Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"
de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia
Maracaibo, Venezuela
Publicación cientíca en formato digital
ISSN-Versión Impresa 0798-1406 / ISSN-Versión on line 2542-3185
Depósito legal pp 197402ZU34
ppi 201502ZU4645
Vol.40 N° 75
2022
Recibido el 01/08/22 Aceptado el 15/11/22
ISSN 0798- 1406 ~ De pó si to le gal pp 198502ZU132
Cues tio nes Po lí ti cas
La re vis ta Cues tio nes Po lí ti cas, es una pu bli ca ción aus pi cia da por el Ins ti tu to
de Es tu dios Po lí ti cos y De re cho Pú bli co “Dr. Hum ber to J. La Ro che” (IEPDP) de la Fa-
cul tad de Cien cias Ju rí di cas y Po lí ti cas de la Uni ver si dad del Zu lia.
En tre sus ob je ti vos fi gu ran: con tri buir con el pro gre so cien tí fi co de las Cien cias
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ti ga do res; es ti mu lar la in ves ti ga ción en es tas áreas del sa ber; y pro pi ciar la pre sen ta-
ción, dis cu sión y con fron ta ción de las ideas y avan ces cien tí fi cos con com pro mi so so cial.
Cues tio nes Po lí ti cas apa re ce dos ve ces al año y pu bli ca tra ba jos ori gi na les con
avan ces o re sul ta dos de in ves ti ga ción en las áreas de Cien cia Po lí ti ca y De re cho Pú bli-
co, los cua les son so me ti dos a la con si de ra ción de ár bi tros ca li fi ca dos.
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nes Cien tí fi cas y Tec no ló gi cas Ve ne zo la nas del FO NA CIT, La tin dex.
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Eduviges Morales Villalobos
Fabiola Tavares Duarte
Ma ría Eu ge nia Soto Hernández
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Re vis ta Cues tio nes Po lí ti cas. Av. Gua ji ra. Uni ver si dad del Zu lia. Nú cleo Hu ma nís ti co. Fa-
cul tad de Cien cias Ju rí di cas y Po lí ti cas. Ins ti tu to de Es tu dios Po lí ti cos y De re cho Pú bli co
“Dr. Hum ber to J. La Ro che”. Ma ra cai bo, Ve ne zue la. E- mail: cues tio nes po li ti cas@gmail.
com ~ loi chi ri nos por til lo@gmail.com. Te le fax: 58- 0261- 4127018.
Vol. 40, Nº 75 (2022), 28-48
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
European Union policy on nancing
eco-innovations in the transition
to a green economy
DOI: https://doi.org/10.46398/cuestpol.4075.01
Halyna Matviienko *
Olha Pylypenko **
Anatolii Putintsev ***
Olena Chumak ****
Svitlana Gordiichuk *****
Abstract
The purpose of the article is to identify the systemic
interconnections of the main elements of the policy of nancing
green transformation and eco-innovation in the European Union
EU, highlighting the main challenges and further strategic
directions of development. EU policy in the eld of green economy
and innovation has been studied. Identied core economic systems for
«green» nance. The policy of stimulation of eco-innovative activity in the
EU and primary nancing programs are considered. A scheme of the system
of sustainable nance and eco-innovation in the EU has been elaborated,
and the direct relations between the elements of this system have been
claried. The methodological basis of the article are the fundamental
provisions of economic science, the theory of green nance and innovative
development. Dialectical, systematic, logical and historical methods of
scientic knowledge were used. The conclusions demonstrate the urgent
need for a green transformation and the importance of developing a policy
for nancing eco-innovation activities in the EU.
Keywords: green economy; innovation summary index; eco-innovations;
EU green policy; eco-innovation policy infrastructure.
