P8_TC1-COD(2018)0229

Position of the European Parliament adopted at first reading on 18 April 2019 with a view to the adoption of Regulation (EU) 2019/… of the European Parliament and of the Council establishing the InvestEU Programme

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),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) With 1,8 % of EU GDP, down from 2,2 % in 2009, infrastructure investment activities in the Union in 2016 were about 20 % below investment rates before the global financial crisis. Thus, while a recovery in investment-to-GDP ratios in the Union can be observed, it remains below what might be expected in a strong recovery period and is insufficient to compensate years of underinvestment. More importantly, the current investment levels and forecasts do not cover the Union’s structural investment for sustaining long-term growth needs in the face of technological change and global competitiveness, including for innovation, skills, infrastructure, small and medium-sized enterprises (‘SMEs’) and the need to address key societal challenges such as sustainability or population ageing. Consequently, continued support is necessary to address market failures and sub-optimal investment situations to reduce the investment gap in targeted sectors to achieve the Union's policy objectives.

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

(3) In the last years, the Union has adopted ambitious strategies to complete the Single Market and to stimulate sustainable and inclusive growth and jobs, such as the Europe 2020 Strategy, the Capital Markets Union, the Digital Single Market Strategy , the European Agenda for Culture , the Clean Energy for all Europeans package, the Union Action Plan for the Circular Economy, the Low-Emission Mobility Strategy, the EU level of ambition on Security and Defence ▌, the Space Strategy for Europe and the European Pillar of Social Rights . The InvestEU Fund should exploit and reinforce synergies between those mutually reinforcing strategies through providing support to investment and access to financing.

(4) At Union level, the European Semester of economic policy coordination is the framework to identify national reform priorities and monitor their implementation. Member States , in cooperation, where appropriate, with local and regional authorities , develop their own national multiannual investment strategies in support of those reform priorities. The strategies should be presented alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national or Union funding, or by both. They should also serve to use Union funding in a coherent manner and to maximise the added value of the financial support to be received notably from the European Structural and Investment Funds, the European Investment Stabilisation Function and the InvestEU Fund, where relevant.

(5) The InvestEU Fund should contribute to improving the competitiveness and socio-economic convergence of the Union, including in the field of innovation ▌, digitisation, the efficient use of resources in accordance with a circular economy, the sustainability and inclusiveness of the Union's economic growth and the social resilience ▌and integration of the Union capital markets, including solutions addressing their fragmentation and diversifying sources of financing for the 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 instruments underpinned by a guarantee from the Union's budget and by financial contributions from implementing partners as relevant . It should be demand-driven while support under the InvestEU Fund should at the same time focus on providing strategic, long-term benefits in key areas of Union policy which would otherwise not be funded or be insufficiently funded, thereby contributing to meeting policy objectives of the Union. Support under the Fund should cover a wide range of sectors and regions, while avoiding excessive sectoral or geographical concentration .

(5a) Cultural and creative sectors are resilient and fast growing sectors in the Union, generating both economic and cultural value from intellectual property and individual creativity. However, the intangible nature of their assets limits their access to private financing which is essential 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 the cultural and creative sectors.

(6) The InvestEU Fund should support investments in tangible and intangible assets, including cultural heritage, to foster sustainable and inclusive growth, investment and employment, and thereby contributing to improved well-being and fairer income distribution and greater economic, social and territorial cohesion in the Union. InvestEU-funded projects should meet Union environmental and social standards, including labour rights. Intervention through the InvestEU Fund should complement Union support delivered through grants.

(7) The Union endorsed the objectives set out in the United Nations Agenda 2030 and its Sustainable Development Goals and the Paris Agreement in 2015 as well as the Sendai Framework for Disaster Risk Reduction 2015-2030. To achieve the agreed objectives, including those embedded in the environmental policies of the Union, action pursuing sustainable development is to be stepped up significantly. Therefore, the principles of sustainable development should feature prominently in the design of the InvestEU Fund.

(8) The InvestEU Programme should contribute to building a sustainable finance system in the Union which supports the re-orientation of private capital towards sustainable investments in accordance with the objectives set out in the Commission Action Plan for Financing Sustainable Growth (4).

(9) Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, the InvestEU Programme will contribute to mainstream climate actions and to the achievement of an overall target of 25 % of the Union budget expenditures supporting climate objectives over the MFF 2021-2027 period and an annual target of 30 % as soon as possible and at the latest by 2027. Actions under the InvestEU Programme are expected to contribute at least 40 % of the overall financial envelope of the InvestEU Programme to climate objectives. Relevant actions will be identified during the InvestEU Programme's preparation and implementation and reassessed in the context of the relevant evaluations and review processes.

(10) The contribution of the InvestEU Fund to the achievement of the climate target will be tracked through an EU climate tracking system developed by the Commission in cooperation with potential implementing partners and using in an appropriate way the criteria established by [Regulation on the establishment of a framework to facilitate sustainable investment (5)] for determining whether an economic activity is environmentally sustainable. The InvestEU Programme should also contribute to the implementation of other dimensions of the Sustainable Development Goals (SDGs).

(11) According to the 2018 Global Risks Report issued by the World Economic Forum, half of the ten most critical risks threatening the global economy relate to the environment. Such risks include air, soil , inland water and ocean pollution, 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 the InvestEU Fund related operations. Environmental protection and related risk prevention and management should be integrated in the preparation and implementation of investments. The EU should also track its biodiversity-related and air pollution control-related expenditure in order to fulfil the reporting obligations under the Convention on Biological Diversity and Directive (EU) 2016/2284 of the European Parliament and of the Council (6) Investment allocated to environmentally sustainability objectives should therefore be tracked using common methodologies coherent with that developed under other Union programmes applying to climate, biodiversity and air pollution management in order to allow assessing the individual and combined impact of investments on the key components of the natural capital, including air, water, land and biodiversity.

(12) Investment projects receiving substantial Union support, notably in the area of infrastructure, should be screened by the implementing partner to determine if they have an environmental, climate or social impact and if so, 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 and, using in an appropriate way the criteria established by [Regulation on establishment of a framework to facilitate sustainable investment] for determining whether an economic activity is environmentally sustainable and coherently with the guidance developed for other programmes of the Union. In line with the principle of proportionality such guidance should include adequate provisions to avoid undue administrative burden and projects below a certain size as defined in the guidance should be excluded from the sustainability proofing . Where the implementing partner concludes that no sustainability proofing is to be carried out, it should provide a justification to the Investment Committee. Operations that are inconsistent with the achievement of the climate objectives should not be eligible for support under this Regulation.

(13) Low infrastructure investment rates in the Union during the financial crisis undermined the Union's ability to boost sustainable growth, competitiveness and convergence. Sizeable investments in the European infrastructure , in particular with regard to interconnection and energy efficiency and to creating a Single European Transport Area, are fundamental to meet 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 into transport, energy, including energy efficiency and renewable and other safe and sustainable low-emission energy sources , environmental, climate action, maritime and digital infrastructure . The InvestEU Programme should prioritise areas that are under-invested, and in which additional investment is required . To maximise the impact and the value added of Union financing support, it is appropriate to promote a streamlined investment process enabling visibility of the project pipeline and maximising synergies across relevant Union programmes in areas such as transport, energy and digitisation . Bearing in mind safety and security threats, investment projects receiving Union support should include infrastructure resilience, including infrastructure maintenance and safety, and take into account principles for the protection of citizens in public spaces. This should be complementary to the efforts made by other Union funds such as the European Regional Development Fund providing support for security components of investments in public spaces, transport, energy and other critical infrastructure.

