Topic focus

Transformation financing

In addition to traditional forms of financing, new ways and instruments must be found for the successful and rapid implementation of companies' transformation projects, as banks only have limited equity available. The positive effects of green bonds and sustainable finance mainly benefit larger or big companies, especially those that are active on the capital market.

For SMEs, on the other hand, relationship-based financing and the division of labor between regionally oriented small and medium-sized banks on the one hand and large national or international banks on the other are crucial: Banks can support the success of their customers' transformation more sustainably through long-term business relationships than internationally oriented bond investors.

Therefore, the specialization advantages of house banks and capital market investors should be used and new instruments of transformation financing should be strengthened as a link between the banking and capital markets in line with the idea of the European Capital Markets Union.

What magnitude of investment is requirement?

Major efforts are required for the sustainability and transformation of the economy. The climate-neutral and digital transformation in NRW requires high volumes of investment and financing from companies and the public sector.

According to various scenario studies, the European Union will have to invest between 758 and 1055 billion euros annually in industry, the energy sector, transport and the construction sector by 2050 in order to achieve successful decarbonization. For NRW, this means annual investments of between 61 and 85 billion euros.

Who finances this investment?

In principle, private capital is available in NRW to finance the climate-neutral and digital transformation, a resilient energy supply and renewable energies. In view of the necessary scale and the transformation risks, the money from financiers who have claims against customers, as is the case with banks and insurers, cannot simply flow into transformation projects.

Instead, the entire financial ecosystem is needed for risk sharing to work. To achieve this, investors and capital seekers in NRW must come together. Reliable framework conditions and appropriate, risk-appropriate profitability prospects for companies are necessary for the transformation of business models.

In order to finance the digital transformation in NRW, not only must high investment volumes be financed, but the appropriate financing instruments must also be available for the respective business models. These include, for example, loans with liability exemptions, mezzanine capital, funds, private equity and venture capital.

The various challenges for individual company sizes and innovation stages are multifaceted. Financial products must be further developed in a targeted manner in order to find the right financing mix in each case. After all, a start-up with a new business idea needs a different type of financing than an established medium-sized company whose products are to become digital and climate-neutral.

How does Fin.Connect.NRW deal with the topic of financing?

Fin.Connect.NRW focuses on technical discussions and further developments in transformation financing. A regular exchange of experience and knowledge between the stakeholders takes place in various event formats.

To this end, information from practice and science is prepared and concrete recommendations for action are developed for banks, companies (especially SMEs) and for state policy.

Fin.Connect.NRW deals with the topic of financing in the "Financing and Funding" specialist group, in which members of the competence center can network with relevant stakeholders on specific topics and provide important impetus for NRW as a business location.

In addition, the topic of financing plays a central role in the Transfer specialist group, which focuses on the transfer of practice-oriented knowledge on transformation financing in the SME and banking landscape.

Downloads

Report of the German Economic Institute Download as PDF
Financing of wind energy through investment funds Download as PDF

Studies on the topic

Fin.Connect.Compact 2

Banks' equity as a bottleneck factor for financing the transformation?

Fin.Connect.Compact 2 09/23/2024

Banks' equity as a bottleneck factor for financing the transformation?

To transform the economy, companies need to finance huge volumes of investment. As the majority of them are not active on the capital market but are financed by bank loans, there is a high demand for credit from banks. The brief study analyses the resulting capital requirements of banks for…

Fin.Connect.Info

Subsidies as part of transformation financing

Fin.Connect.Info 08/20/2024

Subsidies as part of transformation financing

This practical information provides an overview of what companies should know about public subsidies in order to be able to use them for their investments in climate neutrality and digitalisation. The article provides practical recommendations for companies. This includes the recommendation to…

Fin.Connect.Compact 01

How high are the investment requirements for the climate-neutral and digital transformation in NRW?

Fin.Connect.Compact 01 07/11/2024

How high are the investment requirements for the climate-neutral and digital transformation in NRW?

At least 100 billion euros must be invested annually in North Rhine-Westphalia (NRW) to finance climate-neutral and digital transformation. This is the result of this meta-analysis of existing studies on the need for investment in climate neutrality and the need for investment in digitalization. In…

Fin.Connect.Blog

Transformation Financing from the Perspective of Financial Supervision

Fin.Connect.Blog 02/15/2024

Transformation Financing from the Perspective of Financial Supervision

Transformation financing is also a major topic for the financial supervisory authorities. The financial supervisory authorities are not pushing the topic of sustainability independently. However, they must increasingly integrate it into their supervisory work. This is because there is a need for…

Fin.Connect.Blog

The Energy Dependency of Bank Loans

Fin.Connect.Blog 02/02/2024

The Energy Dependency of Bank Loans

The energy dependency of bank loans is currently a highly relevant issue, not only because of climate protection policy, but also for security of supply. A number of banks are threatening to withdraw from loan commitments in the course of the transformation unless they are climate-neutral. For this…

13 November 2024

Institut der deutschen Wirtschaft

Fin.Connect.NRW specialist event: A better financing environment for start-ups and innovations in NRW

12 September 2024

Bergische IHK, Heinrich-Kamp-Platz 2, 42103 Wuppertal, Plenarsaal

Sustainability reporting - burden or opportunity? CSRD, taxonomy and practical examples

29 August 2024

Institut der deutschen Wirtschaft

Fin.Connect.NRW specialist event: Banks are becoming climate-neutral - What are the consequences for companies?

28 August 2024

Online via Microsoft Teams

Companies in discussions with banks: Sustainability criteria for lending

22 August 2024

Bundesbank Düsseldorf

Transformation financing

What magnitude of investment is requirement?

Who finances this investment?

How does Fin.Connect.NRW deal with the topic of financing?

Links

Downloads

More on transformation financing

Fin.Connect.NRW specialist event on 29 August 2024: Banks will become climate neutral: What are the consequences for companies?

VÖB Service: EU taxonomy made easy - savings banks use TAXO TOOL

KFW: So far only a few SMEs have been approached by banks about sustainability information - but demand is likely to increase

Top 3 position for the NRW region in the "European Cities and Regions of the Future 2024" ranking

2024 will be the year of transformation (-financing)!

Studies on the topic

Banks' equity as a bottleneck factor for financing the transformation?

Subsidies as part of transformation financing

How high are the investment requirements for the climate-neutral and digital transformation in NRW?

Transformation Financing from the Perspective of Financial Supervision

The Energy Dependency of Bank Loans

Events on the topic

Fin.Connect.NRW specialist event: A better financing environment for start-ups and innovations in NRW

Sustainability reporting - burden or opportunity? CSRD, taxonomy and practical examples

Fin.Connect.NRW specialist event: Banks are becoming climate-neutral - What are the consequences for companies?

Companies in discussions with banks: Sustainability criteria for lending

Sustainability, Digitalisation and Regulation - Twin transformation in the financial world