* V.I. Vernadsky Taurida National University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0002-
5265-8379
** V.I. Vernadsky Taurida National University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0003-
3997-9108
*** V.I. Vernadsky Taurida National University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0002-
4397-0408
**** National University of "Zaporozhye Politechnic", Zaporizhzhia, Ukraine. ORCID ID: https://orcid.
org/0000-0001-8999-9951
***** Zhytomyr medical institute, Zhytomyr, Ukraine. ORCID ID: https://orcid.org/0000-0003-4609-
7613
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
Política de la Unión Europea sobre la nanciación de
innovaciones ecológicas en la transición a una economía
verde
Resumen
El propósito del artículo es identicar las interconexiones sistémicas de
los principales elementos de la política de nanciación de la transformación
ecológica y la ecoinnovación en la Union Europea UE, destacando los principales
desafíos y las direcciones estratégicas de desarrollo adicionales. Se ha estudiado
la política de la UE en el campo de la economía verde y la innovación. Sistemas
económicos centrales identicados para las nanzas «verdes». Se considera
la política de estímulo de la actividad ecoinnovadora en la UE y los programas
de nanciación primaria. Se ha elaborado un esquema del sistema de nanzas
sostenibles y ecoinnovación en la UE, y se han aclarado las relaciones directas
entre los elementos de este sistema. La base metodológica del artículo son las
disposiciones fundamentales de la ciencia económica, la teoría del nanciamiento
verde y el desarrollo innovador. Se utilizaron métodos dialécticos, sistemáticos,
lógicos e históricos del conocimiento cientíco. En las conclusiuones se demuestra
la necesidad urgente de una transformación verde y la importancia de desarrollar
una política para nanciar actividades de ecoinnovación en la UE.
Palabras clave: economía verde; índice resumen de innovación;
ecoinnovaciones; política ecológica de la UE;
infraestructura de la política de ecoinnovación.
Introduction
In the modern world, a radical reassessment of values has taken
place, and in the near future, money or GDP will not be a measure of a
country’s economic power or prosperity. By adopting the 2030 Agenda,
the international community recognised that current consumption and
production patterns are unsustainable and that there is a need for a
systematic change in consumption and production patterns.
More important for long-term development is the integration of
ESG into public policy, the transition to a sustainable business model
through sustainable nancing, the formation of a green economy, and the
development of a knowledge economy. According to the UN Environment
Program, eco-innovations actively contribute to separating economic growth
from resource consumption and help achieve sustainable development
goals. Also, implementing a green economy reduces negative externalities
and maximises social value through ESG-related activities, which must
consider the needs of all participants (shareholders, consumers, customers)
(IFC, 2021).
30
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
Climate policy is most developed in the EU, one of the world’s rst to
create regulations and goals to transition to a green economy. The EU
implements a permanent collection of environmental data and monitoring
indicators and develops relationships and mobility in the institutional
sphere at the local, national, and international levels (Oleksenko et al.,
2021; (Gulac et al., 2022a). European institutional and political support
includes the development of climate legislation, consolidation of climate
neutrality and reduction of CO2 emissions in all types of economic activity,
increasing the involvement of citizens, society and businesses to participate
in climate measures.
The EU’s main ambitious goal is to become the rst climate-neutral
economic union by 2050 and develop measures to implement the UN’s
sustainable development goals by including them in all its policies. The
EU’s ambitious goals contribute to a rapid transformation to a green
economy. To achieve this, it is necessary to transform state institutions and
the economy and increase funding.
The green nance market has excellent growth potential, as the demand
for eco-innovation and nancing of global sustainable development will
grow, especially in such sectors as energy, construction, infrastructure,
water supply. However, compared to the serious environmental problems
and energy shortages that Europe already faces, the supply of green nance
remains very scarce, and the nancial resources invested in green sectors
still cannot meet the demand. Between now and 2030, both developed and
developing countries must actively develop green nance (Li and Shen,
2022).
One of the important and priority measures is the development of
a sustainable nancing policy, especially for eco-innovative activities
(Trusova et al., 2021). The main directions of eco-innovation nancing
policy are the development of institutional nancing mechanisms and the
support of the environmental, social and sustainable development (GSS)
bond market as eective instruments for nancing green projects for both
the public and private sectors.
1. Objectives
The purpose of the article is to justify the need to increase nancing of
the green economy and eco-innovations. Study of the policy of nancing
eco-innovations in the EU and its components. Determining the main
challenges and obstacles of nancing the green economy and outlining
further promising directions for the development of nancing sustainable
development and innovative activities in the EU.
