The EU’s recovery fund and new strategy on sustainable finance will expand the role small firms can play in building back the European economy in a sustainable manner, EU officials said.
Frequently labelled as the “backbone of the European economy”, small and medium-sized enterprises (SMEs) represent around 90% of the EU’s businesses.
However, the COVID-19 pandemic forced many small firms to close, especially in the hospitality and tourism sectors.
As member states are phasing out the measures adopted to cushion the impact of the virus, the European Commission stressed the importance of maintaining the support for SMEs during the transition in a “clever” and targeted manner, said Geralndine Mahieu, acting director at the Commission’s directorate-general for Economic and Financial Affairs.
For SMEs, the damage caused by the pandemic was not only higher, but building back pursuing the ‘green’ and digital transitions could be also more difficult, Mahieu explained in an event hosted by EURACTIV.com this month.
She explained that Brussels and national governments have a “duty” to support them with infrastructure, for example on the technological front, and with the right incentives.
SMEs benefited particularly from the EU’s SURE mechanism to support workers and avoid massive laid-offs during the pandemic.
Looking forward, the EU will help small and medium-sized companies make the ‘green’ transition by facilitating access to finance and ensuring the implementation of national recovery plans.
The new sustainable finance strategy put forward by the Commission in early July included new tools and incentives to promote SME’s access to ‘green’ investment in capital markets, said its executive vice-president, Valdis Dombrovskis.
But Maltese Socialist MEP Josianne Cutajar pointed out that many SMEs, specially smaller firms, perceive sustainability goals in a “negative” manner, as it represents additional cost they need to cover at a time of limited resources.
She supported the idea of “sustainability advisors” that could assist and inform businesspeople about the opportunities of the ‘green’ transition.
In regards to the national recovery plans, Mahieu said that many of the reforms proposed by member states will indirectly benefit small companies, including those measures to improve the business environment or local initiative to renovate buildings. In addition, some countries including Spain have earmarked part of the financing for SMEs to big projects like the hydrogen initiative.
Milena Angelova, a member of the European Economic and Social Committee (Employers group), however, “regretted” that only 5% of the national recovery plans offered direct support to SMEs.
She stressed that these type of companies prefer grants to other financial instruments, like those outlined by the sustainable finance strategy.
In addition, she warned of the burden that the additional financial and sustainable reporting could put on smaller companies in the recovery phase.
[Edited by Benjamin Fox]