing experience under the current financial instruments and the EFSI, the EIB Group should remain a privileged implementing partner under the InvestEU Fund’s EU compartment. In addition to the EIB Group, national promotional banks and institutions should be able to offer a complementary financial product range, given that their experience and capabilities at national and regional level could be beneficial for the maximisation of the impact of public funds on the whole territory of the Union, and for ensuring a fair geographical balance of projects. The InvestEU Programme should be implemented in such a way as to promote a level playing field for smaller and younger promotional banks and institutions. Moreover, it should be possible for other international financial institutions to become implementing partners, in particular when they present a comparative advantage in terms of specific expertise and experience in certain Member States and when they present a Union majority of shareholding. It should also be possible for other entities fulfilling the criteria laid down in the Financial Regulation to become implementing partners.

(51) With a view to promoting improved geographic diversification, investment platforms may be established to combine the efforts and expertise of implementing partners with other national promotional banks and institutions that have limited experience in the use of financial instruments. Such structures should be encouraged, including with available support from the InvestEU Advisory Hub. It is appropriate to bring together co-investors, public authorities, experts, education, training and research institutions, relevant social partners and representatives of the civil society and other relevant actors at Union, at national and regional levels to promote the use of investment platforms in relevant sectors.

(52) The EU guarantee under the Member State compartment should be allocated to any implementing partner eligible in accordance with point (c) of Article 62(1) of the Financial Regulation, including national or regional promotional banks or institutions, the EIB, the EIF and other international financial institutions. When selecting implementing partners under the Member State compartment, the Commission should take into account the proposals made by each Member State, as reflected in the contribution agreement. In accordance with Article 154 of the Financial Regulation, the Commission is to carry out an assessment of the rules and procedures of the implementing partner to ascertain that they provide a level of protection of the financial interest of the Union equivalent to the one provided by the Commission.

(53) Financing and investment operations should ultimately be decided by the implementing partner in its own name, implemented in accordance with its internal rules, policies and procedures, and accounted for in its own financial statements or, where applicable, disclosed in the notes to the financial statements. Therefore, the Commission should exclusively account for any financial liability arising from the EU guarantee and should disclose the maximum guarantee amount, including all relevant information concerning the guarantee provided.

(54) Where appropriate, the InvestEU Fund should allow for the smooth, seamless and efficient blending of grants, financial instruments or both, funded by the Union budget or by other funds, such as the EU Emissions Trading System (ETS) Innovation Fund with the EU guarantee in situations where this is necessary to best underpin investments to address particular market failures or suboptimal investment situations.

(55) Projects submitted by implementing partners for support under the InvestEU Programme, which include blending support from the InvestEU Fund with support from other Union programmes, should as a whole be consistent with the objectives and eligibility criteria of the relevant other Union programmes. The use of the EU guarantee should be decided under the InvestEU Programme.

(56) The InvestEU Advisory Hub should support the development of a robust pipeline of investment projects in each policy window through advisory initiatives that are implemented by the EIB Group or other advisory partners, or are implemented directly by the Commission. The InvestEU Advisory Hub should promote geographic diversification with a view to contributing to the Union objectives of economic, social, and territorial cohesion and reducing regional disparities. The InvestEU Advisory Hub should pay particular attention to the aggregation of small-sized projects into larger portfolios. The Commission, the EIB Group and the other advisory partners should cooperate closely with a view to ensuring efficiency, synergies and effective geographic coverage of support across the Union, taking into account the expertise and local capacity of local implementing partners, as well as the European Investment Advisory Hub established under Regulation (EU) 2015/1017 of the European Parliament and of the Council (15). The findings of the European Court of Auditors’ Special Report No 12/2020 ‘The European Investment Advisory Hub: Launched to boost investment in the EU, the Hub’s impact remains limited’ (16) should be carefully considered in order to maximise the InvestEU Advisory Hub’s effectiveness and impact. The InvestEU Advisory Hub should provide a central entry point for project development assistance delivered under the InvestEU Advisory Hub to public authorities and for project promoters.

(57) The InvestEU Advisory Hub should be established by the Commission with the EIB Group as the main partner, building on the experience acquired through the European Investment Advisory Hub. The Commission should be responsible for the policy steer of the InvestEU Advisory Hub and for the management of the central entry point. The EIB Group should deliver advisory initiatives under the policy windows. In addition, the EIB Group should provide operational services to the Commission, including by providing input to the strategic and policy guidelines regarding advisory initiatives, mapping existing and emerging advisory initiatives, assessing advisory needs and advising the Commission on optimal ways to address these needs through existing or new advisory initiatives.

