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Pillar 1 — Contribution to EFSI policy objectives

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Pillar 2 — Quality and Soundness of the project

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Pillar 3 — Technical and financial contribution

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Pillar 4 — Complementary indicators

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‘Growth’ (indicator 1 — ranging between 0 and 100 points): The contribution of a project to sustainable growth comes from its socioeconomic impact in terms of costs and benefits. Where possible the economic rate of return (‘ERR’) is quantified using best practice in the economics profession. It considers the project's socioeconomic costs and benefits, including its spillover effects (e.g. positive Research, Development and Innovation, long term climate benefits or impact on the labour market or negative environmental effects). However, there are also projects whose ERR is difficult to estimate. For example, a number of sectors are driven by compliance with EU standards and the primary issue is to ensure that a least cost solution is adopted rather than to assess the overall economic return (an example is water and waste treatment). For these sectors the assessment of quality is based upon sector benchmarks. For operations grouping framework loans the assessment is based predominantly on the investment strategy and criteria used by the promoter.

In general, the required hurdle rate of return for EIB financing is 5 %. For a standard project an ERR of 5-7 % is considered ‘acceptable’, 7-10 % ‘good’, while a project with an ERR above 10 % is considered ‘excellent’. However, the classification of results is also based upon some sectorial considerations. Those sectors currently considered being less environmentally sustainable (such as certain transport modes) would only be financed if they are considered ‘good’ from an economic interest point of view, meaning a minimum ERR of 7 %. Conversely, for selected projects with long-term climate benefits, projects shall be considered possible for financing if they produce an ERR in the 3,5-5 % range — with the introduction of a ‘marginal’ category. The rating attributed to private sector projects, due to their risk-return profile, is set at ‘marginal’ for a rate of return of 5-7 %, ‘acceptable’ for 7-10 %, ‘good’ for 10-15 %, and ‘excellent’ for ERRs above 15 %. The ERR shall be calculated taking fully into account positive and negative externalities, including on environmental and climate change aspects. The hurdle rate may be adjusted by the Steering Board if there is evidence of it being out of line with its economically justifiable level and taking into account the long term economic situation.

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‘Promoter capabilities’ (indicator 2 ranging between 0 and 30 points). These capabilities are assessed through a qualitative judgement on the promoter's ability to deliver the project in a timely, efficient manner also considering the relevant institutional context and any technical assistance to be provided. This is particularly important for framework loans, where prioritisation criteria, project implementation and control capacity/capability and monitoring and control systems shall be assessed, as well as management of environmental, competition and public procurement requirements.

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‘Sustainability’ (indicator 3 — ranging between 0 and 30 points): The EIB standards require that projects not only are economically viable and thus contribute to growth, but also that they are sustainable in environmental and social terms. It is critical that high environmental and social standards are maintained. These are assessed through the detailed guidelines set out in the Environmental and Social Practices Handbook (2).

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‘Employment’ (indicator 4 — ranging between 0 and 40 points): The employment indicator covers employment during construction and during operation. The employment needed during construction is estimated using industry specific coefficients. The assessment of employment during operation is to be achieved through judgement by the project analysts comparing the project with sector experience. The following table summarises the rating split between employment during construction as well employment during operation. For example, projects with high labour content during construction include some civil works (notably dispersed rehabilitation works), energy efficiency, and forestry. Higher employment during operation is associated with some industrial projects.

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Capacity and soundness of the intermediary and quality of the operating environment.

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Increasing access to finance and improving financing conditions, including for the final beneficiaries.

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Employment at the level of final beneficiaries.

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‘Financial Contribution’, i.e. improving the counterpart's funding terms compared to alternative sources of finance (interest rate reduction and/or longer lending tenor).

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‘Financial Facilitation’, i.e. increasing the efficiency of other stakeholder support; leveraging third-party resources in particular from private sector; signalling effects for other lenders).

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‘EIB Contribution and Advice’, i.e. providing non-financial services in the form of expert input/knowledge transfer to facilitate project implementation and to enhance institutional capacity as well as to advise on financial structuring. This could be provided under the European Investment Advisory Hub and any other existing advisory facility such as JASPERS, ELENA or Horizon 2020 Innovfin Advisory or through other appropriate means such as project implementation support.

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Additionality. It shall be specified whether the operation is a special activity or a normal operation. For normal operations, further explanation will be provided justifying additionality as defined in Article 5 of Regulation (EU) 2015/1017;

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A set of indicators related to the macroeconomic environment where the project is taking place, allowing, inter alia, Investment Committee members to assess the potential impact on economic disparities within the Union and long term growth potential: i) indicators specific to the investment situation; ii) the Output Gap, calculated on the basis of the Ecofin Council-approved production function methodology iii) Potential GDP growth; iv) indicators specific to unemployment: the unemployment rate, the year-on-year change in the unemployment rate and a comparison with the EU average; v) the composite cost of borrowing indicator for non-financial corporations, or where those are not available, bank-interest rates to non-financial corporations. In light of these indications, the Investment Committee shall pay a particular attention to the projects that help addressing economic disparities within the Union;

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The expected multiplier effect of the EFSI intervention;

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Amount of private finance mobilised;

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Cooperation with National Promotional Banks and support to Investment Platforms;

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Co-financing with European Structural and Investment Funds;

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Co-financing with other EU instruments (i.e. Horizon 2020, Connecting Europe Facility, etc.);

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Energy efficiencies realised (for relevant operations);

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Climate action indicator (for relevant operations).