(13a) The InvestEU Programme should contribute, where appropriate, to the objectives of the [revised Renewables Directive] and the [Governance Regulation], as well as promote energy efficiency in investment decisions.

(13b) 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 could support investment in multimodal transport hubs, which — in spite of their significant economic potential and business case — carry a significant risk for private investors . The Programme could 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 .

(13c) The InvestEU Programme should contribute to EU policies concerning seas and oceans, through the development of projects and enterprises in the area of the Blue Economy, and its 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.

(14) Whereas the level of overall investment in the Union is increasing, investment in higher-risk activities such as research and innovation is still inadequate. The resulting underinvestment in research and innovation is damaging to the industrial and economic competitiveness of the Union and the quality of life of its citizens. The InvestEU Fund should provide the appropriate financial products to cover different stages in 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, including the European Innovation Council. In that regard, the experience gained from the financial instruments deployed under Horizon 2020 such as InnovFin to facilitate and accelerate access to finance for innovative businesses should serve as a strong basis to deliver this targeted support .

(14 a) Tourism is an important area for the Union economy and the InvestEU Programme should contribute to strengthening its long-term competitiveness by supporting operations promoting sustainable, innovative and digital tourism.

(15) 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.

(16) ▌SMEs represent over 99 % of businesses in the Union and their economic value is significant and crucial ▌. However, they face challenges 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. Moreover, compared to larger enterprises, they have access to a more limited set of financing sources: they typically do not issue bonds, have only limited access to stock exchanges or large institutional investors. Innovative solutions such as the acquisition of a business or a participation in a business by employees are also increasingly common for SMEs and social economy enterprises. The challenge in accessing finance is even greater for those SMEs whose activities focus on intangible assets. SMEs in the Union rely heavily on banks and 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 providing more diversified sources of funding is necessary for increasing the ability of SMEs to finance their creation, growth , innovation and sustainable development , ensure their competitiveness , withstand economic downturns, and for making the economy and the financial system more resilient during economic downturn or shocks and capable of creating jobs and social well-being. This is also complementary to the initiatives already undertaken in the context of the Capital Markets Union. The InvestEU Fund should therefore build on successful programmes such as COSME and provide working capital and investment throughout the life cycle of a company, financing for leasing transactions and an opportunity to focus on specific, more targeted financial products.

(17) As set out in the reflection paper on the social dimension of Europe (7) and the European Pillar of Social Rights (8) and the Union framework for the UN Convention on the Rights of Persons with disabilities, building a more inclusive and fairer 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 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, help increase employment, in particular among the unskilled and long-term unemployed, and improve the situation with regard to gender equality, equal opportunities, 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 contribute to the support of European culture and creativity. To counter the 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 eco-system, increasing the supply of and access to finance to micro- and social enterprises and social solidarity institutions , 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 (9) has identified a total investment gap of at least EUR 1,5 trillion for the period between 2018 and 2030 in social infrastructure and services, including for education, training, health and housing, which call for support, including at the Union level. Therefore, the collective power of public, commercial and philanthropic capital, as well as support from alternative types of financial providers such as ethical, social and sustainable actors, and from foundations, should be harnessed to support the social market value chain development and a more resilient Union.

(18) The InvestEU Fund should operate under four policy windows, mirroring the key Union policy priorities, namely sustainable infrastructure; research, innovation and digitisation: SMEs; and social investment and skills.

(18a) While the SME window should primarily focus on benefitting SMEs, small midcap companies are also eligible under this window. Midcap companies should be eligible for support under the other three windows.

(19) 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 sub-optimal investment situations in a proportionate manner; supported actions should have a clear European added value. The Member State compartment should give Member States as well as regional authorities via their Member State the possibility to contribute a share of their resources of Funds under shared management to the provisioning of the EU guarantee to use the EU guarantee for financing or investment operations to address specific market failures or sub-optimal investment situations in their own territory, as set out in the contribution agreement , including in vulnerable and remote areas such as the outermost regions of the Union, to deliver objectives of the Fund under shared management. Actions supported from 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.

(20) The Member State compartment should be specifically designed to allow the use of funds under shared management to provision a guarantee issued by the Union. That possibility would increase the added value of the Union backed budgetary guarantee by providing it to a wider range of financial recipients and projects and diversifying the means of achieving the objectives of the funds under shared management, while ensuring a consistent risk management of the contingent liabilities by implementing the guarantee given by the Commission under indirect management. The Union should guarantee the financing and investment operations foreseen by the guarantee agreements concluded between the Commission and implementing partners under the Member State compartment, the Funds under shared management should provide the provisioning of the guarantee, following a provisioning rate determined by the Commission and set out in the contribution agreement signed with the Member State, based on the nature of the operations and the resulting expected losses, and the Member State would assume losses above the expected losses by issuing a back-to-back guarantee in favour of the Union. 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 , as well as any regional ring-fencing, on the basis of the rules of the InvestEU Fund . The setting out of the provisioning rate on a case by case basis requires a derogation from Article 211(1) of Regulation (EU, Euratom) No 2018/1046 (10) (the ‘Financial Regulation’). This design provides also a single set of rules for budgetary guarantees supported by funds managed centrally or by funds under shared management, which would facilitate their combination.

(20a) 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, appropriate budgetary and risk management oversight and should support an effective and inclusive direct access.

(20b) The Commission should seek the views of other potential implementing partners along with the EIB Group on investment guidelines, climate tracking and sustainability guidance documents and common methodologies, as appropriate, with a view to ensuring inclusiveness and operationality, until the set-up of the governance bodies, whereafter involvement of implementing partners should take place in the framework of the advisory board and the steering board.

(21) 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 Neighbourhood policy and other countries, in accordance with the conditions laid down between the Union and those countries. This should allow continuing cooperating with the relevant countries, where appropriate, in particular in the fields of research and innovation as well as SMEs.

(22) 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 [reference to be updated as appropriate according to the new inter-institutional agreement: point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (11)], for the European Parliament and the Council during the annual budgetary procedure.

(23) The EU guarantee of EUR 40 817 500 000 (current prices) at Union level is expected to mobilise more than EUR 698 194 079 000 of additional investment across the Union and should be ▌ allocated between the policy windows.

(23a) On [date], the Commission declared that, ‘[w]Without prejudice to the prerogatives of the Council in the implementation of the Stability and Growth Pact, 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 and Article 3(4) of Council Regulation (EC) No 1467/97. 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 EFSI in the context of the Commission communication on flexibility can be applied to InvestEU as the successor instrument to 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.’.

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

(24a) 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, or be a substitute for their respective governing bodies.