(58) In order to ensure a wide geographic outreach of the advisory services across the Union and to successfully leverage local knowledge about the InvestEU Fund, a local presence of the InvestEU Advisory Hub should be ensured, where needed, taking into account existing support schemes and the presence of local partners, with a view to providing tangible, proactive, tailor-made assistance on the ground. In order to facilitate the provision of advisory support at local level and to ensure efficiency, synergies and effective geographic coverage of support across the Union, the InvestEU Advisory Hub should cooperate with national promotional banks and institutions, and should benefit from and make use of their expertise.

(59) The InvestEU Advisory Hub should provide advisory support to small-sized projects and projects for start-ups, especially when start-ups seek to protect their research and innovation investments by obtaining intellectual property titles, such as patents, taking into account the existence of other services able to cover such actions and seeking synergies with those services.

(60) In the context of the InvestEU Fund, there is a need to provide support for project development and capacity building to develop the organisational capacities and market development activities needed to originate quality projects. Such support should also target financial intermediaries that are key to help SMEs access financing and realise their full potential. Moreover, the aim of the advisory support is to create the conditions for the expansion of the potential number of eligible recipients in nascent market segments, in particular where the small size of individual projects considerably raises the transaction cost at the project level, such as for the social finance ecosystem, including philanthropic organisations, or for the cultural and creative sectors. The capacity-building support should be complementary and in addition to actions taken under other Union programmes that cover specific policy areas. An effort should also be made to support the capacity building of potential project promoters, in particular local organisations and authorities.

(61) The InvestEU Portal should be established to provide for an easily accessible and user-friendly project database to promote visibility of investment projects searching for financing with enhanced focus on the provision of a possible pipeline of investment projects, compatible with Union law and policies, to the implementing partners.

(62) In accordance with Council Regulation (EU) 2020/2094 (17) and within the limits of resources allocated therein, recovery and resilience measures under the InvestEU Programme should be carried out to address the unprecedented impact of the COVID-19 crisis. Such additional resources should be used in such a way as to ensure compliance with the time limits provided for in Regulation (EU) 2020/2094.

(63) Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (18), the InvestEU Programme should be evaluated on the basis of information collected in accordance with specific monitoring requirements, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators, as a basis for evaluating the effects of the InvestEU Programme on the ground.

(64) A solid monitoring framework that is based on output, outcome and impact indicators should be implemented to track progress towards the Union’s objectives. In order to ensure accountability to the Union’s citizens, the Commission should report annually to the European Parliament and the Council on the progress, impact and operations of the InvestEU Programme.

(65) Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union (TFEU) apply to this Regulation. Those rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(66) The Financial Regulation applies to the InvestEU Programme. It lays down rules on the implementation of the Union budget, including the rules on budgetary guarantees.

(67) In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (19) and Council Regulations (EC, Euratom) No 2988/95 (20), (Euratom, EC) No 2185/96 (21) and (EU) 2017/1939 (22), the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, including fraud, to the recovery of funds lost, wrongly paid or incorrectly used, and, where appropriate, to the imposition of administrative penalties. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (23). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the financial interests of the Union, grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, the EPPO, and ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(68) Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the Agreement on the European Economic Area (24), which provides for the implementation of the programmes on the basis of a decision adopted under that Agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation requiring third countries to grant the necessary rights and access required for the authorising officer responsible, OLAF and the Court of Auditors to comprehensively exercise their respective competences.

(69) Pursuant to Council Decision 2013/755/EU (25), individuals and entities established in overseas countries or territories are eligible for funding subject to the rules and objectives of the InvestEU Programme and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked.

(70) In order to supplement the non-essential elements of this Regulation with investment guidelines and with a scoreboard of indicators, to facilitate the prompt and flexible adaptation of the performance indicators and to adjust the provisioning rate, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of drawing-up investment guidelines for the financing and investment operations under different policy windows, of the scoreboard, of the amendment of Annex III to this Regulation to review or complement the indicators and of the adjustment of the provisioning rate. In line with the principle of proportionality, such investment guidelines should include adequate provisions to avoid undue administrative burden. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(71) Financing and investment operations signed or entered into by an implementing partner during the period from 1 January 2021 until the signature of their respective guarantee agreements should be eligible for the EU guarantee provided that such operations are indicated in the guarantee agreement, pass the policy check or receive a favourable opinion within the framework of the procedure provided for in Article 19 of Protocol No 5 on the Statute of the European Investment Bank annexed to the Treaty on European Union (TEU) and the TFEU (the EIB Statute), and are in both cases approved by the Investment Committee.