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
2. Materials and methods
The article used analytical articles and studies of world economic
organizations: the World Bank, the IMF, United Nations and others.
Analytical reviews and studies of economic associations and the European
Commission were used. The main research methods were scientic
abstraction, logical generalization when determining the need for nancing
and supporting green transformation and eco-innovation activities;
graphical method for visual reection of trends in nancing innovative
activities and R&D; analytical method for determining the components of
the policy of nancing eco-innovation activities and their interrelationships;
economic-statistical and comparative - for assessing the state of nancing
of the green economy in the EU; a visual reection of the sustainable nance
and eco-innovation system in the EU; situational analysis to identify
problems of nancing eco-innovation activities.
System-structural analysis - for the development of a conceptual model
of green economy nancing, a theoretical model of network partnership in
the formation of alliances and relationships, a structural-logical scheme of
the formation of the main elements of the green transformation nancing
policy; complex empirical and applied analysis - to determine directions,
conditions, mechanisms of nancial support for green transformation and
development of eco-innovations
3. Results and discussion
A new EU growth strategy aimed at a sustainable, prosperous and fair
society was launched with the European Green Deal. Which sets out the
transformation of the EU into a resource-ecient and competitive economy
with no net greenhouse gas emissions in 2050 and where economic growth
will not be linked to the use of resources. Europe has set ambitious plans to
become the rst climate-neutral continent by 2050. Based on the European
Green Deal, the «Climate Target Plan 2030» was developed, which
increased climate ambitions and commitments to reduce net emissions by
at least 55% in a responsible manner by 2030 (The european green deal
investment plan and just transition mechanism explained, 2020).
The implementation of such ambitious EU plans means the need to
increase the contribution of all sectors and increase funding. To achieve
the goals set by the European Green Deal, the European Commission plans
to mobilize at least €1 trillion in sustainable investment over the next
decade, or 30% of the EU’s multiannual budget (2021-2028). The necessity
and value of the European Green Deal has only increased in the light of
very serious geopolitical events in Europe, which threaten the social and
economic well-being of EU citizens.
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Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
Eco-innovations are becoming one of the main priorities of EU
policy in almost all types of economic activity. At the level of the
countries and in the EU, it is necessary to evaluate and define
the promising social, economic and environmental dimensions
of developing the eco-innovation strategy (Gulac et al., 2022b).
The new economy that is being formed is not only an economy of
knowledge and human capital but also of conscious and responsible
behaviour for the consequences that future generations may feel.
The development of the green economy should be carried out in three
dimensions: green innovations, sustainable and inclusive development.
What determines the development of the main factors (World Bank, 2021):
• investments in human capital;
• preservation of nature and increase of social capital;
• implementation of macroeconomic and structural policy;
• development of institutions for innovative activity and economic
transformation;
• capital mobilisation and attraction of private investments to nance
eco-innovations (European Commission, 2021a).
Today, innovation policy is one of the main policies of the European
Union, as technological progress is one of the main drivers of economic
development. As of 2021, the prominent leaders of eco-innovations in
Europe are: Luxembourg, Finland, Austria, Denmark, Sweden, Germany,
France, Spain and the Netherlands. Average Eco-Innovation indicators
include: Italy, Portugal, Slovenia, Czech Republic, Ireland, Belgium,
Greece, Estonia and Latvia. The following countries were included in the
“Catching up eco-innovations” category: Lithuania, Croatia, Slovakia,
Cyprus, Romania, Poland and Bulgaria.
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
Figure No. 1: Eco-innovation index (2021).
Source: (European Commission, 2022a).
Despite the established policy of sustainable nancing, EU countries
dier signicantly in the amount of nancing of eco-innovation activities.
Total value of green early stage investment (per capita) is highly
dierentiated between countries from 14 (Slovakia) to Luxembourg with an
indicator of 341 (a 24-fold dierence).
Figure No. 2. Eco-innovation index. Total value of green early-stage
investment (per capita)
Source: (European Commission, 2022a).