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

(25a) A Steering Board composed of representatives of the Commission, of implementing partners and of one non-voting expert appointed by the European Parliament should determine the strategic and operational guidance for the InvestEU.

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

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

(28) An Investment Committee composed of independent experts should conclude on the granting of the support from the EU guarantee to financing and investment operations fulfilling the eligibility criteria, thereby providing external expertise in investment assessments in relation to projects. The Investment Committee should have different configurations to best cover different policy areas and sectors.

(29) In selecting implementing partners for the deployment of the InvestEU Fund, the Commission should consider the counterpart's capacity to fulfil the objectives of the InvestEU Fund and contribute its own resources, in order to ensure adequate geographical coverage and diversification, to crowd-in private investors and to provide sufficient risk diversification as well as ▌solutions to address market failures and sub-optimal 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 European Investment Bank (‘EIB’) Group should remain a privileged implementing partner under the InvestEU Fund's EU compartment. In addition to the EIB Group, national promotional banks or 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 to ensure 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 or institutions. Moreover, it should be possible to have other international financial institutions as 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 an EU majority of shareholding . It should also be possible for other entities fulfilling the criteria laid down in the Financial Regulation to act as implementing partners.

(30) With a view to promoting improved geographic diversification, investment platforms may be established, combining the efforts and expertise of implementing partners with other national promotional banks with 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, the relevant social partners and representatives of the civil society and other relevant actors at Union, national and regional levels, to promote the use of investment platforms in relevant sectors.

(31) The EU guarantee under the Member State compartment should be allocated to any implementing partner eligible according to Article 62(1)(c) of the Financial Regulation, including national or regional promotional banks or institutions, the EIB, the European Investment Fund 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 must 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.

(32) Financing and investment operations should ultimately be decided by an 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 disclose the maximum guarantee amount, including all relevant information on the guarantee provided.

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

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

(35) The InvestEU Advisory Hub should support the development of a robust pipeline of investment projects in each policy window through advisory initiatives to be implemented by the EIB Group, other advisory partners or 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 . In addition ▌, the InvestEU Advisory Hub should provide a central entry point for project development assistance delivered under the InvestEU Advisory Hub for authorities and for project promoters.

(35a) The InvestEU Advisory Hub should be established by the Commission with the EIB Group as the main partner, building in particular on the experience acquired under 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, 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.

(36) 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 provide 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 or institutions, as well as benefit from and make use of their expertise.

(36a) 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 (IP) titles, such as patents, taking into account the existence of and seeking synergies with other services able to cover such actions.

(37) In the context of the InvestEU Fund, there is a need to provide project development and capacity building support to develop the organisational capacities and market development activities needed to originate quality projects. Moreover, the aim 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 raises considerably the transaction cost at the project level, such as for the social finance ecosystem, including philanthropic organisations and for the cultural and creative sectors. The capacity building support should ▌be complementary and additional to actions undertaken under other Union programmes that cover a specific policy area. An effort should also be made to support the capacity building of potential project promoters, in particular local organisations and authorities.

(38) 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.

(39) Pursuant to paragraphs 22 and 23 of the Inter-institutional agreement for Better Law-Making of 13 April 2016 (12), there is a need to evaluate the InvestEU Programme on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. These requirements, where appropriate, can include measurable indicators, as a basis for evaluating the effects of the InvestEU Programme on the ground.

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

(41) 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 apply to this Regulation. These 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 concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding.

(42) Regulation (EU, Euratom) No [the new FR] applies to InvestEU Programme. It lays down rules on the implementation of the Union budget, including the rules on budgetary guarantees.

(43) In accordance with Regulation (EU, Euratom) No 2018/1046 of the European Parliament and of the Council (13) (the ‘ Financial Regulation’), Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (14), Council Regulation (Euratom, EC) No 2988/95 (15), Council Regulation (Euratom, EC) No 2185/96 (16) and Council Regulation (EU) 2017/1939 (17), the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities , including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96 the European Anti-Fraud Office (OLAF) may 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. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office ( ‘the EPPO’) may investigate and prosecute ▌offences against the Union’s financial interests ▌as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (18). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, and the European Court of Auditors and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(44) 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 EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorising officer responsible, the European Anti-Fraud Office (OLAF) as well as the European Court of Auditors to comprehensively exert their respective competences.

(45) Pursuant to [reference to be updated as appropriate according to a new decision on OCTs: Article 88 of Council Decision 2013/755/EU], persons and entities established in overseas countries and territories (OCTs) are eligible for funding subject to the rules and objectives of InvestEU Programme and possible arrangements applicable to the Member State to which the relevant OCT is linked.

(46) In order to supplement the non-essential elements of this Regulation with investment guidelines and with a scoreboard of indicators , to facilitate a prompt and flexible adaptation of the performance indicators and to adjust ▌the provisioning rate, the power to adopt acts in accordance with Article 290 of the TFEU should be delegated to the Commission in respect of drawing-up the investment guidelines for the financing and investment operations under different policy windows , the scoreboard , the amendment of Annex III to this Regulation to review or complement the indicators and 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 on Better Law-Making of 13 April 2016. 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.

(47) The InvestEU Programme should address Union-wide and/or Member State specific market failures and sub-optimal investment situations and provide for Union-wide market testing of innovative financial products, and systems to spread them, for complex market failures. Therefore, action at Union level is warranted,

HAVE ADOPTED THIS REGULATION:

CHAPTER I

GENERAL PROVISIONS

Article 1 Subject matter This Regulation establishes the InvestEU Fund providing for an EU guarantee supporting financing and investment operations carried out by the implementing partners in support of the Union’s internal policies. This Regulation also establishes an advisory support mechanism to support the development of investable projects and access to financing and to provide related capacity building (‘InvestEU Advisory Hub’). It also establishes a database granting visibility to projects for which project promoters seek financing and which provides investors with information about investment opportunities (‘InvestEU Portal’). It lays down the objectives of the InvestEU Programme, the 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) ‘blending operations’ means operations supported by the Union budget combining non-repayable forms of support or repayable support or both from the Union budget with repayable forms of support from development or other public finance institutions, as well as 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 Emissions Trading System (ETS) Innovation Fund, can be assimilated to Union programmes financed by the Union budget; (1a) ‘EIB’ means the European Investment Bank; (1b) ‘EIB Group’ means the European Investment Bank and its subsidiaries or other entities as defined in Article 28(1) of the EIB Statute; (1c) ‘financial contribution’ means the contribution from an implementing partner in the form of own risk taking capacity that shall be provided on a pari passu basis with the EU guarantee or in other forms that allow an efficient implementation of the InvestEU Programme while ensuring appropriate alignment of interest; (1d) ‘contribution agreement’ means the 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 9; (2) ‘EU guarantee’ means an overall irrevocable, unconditional and on demand 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 signature of individual guarantee agreements with implementing partners; (3) ‘financial product’ means a financial mechanism or arrangement ▌under the terms of which the implementing partner provides direct or intermediated financing to final recipients in any of the forms referred to in Article 13; (4) ‘financing and/or investment operations’ means operations to provide finance directly or indirectly to final recipients in the form of financial products, carried out by an implementing partner in its own name, provided by it 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; (5) ‘Funds under shared management’ means funds that foresee the possibility of allocating an amount thereof to the provisioning of a budgetary guarantee under the Member State compartment of the InvestEU Fund, namely the European Regional Development Fund (ERDF), the European Social Fund+ (ESF+), the Cohesion Fund, the European Maritime and Fisheries Fund (EMFF) and the European Agriculture Fund for Rural Development (EAFRD); (6) ‘guarantee agreement’ means the legal instrument whereby the Commission and an implementing partner specify the conditions for proposing financing or investment operations to be granted the benefit of the EU guarantee, for providing the budgetary guarantee for those operations and for implementing them in accordance with the provisions of this Regulation; (7) ‘implementing partner’ means the eligible counterpart such as a financial institution or other intermediary with whom the Commission signs a guarantee agreement ▌; (8) ‘InvestEU Advisory Hub’ means the technical assistance defined in Article 20; (8a) ‘Advisory Agreement’ means the legal instrument whereby the Commission and the advisory partner specify the conditions for the implementation of the InvestEU Advisory Hub; (8b) ‘advisory initiative’ means technical assistance and advisory services supporting investment, including capacity building activities, as defined in Articles 20(1) and (2), implemented by advisory partners, by external service providers contracted by the Commission or by an executive agency; (8c) ‘advisory partner’ means the eligible entity such as a financial institution or other entity with whom the Commission signs an agreement to implement one or more advisory initiatives, except the advisory initiatives implemented through external service providers contracted by the Commission or by executive agencies; (9) ‘InvestEU Portal’ means the database defined in Article 21; (10) ‘InvestEU Programme’ means the InvestEU Fund, the InvestEU Advisory Hub, the InvestEU Portal and blending operations, collectively; (10b) ‘investment platforms’ means special purpose vehicles, managed accounts, contract-based co-financing or risk-sharing arrangements or arrangements 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) national or sub-national platforms that group together several investment projects on the territory of a given Member State; (b) cross-border, multi-country, regional or macro-regional platforms that group together partners from several Member States, regions or third countries interested in projects in a given geographic area; (c) thematic platforms that group together investment projects in a given sector. (11) ‘microfinance’ means microfinance as defined in Regulation [[ESF+] number]; ▌ (13) ‘national promotional banks or institutions’ (NPBIs) means legal entities carrying out financial activities on a professional basis which are 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; (14) ‘small and medium-sized enterprises (SMEs)’ means micro, small and mediumsized enterprises as defined in the Annex to Commission Recommendation 2003/361/EC (19); (15) ‘small midcap companies’ means entities employing up to 499 employees that are not SMEs; (16) ‘social enterprise’ means a social enterprise as defined in Regulation [[ESF+] number]; (17) ‘third country’ means a country that is not a member of the Union.

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 contributing to: (a) the competitiveness of the Union, including research, innovation and digitisation; (b) growth and employment in the Union economy, ▌its sustainability and its enviromental and climate dimension contributing to the achievement of the SDGs and the objectives of the Paris climate agreement and to the creation of high-quality jobs ; (c) the social resilience ▌, inclusiveness and innovativeness of the Union; (ca) the promotion of scientific and technological advance, of culture, education and training; (d) the integration of the Union capital markets and the strengthening of the Single Market, including solutions addressing the fragmentation of the Union capital markets, diversifying sources of financing for Union enterprises and promoting sustainable finance. (da) the promotion of economic, social and territorial cohesion. 2. The InvestEU Programme has the following specific objectives: (a) to support financing and investment operations in sustainable infrastructure in the areas referred to in point (a) of Article 7(1); (b) to support financing and investment operations in research, innovation and digitisation , including support for the upscaling of innovative companies and the rolling out of technologies to market ; (c) to increase the access to and the availability of finance for , and to enhance the global competitiveness of, SMEs, and ▌ for small mid-cap companies; (d) to increase the access to and the availability of microfinance and finance to social enterprises, support financing and investment operations related to social investment , competences and skills and develop and consolidate social investment markets, in the areas referred to in point (d) of Article 7(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 8(1) shall be EUR 40 817 500 000 (current prices). It shall be provisioned at the rate of 40 %. 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 8(1), subject to the allocation by Member States, pursuant to [Article 10(1)] of Regulation [[CPR] number] (20) and Article [75(1)] of Regulation [[CAP plan] number] (21), of the corresponding amounts. An additional amount of the EU guarantee may also be provided in the form of cash by Member States for the purposes of the Member State compartment. The contributions from third countries referred to in Article 5 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. The indicative distribution of the amount referred to in the first subparagraph of paragraph 1 is set out in Annex I to this Regulation. The Commission may modify the amounts referred to in that Annex I, where appropriate, by up to 15 % for each objective. It shall inform the European Parliament and the Council of any modification. 3. The financial envelope for the implementation of the measures provided in Chapters V and VI shall be EUR 525 000 000 (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 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 8(1) and each of the policy windows referred to in Article 7(1) may receive contributions from the following third countries in order to participate in certain financial products pursuant to [Article 218(2)] of the [Financial Regulation]: (a) European Free Trade Association (EFTA) members which are members of the European Economic Area (EEA), in accordance with the conditions laid down in the EEA agreement; (b) acceding countries, candidate countries and potential candidates, in accordance with the general principles and general terms and conditions for their participation in Union programmes established in the respective framework agreements and Association Council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and them; (c) countries covered by the European Neighbourhood Policy, 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 similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and those countries; (d) 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. These contributions shall constitute assigned revenues in accordance with Article [21(5)] of the [Financial Regulation]; (iii) does not confer to the third country a decisional power on the programme; (iv) guarantees the rights of the Union to ensure sound financial management and to protect its financial interests.

Article 6 Implementation and forms of Union funding 1. The EU guarantee shall be implemented in indirect management with bodies referred to in Article 62(1)(c)(ii) , (iii), (v) and (vi) of the Financial Regulation. Other forms of EU funding under this Regulation shall be implemented in direct or indirect management in accordance with the Financial Regulation, including grants implemented in accordance with its Title VIII and blending operations implemented in accordance with this Article as smoothly as possible and ensuring efficient and coherent support of 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 by the EU Emissions Trading System (ETS) Innovation Fund shall: (a) be consistent with the policy objectives and comply with the eligibility criteria set out in the rule on the Union programme under which the support is decided; (b) comply with this Regulation. 3. Blending operations including a financial instrument fully financed by other Union programmes or by the ETS Innovation Fund without use of the EU guarantee under this Regulation shall comply with the policy objectives and eligibility criteria set out in the rules of the Union programme under which the support is provided. 4. In accordance with Article 6(2), the non-repayable forms of support and/or financial instruments from the Union budget forming part of the blending operation referred to in paragraphs 2 and 3 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 shall also include the elements on the consistency with the policy objectives and eligibility criteria set out in the rules of the Union programme under which support is decided as well on the compliance with this Regulation.