(72) In order to optimise the use of budgetary resources, a combination of relevant portfolios of financial instruments established under the 2014-2020 Multiannual Financial Framework and the EU guarantee under Regulation (EU) 2015/1017 with the EU guarantee under this Regulation should be possible. The increased risk bearing capacity established by such combination should enhance the efficiency of the EU guarantee under this Regulation and allow for more support to final recipients. The modalities of the combination should be defined in the guarantee agreement between the Commission and the EIB or the EIF. The conditions of the combination should be consistent with the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (26).

(73) Since the objectives of this Regulation, namely to address Union-wide and Member State specific market failures and suboptimal investment situations and provide for Union-wide market testing of innovative financial products designed to address new or complex market failures or suboptimal investment situations and of systems to spread such products, cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(74) In order to ensure continuity in providing support in the relevant policy area and to allow implementation to start from the beginning of the multi-annual financial framework 2021-2027, this Regulation should enter into force as a matter of urgency and should apply, with retroactive effect, from 1 January 2021,

HAVE ADOPTED THIS REGULATION:

CHAPTER I

General provisions

Article 1 Subject matter This Regulation establishes the InvestEU Fund, which shall provide for an EU guarantee to support financing and investment operations carried out by the implementing partners that contribute to objectives of the Union’s internal policies. This Regulation also establishes an advisory support mechanism to provide support for the development of investable projects and access to financing and to provide related capacity building assistance (the ‘InvestEU Advisory Hub’). It further establishes a database granting visibility to projects for which project promoters seek financing and which provides investors with information about investment opportunities (the ‘InvestEU Portal’). This Regulation establishes the objectives of the InvestEU Programme, its budget and the amount of the EU guarantee for the period 2021 to 2027, the forms of Union funding and the rules for providing such funding.

Article 2 Definitions For the purposes of this Regulation, the following definitions apply: (1) ‘InvestEU Programme’ means the InvestEU Fund, the InvestEU Advisory Hub, the InvestEU Portal and blending operations, collectively; (2) ‘EU guarantee’ means an overall irrevocable, unconditional and on demand budgetary guarantee provided by the Union budget under which the budgetary guarantees in accordance with Article 219(1) of the Financial Regulation take effect through the entry into force of individual guarantee agreements with implementing partners; (3) ‘policy window’ means a targeted area for support by the EU guarantee as laid down in Article 8(1); (4) ‘compartment’ means a part of the EU guarantee defined in terms of the origin of the resources backing it; (5) ‘blending operation’ means an operation supported by the Union budget that combines non-repayable forms of support, repayable forms of support, or both, from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors; for the purposes of this definition, Union programmes financed from sources other than the Union budget, such as the EU ETS Innovation Fund, may be assimilated to Union programmes financed by the Union budget; (6) ‘EIB Group’ means the EIB, its subsidiaries and other entities established in accordance with Article 28(1) of Protocol No 5 on the Statute of the European Investment Bank annexed to the TEU and the TFEU (the EIB Statute); (7) ‘financial contribution’ means a contribution from an implementing partner in the form of own risk-taking capacity that is provided on a pari passu basis with the EU guarantee or in another form that allows an efficient implementation of the InvestEU Programme while ensuring appropriate alignment of interest; (8) ‘contribution agreement’ means a legal instrument whereby the Commission and one or more Member States specify the conditions of the EU guarantee under the Member State compartment, as laid down in Article 10; (9) ‘financial product’ means a financial mechanism or arrangement under the terms of which the implementing partner provides direct or intermediated financing to final recipients using any of the types of financing referred to in Article 16; (10) ‘financing and investment operations’ or ‘financing or investment operations’ means operations to provide finance directly or indirectly to final recipients through financial products, carried out by an implementing partner in its own name, provided by the implementing partner in accordance with its internal rules, policies and procedures and accounted for in the implementing partner’s financial statements or, where applicable, disclosed in the notes to those financial statements; (11) ‘funds under shared management’ means funds that provide for the possibility of allocating a portion of those funds to the provisioning for a budgetary guarantee under the Member State compartment of the InvestEU Fund, namely the European Regional Development Fund (ERDF) and the Cohesion Fund to be established by a Regulation of the European Parliament and of the Council on the European Regional Development Fund and on the Cohesion Fund for the years 2021-2027, the European Social Fund Plus (ESF+) to be established by a Regulation of the European Parliament and of the Council on the European Social Fund Plus (ESF+) (the ‘ESF+ Regulation for 2021-2027’), the European Maritime, Fisheries and Aquaculture Fund (EMFAF) to be established by a Regulation of the European Parliament and of the Council on the European Maritime, Fisheries and Aquaculture Fund and repealing Regulation (EU) No 508/2014 and the European Agriculture Fund for Rural Development (EAFRD) to be established by a Regulation of the European Parliament and of the Council establishing rules on support for strategic plans to be drawn up by Member States under the Common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulation (EU) No 1305/2013 of the European Parliament and of the Council and Regulation (EU) No 1307/2013 of the European Parliament and of the Council (the ‘CAP Strategic Plans Regulation’); (12) ‘guarantee agreement’ means a legal instrument whereby the Commission and an implementing partner specify the conditions for proposing financing and investment operations in order for them to be granted the benefit of the EU guarantee, for providing the EU guarantee for those operations and for implementing them in accordance with this Regulation; (13) ‘implementing partner’ means an eligible counterpart such as a financial institution or other financial intermediary with whom the Commission has concluded a guarantee agreement; (14) ‘important project of common European interest’ means a project that fulfils all the criteria laid down in the Commission Communication on Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest or any subsequent revision of that Communication; (15) ‘advisory agreement’ means a legal instrument whereby the Commission and the advisory partner specify the conditions for the implementation of the InvestEU Advisory Hub; (16) ‘advisory initiative’ means technical assistance and advisory services that support investment, including capacity building activities, provided by advisory partners, by external service providers contracted by the Commission, or by executive agencies; (17) ‘advisory partner’ means an eligible counterpart such as a financial institution or other entity with whom the Commission has concluded an advisory agreement for the purpose of implementing one or more advisory initiatives, other than advisory initiatives implemented through external service providers contracted by the Commission or through executive agencies; (18) ‘investment platform’ means a special purpose vehicle, managed account, contract-based co-financing or risk-sharing arrangement or an arrangement established by any other means by which entities channel a financial contribution in order to finance a number of investment projects, and which may include: (a) a national or sub-national platform that groups together several investment projects on the territory of a given Member State; (b) a cross-border, multi-country, regional or macro-regional platform that groups together partners from several Member States, regions or third countries interested in investment projects in a given geographic area; (c) a thematic platform that groups together investment projects in a given sector; (19) ‘microfinance’ means microfinance as defined in the relevant provisions of the ESF+ Regulation for 2021-2027; (20) ‘national promotional bank or institution’ means a legal entity that carries out financial activities on a professional basis which has been given mandate by a Member State or a Member State’s entity at central, regional or local level to carry out development or promotional activities; (21) ‘small and medium-sized enterprise’ or ‘SME’ means a micro, small or medium-sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC (27); (22) ‘small mid-cap company’ means an entity that is not an SME and that employs up to 499 employees; (23) ‘social enterprise’ means a social enterprise as defined in the relevant provisions of the ESF+ Regulation for 2021-2027.