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Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
Total government budget allocations for R&D. The percentage of
gross domestic product (GDP) on average across EU countries is 0.8. In
general, there is a close direct relationship between a country’s economic
development and the share of its R&D expenditures.
Figure No. 3. Total government budget allocations for R&D.
Percentage of gross domestic product (GDP).
Source: (Eurostat, 2022a).
Total government budget allocations for R&D euro per inhabitant in
the EU was 264.9 Euros in 2020 and had a tendency to grow every year,
the most developed countries spend about 2 times more on R&D than the
EU average (for example, Germany spends 519, 2 euros). Also, increasing
the share of the public sector in the R&D nancing structure has a positive
eect on the eciency of the R&D sector. Ensuring competitiveness in the
R&D sector in the EU is the main goal.
On the one hand, there should be enough funding and support for
R&D; on the other hand, it is advisable to ensure eective communication
between science and the real sector of the economy, to ensure the eective
use of R&D in practice. In the last decade, highly developed countries have
signicantly increased the share of scientic work in total employment
and the number of scientic workers. In the EU, human resources for the
development of innovation and cooperation should be strengthened, thus
creating even more space for innovation processes (Eurostat, 2022a).
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
Due to the planned increase in the EU’s 2030 greenhouse gas reduction
targets, as announced in the European Green Plan, investment needs will
continue to grow. There is already a signicant increase in the number of
eco-technologies. Environment-related technologies accounted for 12%
Percentage of all technologies in 2019 (Euro-19), which is 47% more than
the level of 2000 (OECD, 2021a).
Achieving the existing climate and energy targets by 2030 requires an
additional investment of €260 billion per year. This gure mainly includes
investments related to energy, buildings and partially the transport sector.
Therefore, it is necessary to maintain the continuity of investment ows
in these areas, and especially to ensure the nancing of eco-innovation
activities.
For the development of sustainable green nancing, it is advisable to
form a favorable policy, which includes: the policy of regulation of green
nancing; strategic plans for climate change mitigation and adaptation;
green taxonomy; dissemination of ESG best practices; implementation
of climate stress testing for enterprises of various sectors and nancial
institutions; regulation of environmental emissions; development of
information disclosure platforms and changes in nancial reporting
standards; development and implementation of new nancial instruments
and products for green nancing. The main economic systems that need
to be nanced for climate transformation are: climate-smart agriculture;
green buildings and cities; development of renewable energy sources;
distributed generation; energy eciency; water supply and sewage systems;
waste management; development of the circular economy; transport
infrastructure and mobility (European Commission, 2021a).
The nancing of innovative activities has its own specicity due to
the high risk of innovation failures and high development costs, which
necessitates the development of a policy to stimulate the introduction
of eco-innovations, especially in small and medium-sized enterprises.
(Oleksenko et al., 2022).
Also, environmental regulation and a developed institutional
environment stimulate enterprises to reawaken eco-innovations, formulate
and implement environmental protection strategies. It is important to
measure the degree of policy implementation to assess the achievement of
established strategies and to monitor and control the established goals of
the strategies. The main problem of such actions is the correct selection of
relevant indicators. An important challenge and a necessary development
factor is the motivation of the business sector to invest in environmental
innovations.
It is desirable for the international community to encourage politicians
to take action to create new legislative frameworks to support investments
36
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
in eco-innovation, develop new nancial schemes to support the private
sector in investing in eco-innovations, and new programs for society to
encourage local communities to participate in eco-actions (Jesic et al.,
2021).
Achieving the goals of sustainable development is possible only through
the implementation of eco-innovations, introducing the best possible
conditions for the implementation of innovations. The introduction of the
innovation principle means that in the future, when the EU Commission
develops new initiatives, it will take into account the impact on innovation.
This principle ensures that innovation is supported in all new EU policies
and regulations, and the legislative framework will facilitate innovation
(European Commission, 2019).
EU Cohesion Policy helps EU countries, regions, local governments and
cities make major investments that contribute to the European Green Deal.