CHAPTER II

InvestEU Fund

Article 7 Policy windows 1. The InvestEU Fund shall operate through the following four policy windows that shall address market failures or sub-optimal investment situations within their specific scope: (a) sustainable infrastructure policy window: comprises sustainable investment in the areas of transport, including multimodal transport, road safety, also in line with the EU objective of eliminating fatal road accidents and serious injuries by 2050, renewal and maintenance of rail and road infrastructure, energy, in particular renewable energy, energy efficiency in line 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 system, 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 line with the waste hierarchy and the circular economy , nature and other environment infrastructure, cultural heritage, tourism, equipment, mobile assets and deployment of innovative technologies that contribute to the environmental climate resilience or social sustainability objectives of the Union, or to both, and meet the environmental or social sustainability standards of the Union; (b) research, innovation and digitisation policy window: comprises research , product development and innovation activities, transfer of technologies and research results to the market , supporting market enablers and cooperation between enterprises , demonstration and deployment of innovative solutions and support to scaling up of innovative companies ▌as well as digitisation of Union industry; (c) SMEs policy window: access to and availability of finance primarily for SMEs , including innovative ones and those operating in the cultural and creative sectors, as well as for small mid-cap companies; (d) social investment and skills policy window: comprises microfinance, social enterprise finance and 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; integration of vulnerable people, including third country nationals. 2. Where a financing or investment operation proposed to the Investment Committee referred to in Article 19 falls under more than one policy window, it shall be attributed to the window under which its main objective or the main objective of most of its sub-projects fall, unless the investment guidelines define otherwise. 3. Financing and investment operations shall be screened to determine if they have an environmental, climate or social impact and if so, shall be subject to climate, environmental and social sustainability proofing with a view to minimise detrimental impacts and maximise benefits on climate, environment and social dimension. For that purpose, promoters requesting financing shall provide adequate information based on guidance to be developed by the Commission. Projects below a certain size defined in the guidance shall be excluded from the proofing. Projects that are inconsistent with the achievement of the climate objectives shall not be eligible for support under this Regulation. The Commission guidance shall , in accordance with Union environmental objectives and standards, allow to: (a) as regards adaptation, ensure the resilience to the potential adverse impacts of climate change through a climate vulnerability and risk assessment, including relevant adaptation measures, and, as regards mitigation, integrate the cost of greenhouse gas emissions and the positive effects of climate mitigation measures in the cost-benefit analysis; (b) account for consolidated project impact in terms of the principal components of the natural capital relating to air, water, land and biodiversity; (c) estimate the social impact , including on gender equality, the social inclusion of certain areas or populations and the economic development of areas and sectors affected by structural challenges such as the decarbonisation needs of the economy; (ca) identify projects that are inconsistent with the achievement of climate objectives. (cb) provide implementing partners with guidance for the purpose of the screening foreseen under paragraph 3, subparagraph 1. In case the implementing partner concludes that no sustainability proofing is to be carried out, it shall provide a justification to the Investment Committee. 4. Implementing partners shall provide the information necessary to allow the tracking of investment that contributes to meeting the Union objectives on climate and environment, based on guidance to be provided by the Commission. 5. Implementing partners shall target that at least 55 % of the investment under the sustainable infrastructure policy window contribute to meeting the Union objectives on climate and environment. The Commission together with implementing partners shall seek to ensure that the part of the budgetary guarantee used for the sustainable investment window is distributed aiming at a balance between the different areas. 6. The Commission is empowered to adopt delegated acts in accordance with Article 26 to define the investment guidelines for each of the policy windows. The investment guidelines shall be prepared in close dialogue with the EIB Group and other potential implementing partners. 6a. The Commission shall make the information on the application or interpretation of the investment guidelines available to the implementing partners, the Investment Committee and the advisory partners.

Article 8 Compartments 1. The policy windows referred to in Article 7(1) shall each consist of two compartments addressing ▌market failures or sub-optimal investment situations as follows: (a) the EU compartment shall address any of the following situations: (i) market failures or sub-optimal investment situations related to Union policy priorities ▌; (ii) Union wide and/or Member State specific market failures or sub-optimal investment situations; or (iii) ▌market failures or sub-optimal investment situations , in particular new or complex ones, which require the development of innovative financial solutions and market structures; (b) the Member State compartment shall address specific market failures or sub-optimal investment situations in one or several regions or Member States to deliver the policy objectives of the contributing Funds under shared management in particular to strengthen economic, social and territorial cohesion in the European Union by addressing imbalances among its regions . 2. The compartments referred to in paragraph 1 shall, where appropriate, be used in a complementary manner to support a financing or investment operation, including by combining support from both compartments.

Article 9 Specific provisions applicable to the Member State compartment 1. Amounts allocated by a Member State on a voluntary basis under Article [10(1)] of Regulation [[CPR] number] or Article [75(1)] of Regulation [[CAP plan] number] shall be used for the provisioning of 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 from Funds under shared management to the InvestEU Advisory Hub. Those amounts shall contribute to the achievement of the policy objectives selected in the Partnership Agreement and in the programmes which contribute to InvestEU . Amounts allocated under the third subparagraph of Article 4(1) shall be used for the provisioning of the guarantee. 2. The establishment of that part of the EU guarantee under the Member State compartment shall be subject to the conclusion of a contribution agreement between the Member State and the Commission. The fourth subparagraph of Article 9(2) and Article 9(5) 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 under Article 10(1) of Regulation [CPR number] or Article 75(1) of Regulation [CAP plan] 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). The Member State and the Commission shall conclude the contribution agreement or an amendment to it within four months following the Commission Decision adopting the Partnership Agreement or the CAP plan or simultaneously to the Commission Decision amending a programme or a CAP plan. Two or more Member States may conclude a joint contribution agreement with the Commission. By 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 maybe 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, its provisioning rate, the amount of the contribution from Funds under shared management, the constitution phase of the provisioning in accordance with an annual financial plan 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 the regional coverage if needed, types of projects, the investment period and, where applicable, the categories of final recipients and of eligible intermediaries; (c) the potential implementing partner or partners proposed in accordance with Article 12, and the obligation of the Commission to inform the Member State about the implementing partner or partners selected; (d) the possible contribution from Funds under shared management to the InvestEU Advisory Hub; (e) the annual reporting obligations towards the Member State, including reporting in accordance with the relevant indicators related to the policy objectives covered in the Partnership Agreement or programme and referred to in the contribution agreement; (f) provisions on the remuneration of the part of the EU guarantee under the Member State compartment; (g) possible combination with resources under the EU compartment, including in a layered structure to achieve better risk coverage in accordance with Article 8(2). 4. The contribution agreements shall be implemented by the Commission through guarantee agreements signed with implementing partners pursuant to Article 14 and advisory agreements signed with advisory partners . Where, within nine months from the signature of the contribution agreement, no guarantee agreement has been concluded or the amount of a contribution agreement is not fully committed through one or more guarantee agreements, the contribution agreement shall be terminated or prolonged, by mutual agreement, in the first case or amended accordingly in the second case ▌. The unused amount of provisioning coming from amounts allocated by Member States under Article [10(1) of Regulation [[CPR]] of Article [75(1)] of Regulation [[CAP]] shall be re-used pursuant to [Article 10(5)] of Regulation [[CPR] number] and Article [75(5)] of Regulation [[CAP plan] number]. The unused amount of provisioning coming from amounts allocated by a Member State under the third subparagraph of Article 4(1) shall be paid back to the Member State . Where the guarantee agreement has not been duly implemented within a period specified in Article [10(6)] of Regulation [[CPR] number] or in Article [75(6)] of Regulation [[CAP plan] number], the contribution agreement shall be amended ▌. The unused amount of provisioning coming from amounts allocated by Member States under Article [10(1) of Regulation [[CPR]] of Article [75(1)] of Regulation [[CAP]] shall be re-used pursuant to [Article 10(5)] of Regulation [[CPR] number] and Article [75(5)] of Regulation [[CAP plan] number]. The unused amount of provisioning coming from amounts allocated by a Member State under the third subparagraph of Article 4(1) shall be paid back to the Member State. 5. The following rules shall apply to the provisioning for the part of the EU guarantee under the Member State compartment established by a contribution agreement: (a) after the constitution phase referred to in point (a) of paragraph 3 of this Article, any annual surplus of provisions, calculated by comparing the amount of provisions required by the provisioning rate and the actual provisions, shall be re-used pursuant to [ Article 10(7)] of the [CPR] and to Article [75(7)] of the [[CAP plan] number]; (b) by derogation from [Article 213(4)] of the [Financial Regulation], after the constitution phase referred to in point (a) of paragraph 3 of this Article, the provisioning shall not give rise during the availability of that part of the EU guarantee under the Member State compartment to annual replenishments; (c) the Commission shall immediately inform the Member State where, as a result of calls on that part of the EU guarantee under the Member State compartment, the level of provisions for that part of the EU guarantee falls below 20 % of the initial provisioning; (d) if the level of provisions for that part of the EU guarantee under the Member State compartment reaches 10 % of the initial provisioning, the Member State concerned shall provide to the common provisioning fund up to 5 % of the initial provisioning upon request by the Commission.