Article 3 Objectives of the InvestEU Programme 1. The general objective of the InvestEU Programme is to support the policy objectives of the Union by means of financing and investment operations that contribute to: (a) the competitiveness of the Union, including research, innovation and digitisation; (b) growth and employment in the Union economy, the sustainability of the Union economy and its environmental and climate dimension contributing to the achievement of the SDGs and the objectives of the Paris Agreement and to the creation of high-quality jobs; (c) the social resilience, inclusiveness and innovativeness of the Union; (d) the promotion of scientific and technological advances, of culture, education and training; (e) the integration of Union capital markets and the strengthening of the internal market, including solutions to address the fragmentation of Union capital markets, diversify sources of financing for Union enterprises and promote sustainable finance; (f) the promotion of economic, social and territorial cohesion; or (g) the sustainable and inclusive recovery of the Union economy after the COVID-19 crisis, including by providing capital support for SMEs that were negatively affected by the COVID-19 crisis and were not already in difficulty in State aid terms at the end of 2019, upholding and strengthening existing strategic value chains of tangible or intangible assets, developing new ones, and maintaining and reinforcing activities of strategic importance to the Union, including important projects of common European interest, in relation to critical infrastructure, whether physical or virtual, transformative technologies, game-changing innovations and inputs to businesses and consumers and supporting a sustainable transition. 2. The InvestEU Programme has the following specific objectives: (a) supporting financing and investment operations related to sustainable infrastructure in the areas referred to in point (a) of Article 8(1); (b) supporting financing and investment operations related to research, innovation and digitisation, including support for the scaling up of innovative companies and the rolling out of technologies to market, in the areas referred to in point (b) of Article 8(1); (c) increasing the access to and the availability of finance for SMEs and for small mid-cap companies and to enhance the global competitiveness of such SMEs; (d) increasing access to and the availability of microfinance and finance for social enterprises, to support financing and investment operations related to social investment, competences and skills, and to develop and consolidate social investment markets, in the areas referred to in point (d) of Article 8(1).