They must dedicate at least 30% of what they receive from the European
Regional Development Fund to these priorities. The European Commission
has adopted a series of measures to make the EU’s climate, energy, transport
and tax policies t to reduce net greenhouse gas emissions by at least 55%
by 2030 compared to 1990 levels (European Commission, 2021b).
In general, the nancial market is of great importance for nancing
climate resilience. Eco-innovation nancing tools are classied into own
resources, nancial resources of institutions (bank loans, private equity
nancing, venture capital), can be divided into external and internal
nancing, state nancing, and nancing of international organizations.
The formation of nancial market infrastructure is important for nancing
eco-innovations: nancial regulators at the national and regional level,
supervisory bodies, associations, stock exchanges, rating agencies, auditing
companies, nancial institutions (IFC, 2021).
The main elements and their relationship of the sustainable nance and
eco-innovation system in EU are shown in the Figure 4. In more detail, the
main parts of the sustainable nance and eco-innovation system in EU are
studied later.
The investment plan for a sustainable Europe envisages EU spending
aimed at combating climate and environmental policy. In addition, the
European Investment Bank intends to increase the share of nancing
measures for climate protection and environmental sustainability to 50%
of the total volume of operations in 2025. Gradually nancing the green
economy, it will transform into the Climate Union Bank. The long-term
EU budget covers seven years from 2021 to 2027 and will invest heavily
in climate and environment-related objectives. The EU Commission has
oered 25% of the total to promote climate action and environmental
spending under several programs (e.g. European Agricultural Fund for
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
Rural Development, European Agricultural Guarantee Fund, European
Regional Development Fund, Cohesion Fund, Horizon Europe and Life
Funds ) (The European Green Deal Investment Plan And Just Transition
Mechanism Explained, 2020).
Figure No. 4. The sustainable nance and eco-innovation system in EU.
Source: оwn research based on (World Bank, 2021; IFC, 2021)
EU support for eco-innovation has never been greater. The following
eective programs with EU funding for green projects have been developed
in the EU:
• Social Climate Fund. It is planned that a part of the proceeds from
emissions trading for buildings and road transport will go to the
Fund. The fund aims to mitigate the impact of the new carbon
pricing and will provide funding to member states to support their
policies to address social impacts (EUR-Lex, 2021).
• Horizon Europe —with a budget of more than 95.5 billion euros
for European research and innovation, it is the largest and most
important European funding program for green innovation. In
cooperation with other EU programs, Horizon Europe is a key
factor in attracting national public and private investments. A new
wave of scientic and innovative partnerships is planned as part of
Horizon Europe. It is the development of partnerships that will help
bring about the huge environmental, social and economic changes
required by the European Green Deal.
38
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
• InvestEU has plans to attract additional private investments with
EU budget guarantees. InvestEU will attract around €279 billion
of climate and environment-related private and public investment
between 2021 and 2030 (European Union, 2022). The program
is based on the Juncker Plan Investment for Europe model.
Which combines the European Fund for Strategic Investments
and EU nancial instruments. It is also planned to create, within
the framework of the program, a consulting centre and an easily
accessible database that corresponds to the projects of potential
investors around the world (European Commission, 2022b).
• The LIFE program is a European funding program dedicated
to nancing environmental, climate and clean energy goals. The
allocated budget for nancing EU environmental projects is
approximately 5.4 billion euros.
• The Innovation Fund (IF), funded by the EU Emissions Trading
System, provides EU funding of up to €10 billion by 2030 for
environmental projects contributing to the reduction of greenhouse
gases.
• The EUcalls platform was also created to nd EU funding for
environmental projects. The purpose of the project is to ensure the
search process for European tenders for environmental projects,
as well as to establish connections with reliable and experienced
project partners with whom it is possible to cooperate and form
consortia.
• In the plan to recover the EU from the adverse eects of COVID-19
- NextGenerationEU is provided with an additional budget of 750
billion euros to increase investments in important digital and
sustainable innovations EU intends to raise 30% of funds within
the framework of the NGEU through the issuance of green bonds
(EUcalls, 2022a).