CHAPTER IIA

PARTNERSHIP BETWEEN THE COMMISSION AND THE EIB GROUP

Article 9a Scope of the partnership 1. The Commission and the EIB Group shall form a partnership under this Regulation with the objective of supporting programme implementation and consistency, inclusivity, additionality, and efficiency of deployment. In accordance with the terms of this Regulation and as further specified in the agreements referred to in paragraph 2, the EIB Group: (a) shall implement the portion of the EU guarantee specified in Article 10(1b); (b) shall support the implementation of the EU compartment, and where applicable in accordance with Article 12(1) the Member State compartment, of the InvestEU Fund, in particular by: (i) contributing together with potential implementing partners to the investment guidelines in accordance with Article 7(6), contributing to the design of the scoreboard in accordance with Article 19(1a) and to other documents setting out the operational guidance of the InvestEU Fund, (ii) defining, together with the Commission and potential implementing partners, the risk methodology and risk mapping system relating to the financing and investment operations of the implementing partners in order to allow such operations to be assessed on a common rating scale, (iii) upon request by the Commission and in agreement with the potential implementing partner concerned, carrying out an assessment of, and providing targeted technical advice on, the systems of that potential implementing partner, where and to the extent required by the conclusions of the audit of the pillar assessment in view of the implementation of the financial products envisaged by that potential implementing partner, (iv) providing a non-binding opinion on the banking related aspects, notably on the financial risk and financial terms related to the portion of the EU guarantee to be allocated to the implementing partner as defined in the guarantee agreements to be concluded with implementing partners other than the EIB Group. The Commission shall, as appropriate, engage with the implementing partner based on the findings of the opinion. It shall inform the EIB Group on the outcome of its decision making, (v) carrying out simulations and projections on the financial risk and remuneration of the aggregate portfolio based on assumptions agreed with the Commission, (vi) carrying out financial risk measurement and financial reporting of the aggregate portfolio, and (vii) providing restructuring and recovery services set out in the agreement referred to in Article 9a(2)(b) to the Commission, at the request of the Commission and in agreement with the implementing partner, in accordance Article 14(2)(g), where the implementing partner is no longer responsible for pursuing restructuring and recovery activities under the relevant guarantee agreement; (c) may, upon request by a national promotional bank or institution, provide capacity building referred to in Article 20(2)(f) to that national promotional bank or institution and/or other services, related to the implementation of financial products supported by the EU guarantee; (d) shall, in relation to the InvestEU Advisory Hub, (i) be allocated an amount of up to EUR 375 million out of the financial envelope referred to in Article 4(3) for advisory initiatives and operational tasks referred to in point (ii); (ii) advise the Commission and perform operational tasks, to be laid down in the agreement referred to in Article 9a(2)(c), by: 1. supporting the Commission in the design, the establishment and functioning of the InvestEU Advisory Hub; 2. providing an assessment of requests for advisory services not considered by the Commission as falling under existing advisory initiatives with a view to support the allocation decision of the Commission; 3. supporting national promotional banks or institutions by providing capacity building referred to in Article 20(2)(f), upon their request, in relation to the development of their advisory capabilities to participate in advisory initiatives; 4. at the request of the Commission and of a potential advisory partner and subject to the agreement of the EIB Group, contracting with advisory partners on behalf of the Commission for the delivery of advisory initiatives. The EIB Group shall ensure that its tasks referred to in paragraph 1(d), point (ii) are conducted entirely independently from its role as an advisory partner. 2. The banking related information transmitted to the EIB Group by the Commission under (ii), (iv), (v) and (vi) of (1)(b) shall be limited to information strictly required for the EIB Group to carry out its obligations under these points. The Commission shall define, in close dialogue with the EIB Group and potential implementing partners, the nature and scope of the above mentioned information taking into account the requirements for sound financial management of the EU guarantee, legitimate interests of the implementing partner regarding commercially sensitive information and the needs of the EIB Group for the purpose of meeting its obligations under those points. 3. The modalities of the partnership shall be laid down in agreements, including: (a) on the granting and implementation of the portion of the EU guarantee specified in Article 10(1b): (i) a guarantee agreement between the Commission and the EIB Group, or (ii) separate guarantee agreements between the Commission and the EIB and/or a subsidiary or other entity as defined in Article 28(1) of the EIB Statute; (b) an agreement between the Commission and the EIB Group in relation to points (b) and (c) of paragraph 1; (c) an agreement between the Commission and the EIB Group in relation to the InvestEU Advisory Hub; (d) service agreements between the EIB Group and national promotional banks and institutions concerning capacity building and other services in accordance with point (c) of paragraph 1. 4. Without prejudice to Articles 15(3) and 20(4), the costs incurred by the EIB Group for the performance of tasks referred to in points (b) and (c) of paragraph 1 shall comply with the conditions agreed under the agreement referred to in point (b) of paragraph 2 and may be covered from the repayments or revenues attributable to the EU guarantee contributed to the provisioning, in accordance with Article 211(4) and (5) of the Financial Regulation, or be charged on to the envelope referred to in Article 4(3), upon justification of these costs by the EIB Group and within an overall cap of EUR 7 000 000. 5. The costs incurred by the EIB Group for the performance of the operational tasks referred to in point (d)(ii) of paragraph 1 shall be fully covered and paid from the amount referred to in point (d)(i) of paragraph 1, upon justification of these costs by the EIB Group and within an overall cap of EUR 10 000 000.