Article 4 Budget and amount of the EU guarantee 1. The EU guarantee for the purposes of the EU compartment referred to in point (a) of Article 9(1) shall be EUR 26 152 310 073 in current prices. It shall be provisioned at the rate of 40 %. The amount referred to in point (a) of the first subparagraph of Article 35(3) shall be also taken into account for contributing to the provisioning resulting from that provisioning rate. An additional amount of the EU guarantee may be provided for the purposes of the Member State compartment referred to in point (b) of Article 9(1) of this Regulation, subject to the allocation by Member States, pursuant to the provisions on the use of the ERDF, the ESF+, the Cohesion Fund and the EMFAF delivered through the InvestEU Programme laid down in a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the instrument for financial support for border management and visa (the ‘Common Provisions Regulation for 2021-2027’) and the provisions on the use of the EAFRD delivered through the InvestEU Programme laid down in the CAP Strategic Plans Regulation, of the corresponding amounts. An additional amount of the EU guarantee may also be provided in the form of cash or guarantee by Member States for the purposes of the Member State compartment. The amount provided in cash shall constitute an external assigned revenue in accordance with the second sentence of Article 21(5) of the Financial Regulation. The contributions from third countries referred to in Article 5 of this Regulation shall also increase the EU guarantee referred to in the first subparagraph, providing a provisioning in cash in full in accordance with Article 218(2) of the Financial Regulation. 2. An amount of EUR 14 825 000 000 in current prices of the amount referred to in the first subparagraph of paragraph 1 of this Article shall be allocated for operations implementing measures referred to in Article 1 of Regulation (EU) 2020/2094 for the objectives referred to in Article 3(2) of this Regulation. An amount of EUR 11 327 310 073 in current prices of the amount referred to in the first subparagraph of paragraph 1 of this Article shall be allocated for the objectives referred to in Article 3(2). The amounts referred to in the first subparagraph of this paragraph shall only be available as of the date referred to in Article 3(3) of Regulation (EU) 2020/2094. The indicative distribution of the EU guarantee for the purposes of the EU compartment is set out in Annex I to this Regulation. Where appropriate, the Commission may depart from the amounts referred to in Annex I by up to 15 % for each objective referred to in points (a) to (d) of Article 3(2). The Commission shall inform the European Parliament and the Council of any such departure. 3. The financial envelope for the implementation of the measures provided in Chapters VI and VII shall be EUR 430 000 000 in current prices. 4. The amount referred to in paragraph 3 may also be used for technical and administrative assistance for the implementation of the InvestEU Programme, such as preparatory, monitoring, control, audit and evaluation activities, including for corporate information technology systems.

Article 5 Third countries associated to the InvestEU Fund The EU compartment of the InvestEU Fund referred to in point (a) of Article 9(1) of this Regulation and each of the policy windows referred to in Article 8(1) of this Regulation may receive contributions from the following third countries for the purpose of participation in certain financial products pursuant to Article 218(2) of the Financial Regulation: (a) members of the European Free Trade Association (EFTA) which are members of the EEA, in accordance with the conditions laid down in the Agreement on the European Economic Area; (b) acceding countries, candidate countries and potential candidates, in accordance with the general principles and general terms and conditions for the participation of those countries in Union programmes established in the respective framework agreements and Association Council decisions or in similar agreements and in accordance with the specific conditions laid down in agreements between the Union and those countries; (c) European Neighbourhood Policy countries, in accordance with the general principles and general terms and conditions for the participation of those countries in Union programmes established in the respective framework agreements and Association Council decisions or in similar agreements and in accordance with the specific conditions laid down in agreements between the Union and those countries; (d) other third countries, in accordance with the conditions laid down in a specific agreement covering the participation of the third country to any Union programme, provided that the agreement: (i) ensures a fair balance as regards the contributions and benefits of the third country participating in the Union programmes; (ii) lays down the conditions of participation in the programmes, including the calculation of financial contributions to individual programmes, and their administrative costs; (iii) does not confer on the third country any decision-making power in respect of the Union programme; (iv) guarantees the rights of the Union to ensure sound financial management and to protect its financial interests. The contributions referred to in point (d)(ii) of the first paragraph of this Article shall constitute assigned revenues in accordance with Article 21(5) of the Financial Regulation.