An important step was the introduction of the EU taxonomy, which is a
classication system that establishes a list of environmentally sustainable
types of economic activity. This helps the EU increase sustainable investment
and implement the European Green Deal. The EU taxonomy provides
companies, investors and policy-makers with relevant denitions by which
economic activities can be considered environmentally sustainable.
Thus, it creates security for investors, protects private investors
from «green» laundering, helps companies with the transition to green
technologies, mitigates market fragmentation and attracts investments.
The taxonomy regulation was published on June 22, 2020 and entered into
force on July 12, 2020 (European Commission, 2019b).
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 28-48
The banking sector has a signicant impact on green nance. It is
expedient for banking institutions to develop a strategic green vision, green
obligations; implement the organization and culture in accordance with
the values of the green economy; to expand the oer of green products;
improve climate and ESG risk management mechanisms; develop green
digital nance and engage stakeholders.
The policy of green lending has a signicant and positive impact on the
implementation of environmental innovations by enterprises. Currently,
banks provide a wide range of services related to the nancing of the green
economy: assessment of environmental risks, provision of «green loans»,
issuance of green bonds, implementation of green ratings, green insurance,
environmental stress testing.
One of the most eective nancing tools are green bonds, which have
been developed specically to support climate and environmental projects.
The green bond market is a dynamic and rapidly growing market. Regulators
are also looking at the green bond market as one of the main nancing tools
for the green economy.
The establishment of «green bond» standards goes in this direction
with the aim of making it easier for investors and companies to identify
sustainable investments and ensure condence. The EU Green Bond
Standard (EU GBS) is based on the European taxonomy. Europe was
the rst region to issue the rst green bonds in 2007, with the European
Investment Bank as the main rst bank in this market.
Nowadays, the EIB remains the largest supranational issuer and
leads the application of the EU taxonomy and the EU GBS, spreading EU
standards around the world. In the developed Climate Bank Roadmap for
2021-2025, the EIB commits to gradually align CABs and Sustainability
Awareness Bonds (SABs) with the proposed EU GBS.
Organizations that certify green bonds seek to reassure investors that
their certication standards are transparent and based on scientic criteria.
Thus, certied bonds tend to be more attractive to a wider range of socially
responsible investors. Some regulators are proposing to supplement the
sustainability standard by including social and governance factors. The
European Central Bank (ECB)on 5 November 2021 proposes to assess
and monitor over time the attractiveness of EU GBS compared to market
standards.
At the same time, it is important to identify problematic points for both
investors and issuers when issuing green bonds. For investors, the main
challenges are the determination of truly green investments and obtaining
complete information. For issuers, this can be additional costs and potential
risks.
40
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
The main obstacles to the development of green bonds are: 1. the need
to reach an agreement on the joint denition of environmental projects
and environmental bonds and their assessment methodology; 2. complex
procedures for reviewing and evaluating green bonds. 3. the diculty of
nancing green projects and their small number. In general, the green bond
market also has potential risks that must be leveled at the expense of the
right policy: potential possible «green washing»; heterogeneity and lack of
transparency; insucient number of green bonds, demand exceeds supply;
the need to increase investment in important projects (Green Finance &
Development center, 2022).
Currently, there are the following types of bonds (loans) that are used
for sustainable development: green bonds/loans; bonds/loans related to
sustainable development; blue bonds/loans; transitional nancing; green/
sustainable funds; green structured nancing; green capital
Climate and sustainable bonds occupy a larger share in the nancing
structure of the green economy, the volume of which has a steady upward
trend. In 2021, annual green bond issuance surpassed the half-trillion mark
for the rst time, amounting to US$522.7 billion, a 75% increase over 2020
(Climate Bonds Initiative, 2022).
Figurе No. 5. Сlimate Bonds by Insure type
Sourse: (Climate Bonds Initiative, 2022).
Green bonds issued the most in Europe, while the Asia-Pacic region
had the largest annual growth (129%). The US is the leader in terms of
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Vol. 40 Nº 75 (2022): 28-48
emissions, while China is the second largest emitter ($199 billion). Most
of the issue is carried out at the expense of Non Financial corporate and
Financial corporate (Climate Bonds Initiative, 2022).
