The Multiannual Financial Framework (MFF) is the European Union’s (EU) key strategic tool to shape public finance, guide long-term investment, and ensure policy coherence across the political agenda. Considering increasing global instability and the urgency of the green transition, the next MFF must provide clear answers for aligning public resources with climate and resilience objectives.
To remain globally competitive and reach its climate targets, the EU must close a growing clean investment gap. To ensure Europe’s industry and society are prepared for future generations and remain globally competitive, substantial investment of around €1.52 trillion is needed to fully realise the EU’s ambitions. To address the scale and urgency of required investments, the next MFF should allocate 50% of its budget to climate and environmental spending. Despite programmes like InvestEU and the Innovation Fund, persistent barriers, ranging from regulatory uncertainty to limited access for smaller actors, are hindering capital mobilisation. Only by strengthening the role of public finance in de-risking private investments, innovation can be accelerated to secure a resilient and prosperous Europe that leads the way.
To achieve this, the MFF’s strategic role must be reinforced by embedding financial instruments that are predictable, inclusive, and performance driven. Guarantees and equity tools targeted at sustainable retail banks that support the real economy can unlock significant private capital. These institutions bring proximity, credibility, and a deep understanding of transformative finance, yet they
remain underserved by EU instruments to truly empower their role.
To ensure budgetary credibility and impact, the MFF must establish a more consistent framework for sustainable spending, with three key reforms needed:
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Strategic financial instruments must be scaled up in the next MFF to de-risk clean investments, strengthen future-fit banks, and crowd in private capital, especially through guarantees and tailored equity tools.
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Sustainability must be structurally embedded in MFF governance by ensuring climate considerations are consistently integrated across the budget, enforcing the Do No Significant Harm principle, and linking payments to measurable green and social outcomes.
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Public-private collaboration must be strengthened through simplified procedures, inclusive design, and performance-based incentives, making EU funding and financial instruments more accessible to smaller, mission-driven financial institutions.
If properly structured, the next MFF can direct essential funding towards climate and environmental goals, strengthen Europe’s strategic autonomy, and mobilise private capital for the green transition. This is the opportunity to align the EU’s financial framework with its long-term vision for a simpler, more competitive, climate-neutral and just Europe.
Please find more information and a detailed assessment in the position paper from July 2025.
Financed by
Sustainable Banking Coalition
Rue du Commerce 72 - 1040 Brussels
info@sustainablebankingcoalition.eu
Transparency register: 909433798470-50