Article 6 Implementation and forms of Union funding 1. The EU guarantee shall be implemented in indirect management with bodies referred to in points (c)(ii), (c)(iii), (c)(v) and (c)(vi) of Article 62(1) of the Financial Regulation. Other forms of Union funding under this Regulation shall be implemented in direct or indirect management in accordance with the Financial Regulation, including grants implemented in accordance with Title VIII of the Financial Regulation and blending operations implemented in accordance with this Article as smoothly as possible, in a manner that ensures efficient and coherent support for Union policies. 2. Financing and investment operations covered by the EU guarantee which form part of the blending operation combining support under this Regulation with support provided under one or more other Union programmes or covered by the EU ETS Innovation Fund shall: (a) be consistent with the policy objectives and comply with the eligibility criteria set out in the rules of the Union programme under which the support is decided; (b) comply with this Regulation. 3. Blending operations that include a financial instrument that is fully financed by other Union programmes or by the EU ETS Innovation Fund without the use of the EU guarantee under this Regulation shall be consistent with the policy objectives and comply with the eligibility criteria set out in the rules of the Union programme under which the support is provided. 4. In accordance with paragraph 2 of this Article, the non-repayable forms of support and financial instruments from the Union budget forming part of the blending operation referred to in paragraphs 2 and 3 of this Article shall be decided under the rules of the relevant Union programme and shall be implemented within the blending operation in accordance with this Regulation and with Title X of the Financial Regulation. The reporting relating to such blending operations shall also cover their consistency with the policy objectives and eligibility criteria set out in the rules of the Union programme under which the support is decided as well as their compliance with this Regulation.

Article 7 Combination of portfolios 1. Support from the EU guarantee under this Regulation, Union support provided through the financial instruments established by the programmes in the programming period 2014-2020 and Union support from the EU guarantee established by Regulation (EU) 2015/1017 may be combined in financial products to be implemented by the EIB or the EIF under this Regulation. 2. By way of derogation from Article 19(2) and the second subparagraph of Article 16(1), the EU guarantee under this Regulation may also cover losses referred to in Article 19(2) in relation to the entire portfolio of financing and investment operations supported by the financial products referred to in paragraph 1 of this Article. Notwithstanding the objectives of the financial instruments referred to in paragraph 1, the provisions made to cover the financial liabilities arising from financial instruments referred to in paragraph 1 may be used to cover losses in relation to the entire portfolio of financing and investment operations supported by the financial products referred to in paragraph 1. 3. Losses, revenues and repayments from financial products as referred to in paragraph 1, as well as potential recoveries, shall be attributed pro rata between the financial instruments and EU guarantees referred to in that paragraph providing the combined Union support to that financial product. 4. The terms and conditions of the financial products referred to in paragraph 1 of this Article, including the respective pro rata shares of losses, revenues, repayments and recoveries, shall be set out in the guarantee agreement referred to in Article 17.