With a large-scale green bond issuance program, the EU is demonstrating
condence in the green bond market as an eective source of nancing
for the green economy. But it is especially important to support the green
transformation of small and medium-sized companies. Among professional
associations in the EU, there is no consensus on the implementation of
standards and their obligation for such enterprises.
The Federation of European Securities Exchanges (FESE) recommends
the implementation of special benets and incentives to facilitate the
issuance of EuGB by small and medium-sized enterprises, and emphasizes
the importance of having a standard compatible with other taxonomies and
international frameworks. Together with the European Banking Federation
(EBF), the EU supports the proposal to introduce a voluntary GBS.
Accountancy Europe supports the EU’s mandatory GBS and
recommends the creation of a centralized European accreditation system
for external assessment, building on existing national schemes and
processes. The organization also puts forward proposals for reporting on
actual environmental impact on a regular basis and proposes the creation
of independent third-party assurance on distribution and environmental
reporting with the development of standards for sustainable development
bonds incorporating environmental, social and governance objectives.
“Better Finance” believes there should be a degree of exibility for
companies not included in the taxonomy but who want to raise money for
specic, eective environmental projects, and oers transitional tax breaks
to encourage market development (European Parliament, 2022).
In the coming years, regulatory requirements for disclosure of
information about environmental and climate risks will become more
stringent. Central banks have already begun to conduct pilot climate stress
tests en masse, and they will undoubtedly become more complex in the
future. The market for ESG data is also developing and is expected to grow
signicantly as regulation grows and becomes more complex in the future.
Consulting rm Opimas has set the value of the ESG data market to exceed
$1 billion in 2021 for the rst time as demand for ESG data and products
continues to grow rapidly. Also, information disclosure is stimulated by such
initiatives as: The Corporate Sustainability Reporting Directive (CSRD), a
proposal of the US Securities and Exchange Commission (SEC) regarding
the disclosure of climate information. This leads to increased sustainability
disclosure requirements for investors. ESG disclosure has strong positive
relationships with corporate performance, return on assets, and market
value components of a company’s nancial performance (Tolliver et al.,
2021).
42
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
There is also a global initiative, The Climate Data Steering Committee,
which contributes to simplifying access to data, including through the
EU’s planned European Single Point of Access - a database for sustainable
development and nancial data. The regulation of ESG rating providers
is important, the increase in the amount of data and digital platforms is
pushing the use of articial intelligence for reporting and modelling the
development of world events. But the data of the platform should be open
and not allow obtaining asymmetric information for market players,
stimulate small and medium-sized rms to use this data and implement
innovations, reduce barriers to market entry.
According to the NGEU, each country must develop its national
investment and reform plans with the mandatory inclusion of the digital
transition and environmental initiatives, reduce dependence on fossil fuels,
increase energy eciency and align these plans with the EU taxonomy.
Development of an action plan for sustainable nancing is an urgent
need. Special attention should be paid to standardization and disclosure of
information. To ensure integrity in the market, the High-Level Expert Group
on Sustainable Financing (HLEG) was established in 2016. It provided
advice on: channeling public and private capital to sustainable investments;
determining the role of nancial and supervisory bodies in the stability of
the nancial system in connection with climate risks; development and
development of the European Green Policy. Subsequently, the EC convened
a Technical Expert Group on Sustainable Finance (TEG).
A digitalization policy in tandem with a ooded policy can have a
signicant positive synergistic eect. Since it is digitalization that is the
main driver of innovative processes and an opportunity to achieve social
and environmental sustainability. The implementation of digital solutions
can signicantly accelerate the transition to a green economy. In addition, it
is digitalization that makes innovations more transparent, cross-industry,
allows them to be quickly distributed and manage data for the purposes of
sustainable development.
There is a positive relationship between public-private partnerships
(PPPs) and project nance (PF). PPP and PF approaches are the most
important tools for the development of new infrastructure systems and
there is a recognized need to develop green resilience infrusructure
development carried out on the basis of public-private partnerships. Thus,
the introduction of sustainable nancing mechanisms will allow to increase
eco-innovation projects.