Article 9b Conflict of interest Within the framework of the partnership the EIB Group shall take all necessary measures and precautions to avoid conflicts of interests with other implementing partners, including through putting in place a dedicated and independent team for the tasks referred to in Article 9a(1)(b)(iii), (iv), (v), and (vi) which shall be subject to strict confidentiality rules, which shall continue to apply to those that have left the team. The EIB Group or other implementing partners shall inform the Commission without delay of any situation constituting or likely to lead to any such conflict. In case of doubt, the Commission shall decide if a conflict of interest exists and shall inform the EIB Group thereof. In the event of a conflict of interest, the EIB Group shall take appropriate measures. The steering board shall be informed of the measures taken and their results. The EIB Group shall take the necessary precautions to avoid conflict of interest situations in the implementation of the InvestEU Advisory Hub, in particular in relation to the operational tasks in its role of supporting the Commission referred to in Article 9a(1)(d)(ii). In the event of a conflict of interest, the EIB Group shall take appropriate measures.

CHAPTER III

EU GUARANTEE

Article 10 EU guarantee 1. The EU guarantee shall be granted as an irrevocable, unconditional and on demand guarantee to the implementing partners in accordance with Article 219(1) of the Financial Regulation and managed in accordance with Title X of the Financial Regulation in indirect management . 1a. The remuneration of the EU guarantee shall be linked to the characteristics and risk profile of the financial products, taking into due account the nature of the underlying financing and investment operations and the fulfilment of the policy objectives targeted. This may include, in duly justified cases related to the nature of the policy objectives targeted by the financial product to be implemented and to the affordability for targeted final recipients, a reduction of the cost or improvement of the terms of financing provided to the final recipient by modulating the remuneration of the EU guarantee, or, where necessary, by covering the outstanding administrative costs borne by the implementing partner through the EU budget, in particular: (a) in situations where stressed financial market conditions would prevent the realisation of an operation under market-based pricing, or (b) where necessary to catalyse financing and investment operations in sectors or areas experiencing a significant market failure or suboptimal investment situation and to facilitate the establishment of investment platforms, to the extent that the reduction of the remuneration of the EU guarantee or the coverage of the outstanding administrative costs borne by implementing partners do not significantly impact the provisioning of the InvestEU guarantee. The reduction of the remuneration of the EU guarantee shall fully benefit final recipients. 1b. The condition set out in Article 219(4) of the Financial Regulation shall to each implementing partner on a portfolio basis. 1c. 75 % of the EU guarantee under the EU compartment as referred to in first sub-paragraph of Article 4(1), amounting to EUR 30 613 125 000, shall be granted to the EIB Group. The EIB Group shall provide an aggregate financial contribution amounting to EUR 7 653 281 250. This contribution shall be provided in a manner and form that facilitates the implementation of the InvestEU Fund and the achievement of the objectives set out in Article 12(2). 1d. The remaining 25 % of the EU guarantee under the EU compartment shall be granted to other implementing partners, which are also to provide a financial contribution to be determined in the guarantee agreements. 1e. Best efforts shall be made to ensure that at the end of the investment period a wide range of sectors and regions will be covered and excessive sectoral or geographical concentration is avoided. These efforts shall include incentives for the smaller or less sophisticated NPBIs that have a comparative advantage due to their local presence, knowledge and investment competencies. Those efforts shall be supported by the Commission through the development of a coherent approach. 2. Support of the EU guarantee may be granted for financing and investment operations covered by this Regulation for an investment period ending on 31 December 2027. Contracts between the implementing partner and the final recipient or the financial intermediary or other entity referred to in Article 13(1)(a) shall be signed by 31 December 2028.

Article 11 Eligible financing and investment operations 1. The InvestEU Fund shall only support financing and investment operations that (a) comply with the conditions set out in points (a) to (e) of Article 209(2) of the Financial Regulation, in particular with the ▌requirement s regarding market failures, sub-optimal investment situations and additionality as set out in points (a) and (b) of Article 209(2) of the Financial Regulation and in Annex V to this Regulation and, where appropriate, maximising private investment in accordance with point (d) of Article 209(2) of the Financial Regulation; (b) contribute to the Union policy objectives and fall under the scope of the areas eligible for financing and investment operations under the appropriate window in accordance with Annex II to this Regulation; ▌ (ba) do not provide financial support to the excluded activities defined in point B of Annex V to this Regulation; and (c) are consistent with the investment guidelines. 2. In addition to projects situated in the Union, the InvestEU Fund may support the following projects and operations through financing and investment operations: (a) ▌projects between entities located or established in one or more Member States and extending to one or more third countries, including acceding countries, candidate countries and potential candidates, countries falling within the scope of the European Neighbourhood Policy, the European Economic Area or the European Free Trade Association, or to an overseas country or territory as set out in Annex II to the TFEU, or to an associated third country, whether or not there is a partner in those third countries or overseas countries or territories; (b) financing and investment operations in countries referred to in Article 5 which have contributed to a specific financial product. 3. The InvestEU Fund may support financing and investment operations providing finance to recipients which are legal entities established in any of the following countries: (a) a Member State or an overseas country or territory linked to it; (b) a third country or territory associated to the InvestEU Programme in accordance with Article 5; (c) a third country referred to in point (a) of paragraph 2, where applicable; (d) other countries where needed for financing a project in a country or territory referred to in points (a) to (c).

Article 12 Selection of implementing partners other than the EIB Group 1. The Commission shall select, in accordance with Article 154 of the Financial Regulation, the implementing partners , other than the EIB Group . Implementing partners may form a group. An implementing partner may be a member of one or more groups. For the EU compartment, the eligible counterparts shall have expressed their interest in relation to the portion of the EU guarantee referred to in Article 10(1c) .▌ For the Member State compartment, the Member State concerned may propose one or more ▌counterparts as implementing partners from among those that have expressed their interest ▌. The Member State concerned may also propose the EIB Group as an implementing partner and may contract, at its own expense, the EIB Group to provide the services listed in Article 9a. Where the Member State concerned does not propose an implementing partner, the Commission shall proceed in accordance with the second subparagraph of this paragraph among those implementing partners that can cover financing and investment operations in the geographical areas concerned. 2. When selecting implementing partners, the Commission shall ensure that the portfolio of financial products under the InvestEU Fund meets the following objectives : (a) to maximise the coverage of the objectives laid down in Article 3; (b) to maximise the impact of the EU guarantee through the own resources committed by the implementing partner; (c) to maximise , where appropriate, private investment; (ca) to promote innovative financial and risk solutions to address market failures and sub-optimal investment situations; (d) to achieve geographical diversification via gradual allocation of the EU guarantee, and to allow for the financing of smaller projects ; (e) to provide sufficient risk diversification. ▌ 3. When selecting the implementing partners, the Commission shall also take into account: (a) the possible cost and remuneration to the Union budget; (b) the capacity of the implementing partner to implement thoroughly the requirements of Articles 155(2) and 155(3) of the Financial Regulation related to tax avoidance, tax fraud, tax evasion, money laundering, terrorism financing and non-cooperative jurisdictions. 4. National promotional banks or institutions may be selected as implementing partners, subject to fulfilling the requirements laid down in this Article and in the second subparagraph of Article 14(1).