CHAPTER II

InvestEU Fund

Article 8 Policy windows 1. The InvestEU Fund shall operate through the following four policy windows that shall address market failures or suboptimal investment situations within their specific scope: (a) a sustainable infrastructure policy window which comprises sustainable investment in the areas of transport, including multimodal transport, road safety, including in accordance with the Union objective of eliminating fatal road accidents and serious injuries by 2050, the renewal and maintenance of rail and road infrastructure, energy, in particular renewable energy, energy efficiency in accordance with the 2030 energy framework, buildings renovation projects focused on energy savings and the integration of buildings into a connected energy, storage, digital and transport systems, improving interconnection levels, digital connectivity and access, including in rural areas, supply and processing of raw materials, space, oceans, water, including inland waterways, waste management in accordance with the waste hierarchy and the circular economy, nature and other environment infrastructure, cultural heritage, tourism, equipment, mobile assets and the deployment of innovative technologies that contribute to the environmental or climate resilience or social sustainability objectives of the Union and that meet the environmental or social sustainability standards of the Union; (b) a research, innovation and digitisation policy window which comprises research, product development and innovation activities, the transfer of technologies and research results to the market to support market enablers and cooperation between enterprises, the demonstration and deployment of innovative solutions and support for the scaling up of innovative companies, as well as digitisation of Union industry; (c) an SME policy window which comprises access to and the availability of finance primarily for SMEs, including for innovative SMEs and SMEs operating in the cultural and creative sectors, as well as for small mid-cap companies; (d) a social investment and skills policy window, which comprises microfinance, social enterprise finance, social economy and measures to promote gender equality, skills, education, training and related services, social infrastructure, including health and educational infrastructure and social and student housing, social innovation, health and long-term care, inclusion and accessibility, cultural and creative activities with a social goal, and the integration of vulnerable people, including third country nationals. 2. A just transition scheme shall be established horizontally across all policy windows. That scheme shall comprise investments that address social, economic and environmental challenges deriving from the transition process towards the achievement of the Union’s 2030 climate target and its target of achieving climate neutrality by 2050, as well as benefit territories identified in a just transition plan prepared by a Member State in accordance with the relevant provisions of the Just Transition Fund Regulation. 3. All policy windows may include strategic investments including important projects of common European interest to support final recipients whose activities are of strategic importance to the Union, in particular in view of the green and digital transitions, of enhanced resilience and of strengthening strategic value chains. In the case of strategic investments in defence and space sectors and in cybersecurity, as well as in specific types of projects with actual and direct security implications in critical sectors, the investment guidelines adopted in accordance with paragraph 9 of this Article (the ‘investment guidelines’) shall set out limitations with respect to final recipients controlled by a third country or third country entities and final recipients having their executive management outside the Union with a view to protecting the security of the Union and its Member States. Those limitations shall be set out in line with the principles concerning eligible entities set out in the relevant provisions of a Regulation of the European Parliament and of the Council establishing the European Defence Fund and repealing Regulation (EU) 2018/1092 and in the relevant provisions of a Regulation of the European Parliament and of the Council establishing the Union Space Programme and the European Union Agency for the Space Programme and repealing Regulations (EU) No 912/2010, (EU) No 1285/2013, (EU) No 377/2014 and Decision No 541/2014/EU. The investment guidelines shall set out any necessary requirements relating to the control and executive management of final recipients for other areas, and to the control of intermediaries, in the light of any applicable public order or security considerations. Taking account of those requirements, the Steering Board shall set out any necessary additional requirements. 4. Where a financing or investment operation proposed to the Investment Committee falls under more than one policy window, it shall be attributed to the policy window under which its main objective or the main objective of most of its sub-projects falls, unless the investment guidelines provide otherwise. 5. Financing and investment operations shall be screened to determine whether they have an environmental, climate or social impact. If those operations have such an impact they shall be subject to climate, environmental and social sustainability proofing with a view to minimising detrimental impacts and to maximising benefits to the climate, environment and social dimensions. For that purpose, project promoters that request financing shall provide adequate information based on the guidance referred to in paragraph 6. Projects below a certain size specified in the guidance shall be excluded from the proofing. Projects that are inconsistent with the climate objectives shall not be eligible for support under this Regulation. In the event that the implementing partner concludes that no sustainability proofing is to be carried out, it shall provide a justification to the Investment Committee. 6. The Commission shall develop sustainability guidance that, in accordance with Union environmental and social objectives and standards and, taking appropriate account of the principle of ‘do no significant harm’ allows for: (a) as regards adaptation, ensuring resilience to the potential adverse impacts of climate change through a climate vulnerability and risk assessment, including through relevant adaptation measures, and, as regards mitigation, integrating the cost of greenhouse gas emissions and the positive effects of climate mitigation measures in the cost-benefit analysis; (b) accounting for the consolidated impact of projects in terms of the principal components of natural capital, namely air, water, land and biodiversity; (c) estimating the social impact of projects, including on gender equality, on the social inclusion of certain areas or populations and on the economic development of areas and sectors affected by structural challenges such as the need to decarbonise the economy; (d) identifying projects that are inconsistent with the achievement of climate objectives; (e) providing implementing partners with guidance for the purpose of the screening provided for under paragraph 5. 7. Implementing partners shall provide the information necessary to allow the tracking of investment that contributes to meeting the Union objectives on climate and environment, on the basis of guidance to be provided by the Commission. 8. Implementing partners shall apply a target of at least 60 % of the investment under the sustainable infrastructure policy window contributing to meeting the Union objectives on climate and environment. The Commission, together with implementing partners, shall seek to ensure that the part of the EU guarantee used for the sustainable infrastructure policy window is distributed with the aim of achieving a balance between the different areas referred to in point (a) of paragraph 1. 9. The Commission is empowered to adopt delegated acts in accordance with Article 34 in order to supplement this Regulation by defining the investment guidelines for each of the policy windows. The investment guidelines shall also set out the arrangements for the implementation of the just transition scheme, as referred to in paragraph 2 of this Article. The investment guidelines shall be prepared in close dialogue with the EIB Group and other potential implementing partners. 10. For strategic financing and investment operations in defence and space sectors and in cybersecurity, the investment guidelines may set out limitations with respect to transfer and licensing of intellectual property rights to critical technologies and technologies instrumental to safeguarding the security of the Union and its Member States while respecting Member State competence within export control. 11. The Commission shall make the information on the application and interpretation of the investment guidelines available to the implementing partners, the Investment Committee and the advisory partners.