Dialogue and close cooperation between a wide range of stakeholders
from the public and private sectors will be critical to achieving the goals of
sustainable development. The Platform on Sustainable Finance plays a key
role in enabling such collaboration, bringing together the best practices of
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Vol. 40 Nº 75 (2022): 28-48
the corporate and public sectors in the eld of sustainable development,
industry, as well as academia, civil society and the nancial industry.
IPSF oers a multi-stakeholder forum for dialogue between policymakers
responsible for developing regulatory measures for sustainable nance to
help investors identify and pursue sustainable investment opportunities
that truly contribute to climate and environmental goals (EU Green Bonds,
2022).
Today, the EU is investing more than 1.8 billion euros in 17 large-
scale innovative clean technology projects. The Innovation Fund aims to
create the right nancial incentives for companies and public authorities
to invest in the next generation of low-carbon technologies and to give EU
companies the rst priority to become global technology leaders (European
Commission, 2022c).
Developing alliances for innovation is important. The goal of Alliances
for Innovation is to develop digital skills that have become a prerequisite
for today’s labor market. In addition, the twin transitions proposed by
the Green Deal require changes in qualifications and curricula to meet the
demand for green skills to support sustainable development. To drive
innovation, the focus will be on digital skills as they become increasingly
important in all occupations across the labor market. In addition, the
transition to a circular and greener economy must be supported by
changes in qualifications and national education and training programs to
meet new professional needs for environmental skills and sustainable
development (EUcalls, 2022b).
Conclusion
The transition to a low-carbon economy requires increasing social and
political awareness of society regarding the environment. It is important to
cooperate with other companies, industries, countries in joint research and
development. Innovation today is a very interactive process. Cooperation
leads to the expansion of the scope of development projects and increases
the company’s competence. A strong and reliable system of environmental
innovations ensures technological sustainability and the realization of the
goals of sustainable development.
It is important to increase the level of knowledge and skills of
entrepreneurs regarding eco-innovations with the help of infrastructure,
small and medium-sized enterprises need special attention and support
(Ruralia institute, 2022). The main trends in the development of the green
economy are: 1. gradual abandonment of non-green assets in nancial
portfolios; 2. increasing the nancing of eco-innovations and improving the
44
Halyna Matviienko, Olha Pylypenko, Anatolii Putintsev, Olena Chumak y Svitlana Gordiichuk
European Union policy on nancing eco-innovations in the transition to a green economy
mechanisms of adaptation to climate change in all sectors of the economy;
3. reduction of state support for polluting sectors and reorientation towards
green energy; 4. nancing and supporting ESG information disclosure; 5.
harmonization of the taxonomy of green nancing with the provision of
uninterrupted capital movement (Green Finance & Development center,
2022).
The main challenges for nancing eco-innovations in the coming years
are: 1. the need to implement new initiatives due to the geopolitical and
energy crisis in Europe; 2. improvement of international cooperation
between countries for joint developments and nancing; 3. development
of multilateralism in the spread of eco-innovations and access to digital
databases. Sustainable nancing helps to achieve sustainable development
faster and should become part of nancial decision-making at all levels.
The formed green nancing policy should support the development
of climate-neutral, energy- and resource-ecient and cyclical projects.
However, it is necessary to form the infrastructure and develop a policy
of nancing the transformation to a green economy and eco-innovations
(European Commission, 2022d). The role of the state in these processes is
only growing and is fundamental because of its ability to mobilize national
resources and encourage innovation.
The eective activity of the state should be complemented by the private
sector, the nancing policy of the green economy should be focused on
stimulating investments from the private sector. But it is necessary to
ensure the conditions of a stable legal framework and intellectual property
rights (World Bank, 2021). It can be noted that the development of eco-
innovations is an important factor in the further economic development
and one of the drivers of the transition to the knowledge economy.
Eco-innovations generate synergistic eects, solving economic and
climate challenges, strengthening connections and establishing a common
space between people, countries, economies and the environment.
Countries and enterprises realized the need to transition to green resilient
infrastructure development based on green innovations. It is this approach
that will help make a qualitative leap in development, open new sources of
job growth, and increase resilience to shocks.
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