Article 13 Eligible types of financing 1. The EU guarantee may be used towards risk coverage for the following types of financing provided by the implementing partners: (a) loans, guarantees, counter-guarantees, capital market instruments, any other form of funding or credit enhancement, including subordinated debt, or equity or quasi-equity participations, provided directly or indirectly through financial intermediaries, funds, investment platforms or other vehicles to be channelled to final recipients; (b) funding or guarantees by an implementing partner to another financial institution enabling the latter to undertake financing activities referred to in point (a). In order to be covered by the EU guarantee, the financing referred to in points (a) and (b) of the first subparagraph of this paragraph shall be granted, acquired or issued for the benefit of financing or investment operations referred to in Article 11(1), where the financing by the implementing partner has been granted in accordance with a financing agreement or transaction signed or entered into by the implementing partner after the signature of the guarantee agreement between the Commission and the implementing partner and which has not expired or been cancelled. 2. Financing and investment operations through funds or other intermediate structures shall be supported by the EU guarantee in accordance with provisions to be laid down in the investment guidelines even if such structure invests a minority of its invested amounts outside the Union and in the countries referred to Article 11(2) or into assets other than those eligible under this Regulation.

Article 14 Guarantee agreements 1. The Commission shall conclude a guarantee agreement with each implementing partner on the granting of the EU guarantee in accordance with the requirements of this Regulation up to an amount to be determined by the Commission. In case implementing partners form a group ▌, a single guarantee agreement shall be concluded between the Commission and each implementing partner within the group or with one implementing partner on behalf of the group. 2. The guarantee agreements shall contain, in particular, provisions concerning: (a) the amount and the terms of the financial contribution which is to be provided by the implementing partner; (b) the terms of the funding or the guarantees which are to be provided by the implementing partner to another legal entity participating in the implementation, whenever that is the case; (c) in accordance with Article 16, detailed rules on the provision of the EU guarantee, including coverage of portfolios of specific types of instruments and the respective events triggering possible calls on the EU guarantee; (d) the remuneration for risk-taking that is to be allocated in proportion to the respective share in the risk-taking of the Union and the implementing partner or as adjusted in duly justified cases pursuant to Article 16(1) ; (e) the payment conditions; (f) the commitment of the implementing partner to accept the decisions by the Commission and the Investment Committee as regards the use of the EU guarantee for the benefit of a proposed financing or investment operation, without prejudice to the decision-making of the implementing partner on the proposed operation without the EU guarantee; (g) provisions and procedures relating to the recovery of claims that is to be entrusted to the implementing partner; (h) financial and operational reporting and monitoring of the operations under the EU guarantee; (i) key performance indicators, in particular as regards the use of the EU guarantee, the fulfilment of the objectives and criteria laid down in Articles 3, 7 and 11 as well as the mobilisation of private capital; (j) where applicable, provisions and procedures relating to blending operations; (k) other relevant provisions in compliance with the requirements of Article 155(2) and Title X of the Financial Regulation; (l) the existence of adequate mechanisms for private investors’ potential concerns. 3. A guarantee agreement shall also provide that remuneration attributable to the Union from financing and investment operations covered by this Regulation is to be provided after the deduction of payments due upon calls on the EU guarantee. 4. In addition, a guarantee agreement shall provide that any amount due to the implementing partner related to the EU guarantee shall be deducted from the overall amount of remuneration, revenues and repayments due by the implementing partner to the Union from financing and investment operations covered by this Regulation. Where this amount is not sufficient to cover the amount due to an implementing partner in accordance with Article 15(3), the outstanding amount shall be drawn from the provisioning of the EU guarantee. 5. Where the guarantee agreement is concluded under the Member State compartment, it may provide for the participation of representatives from the Member State or the regions concerned in the monitoring of the implementation of the guarantee agreement.

Article 15 Requirements for the use of the EU guarantee 1. The granting of the EU guarantee shall be subject to the entry into force of the guarantee agreement with the relevant implementing partner. 2. Financing and investment operations shall be covered by the EU guarantee only where they fulfil the criteria laid down in this Regulation and in the relevant investment guidelines and where the Investment Committee has concluded that they fulfil the requirements for benefiting from the support of the EU guarantee. The implementing partners shall remain responsible for ensuring the compliance of the financing and investment operations with this Regulation and the relevant investment guidelines. 3. No administrative costs or fees related to the implementation of financing and investment operations under the EU guarantee shall be due to the implementing partner by the Commission, unless the nature of the policy objectives targeted by the financial product to be implemented and the affordability for targeted final recipients or the type of financing provided allow the implementing partner to duly justify to the Commission the need for an exception. Coverage of such costs by the EU budget shall be limited to an amount strictly required to implement the relevant financing and investment operations, and be provided only to the extent to which the cost is not covered by revenues received by implementing partners on the financing and investment operations concerned. The fee arrangements shall be laid down in the guarantee agreement and shall comply with the modalities set out in Article 14(4) and with Article 209(2)(g) of the Financial Regulation. 4. In addition, the implementing partner may use the EU guarantee to meet the relevant share of any recovery costs, unless deducted from recovery proceeds, in accordance with Article 14(4).

Article 16 Coverage and terms of the EU guarantee 1. The remuneration for risk-taking shall be allocated between the Union and an implementing partner in proportion to their respective share in the risk-taking of a portfolio of financing and investment operations or, where relevant, of individual operations. The remuneration of the EU guarantee may be reduced in duly justified cases referred to in the second sub-paragraph of Article 10(1). The implementing partner shall have an appropriate exposure at its own risk to financing and investment operations supported by the EU guarantee, unless exceptionally the policy objectives targeted by the financial product to be implemented are of such nature that the implementing partner could not reasonably contribute its own risk-bearing capacity to it. 2. The EU guarantee shall cover: (a) for debt products referred to in Article 13(1)(a): (i) the principal and all interest and amounts due to the implementing partner but not received by it in accordance with the terms of the financing operations until the event of default; for subordinated debt a deferral, reduction or required exit shall be considered to be an event of default; (ii) restructuring losses; (iii) losses arising from fluctuations of currencies other than the euro in markets where possibilities for long-term hedging are limited; (b) for equity or quasi-equity investments referred to in Article 13(1)(a), the amounts invested and their associated funding cost and losses arising from fluctuations of currencies other than the euro; (c) for funding or guarantees by an implementing partner to another legal entity referred to in Article 13(1)(b), the amounts used and their associated funding costs. 3. Where the Union makes a payment to the implementing partner upon a call on the EU guarantee, it shall be subrogated into the relevant rights,