Article 9 Compartments 1. The policy windows referred to in Article 8(1) shall consist of an EU compartment and a Member State compartment. Those compartments shall address market failures or suboptimal investment situations as follows: (a) the EU compartment shall address any of the following situations: (i) market failures or suboptimal investment situations related to Union policy priorities; (ii) Union-wide or Member State specific market failures or suboptimal investment situations; or (iii) market failures or suboptimal investment situations, which require the development of innovative financial solutions and market structures, in particular new or complex market failures or suboptimal investment situations; (b) the Member State compartment shall address specific market failures or suboptimal investment situations in one or several regions or Member States to deliver the policy objectives of the contributing funds under shared management or of the additional amount provided by a Member State under the third subparagraph of Article 4(1), in particular to strengthen economic, social and territorial cohesion in the Union by addressing imbalances between its regions. 2. Where appropriate, the compartments referred to in paragraph 1 shall be used in a complementary manner to support a given financing or investment operation, including by combining support from both compartments.

Article 10 Specific provisions applicable to the Member State compartment 1. Amounts allocated by a Member State on a voluntary basis pursuant to the provisions on the use of the ERDF, the ESF+, the Cohesion Fund and the EMFAF delivered through the InvestEU Programme laid down in the Common Provisions Regulation for 2021-2027 or to the provisions on the use of the EAFRD delivered through the InvestEU Programme laid down in the CAP Strategic Plans Regulation or amounts provided in cash in accordance with the third subparagraph of Article 4(1) of this Regulation shall be used for the provisioning for the part of the EU guarantee under the Member State compartment covering financing and investment operations in the Member State concerned or for the possible contribution to the InvestEU Advisory Hub. Those amounts shall be used to contribute to the achievement of the policy objectives specified in the Partnership Agreement referred to in the provisions on the preparation and submission of the Partnership Agreement laid down in the Common Provisions Regulation for 2021-2027, in the programmes or in the CAP Strategic Plan which contribute to the InvestEU Programme, in order to implement relevant measures set out in the recovery and resilience plan established under Regulation (EU) 2021/241 or, in other cases, for the purposes laid down in the contribution agreement, depending on the origin of the amount contributed. 2. The establishment of the part of the EU guarantee under the Member State compartment shall be subject to the conclusion of a contribution agreement between a Member State and the Commission. The fourth subparagraph of this paragraph and paragraph 5 of this Article shall not apply to the additional amount provided by a Member State under the third subparagraph of Article 4(1). The provisions in this Article relating to amounts allocated pursuant to the provisions on the use of the ERDF, the ESF+, the Cohesion Fund and the EMFAF delivered through the InvestEU Programme laid down in the Common Provisions Regulation for 2021-2027 or to the provisions on the use of the EAFRD delivered through the InvestEU Programme laid down in the CAP Strategic Plans Regulation are not applicable to a contribution agreement concerning an additional amount by a Member State, referred to in the third subparagraph of Article 4(1) of this Regulation. The Member State and the Commission shall conclude a contribution agreement or an amendment to it within four months following the Commission Decision approving the Partnership Agreement pursuant to the provisions on the approval of the Partnership Agreement laid down in the Common Provisions Regulation for 2021-2027 or the CAP Strategic Plan under the CAP Strategic Plans Regulation or simultaneously to the Commission Decision amending a programme in accordance with the provisions on the use of the ERDF, the ESF+, the Cohesion Fund and the EMFAF delivered through the InvestEU Programme laid down in the Common Provisions Regulation for 2021-2027 or a CAP Strategic Plan in accordance with the provisions on the amendment to the CAP Strategic Plan laid down in the CAP Strategic Plans Regulation. Two or more Member States may conclude a joint contribution agreement with the Commission. By way of derogation from Article 211(1) of the Financial Regulation, the provisioning rate of the EU guarantee under the Member State compartment shall be set at 40 % and may be adjusted downwards or upwards in each contribution agreement to take account of the risks attached to the financial products intended to be used. 3. The contribution agreement shall at least contain the following elements: (a) the overall amount of the part of the EU guarantee under the Member State compartment pertaining to the Member State concerned, its provisioning rate, the amount of the contribution from funds under shared management or provided in accordance with the third subparagraph of Article 4(1), the constitution phase of the provisioning and the amount of the resulting contingent liability to be covered by a back-to-back guarantee provided by the Member State concerned; (b) the Member State strategy, consisting of the financial products and their minimum leverage, the geographical coverage, including regional coverage if necessary, types of projects, the investment period and, where applicable, the categories of final recipients and of eligible intermediaries; (c) the potential im