Green financing as a way to support businesses in the ESG transformation

Green transformation is not just a goal – it has become a necessity for businesses around the world. However, implementing strategies in line with ESG principles requires significant financial investment. To support businesses in this revolution, both state and private-sector financial institutions offer a variety of support programmes. These initiatives make it possible to meet increasingly stringent environmental requirements as well as fostering growth based on spreading sustainable development standards and implemented innovations.

Below are the key ‘green financing’ initiatives aimed at supporting the transformation in the spirit of ESG:

• European Funds for the Modern Economy programme (known by its Polish acronym, FENG)
  This programme is aimed at businesses moving towards sustainable development and a circular economy, including those developing new business models in this direction. The goal of FENG is transforming the economy towards green technologies. It covers financing for R&D investments (developing a new product, for example) or implementation work (such as building a new production line).

One of the priorities of FENG is the ‘Greening of Businesses’, which means supporting only those projects that directly contribute to the goals of the European Green Deal – climate neutrality, green economic transformation, and sustainable development. Businesses can tap into a green guarantee fund, environmental credits, and IPCEI (Important Projects of Common European Interest) projects. The investments made should significantly contribute to achieving environmental goals, as confirmed by appropriate indicators, such as reducing greenhouse gas emissions by a specified percentage.

• Ecological Credit
  This is a form of co-financing within the FENG programme, implemented with the participation of financial institutions (banks). The ecological credit is dedicated to businesses investing in environmentally friendly technologies, such as photovoltaic systems or energy management systems. As defined in the terms of this form of funding, the credit can be used to modernise existing infrastructure. The result of this modernisation must be a reduction in primary energy consumption in the modernised area by at least 30% compared to current consumption. Ecological credit is available to businesses operating in Poland that meet the criteria of micro, small, or medium-sized enterprises or small mid-caps or mid-caps, and have creditworthiness. Small mid-caps and mid-caps are new categories of beneficiaries of the programmes, related to employment criteria (up to 499 employees – so-called small companies of medium capitalisation, small mid-caps, and medium capitalisation companies with up to 3,000 employees – mid-caps).
• LIFE Programme
  The LIFE Programme is a financial instrument of the EU (managed by one of the European Commission’s agencies) dedicated to co-financing projects in the field of environmental protection, including nature protection, and addressing human impact on climate and adaptation to climate change. The funding is available to businesses, institutions and NGOs. The programme supports projects related to the circular economy, biodiversity protection and combating climate change. In the 2021–2027 edition, the LIFE Programme is divided into two areas: ‘Environment’ and ‘Climate Action’.The form of assistance includes both grants (minimum amount of 50,000 złotys) and loans (minimum 200,000 złotys). The maximum funding level is 60%.

• Biznesmax Guarantee
  This form of financing involves obtaining a free guarantee for the repayment of an investment or working capital loan, securing up to 80% of the loan. Another option within the Biznesmax programme is the possibility of receiving a 20% subsidy for the investment loan principal or a 5% annual subsidy on interest for a working capital loan (for a maximum two years). This support tool is dedicated to micro, small, and medium-sized enterprises, and small mid-caps and mid-caps. These guarantees or subsidies are intended for co-financing eco-innovative investments, which include the introduction of new or significantly improved products, services, processes, organisational methods, or production methods that bring environmental benefits, or implementing renewable energy installations or a circular economy.

• ELENA Initiative
  The ELENA Initiative is funded by the EU’s Horizon 2020 programme and managed by the European Investment Bank, which provides technical and financial support for projects related to energy efficiency and renewable energy sources. In Poland, the Bank Ochrony Środowiska S.A. is the entity to which to apply for funding. ELENA grants finance 90% of the costs of technical investment documentation. The funding covers the preparation of analyses and technical documentation necessary to begin investments, such as improving energy efficiency in buildings owned by companies (thermal modernisation combined with renewable energy sources, changing energy sources to more ecological ones and replacing devices, installations, or technological lines with more efficient ones). Grants are available to SMEs and mid-caps.
• Funds from the National Recovery Plan (KPO)
  Part of Poland’s National Recovery Plan (KPO), approved by the EU, with 20% of KPO funds allocated to businesses. Grants and loans may be awarded for implementing environmental technologies and innovations. However, funding is primarily intended for large entities employing at least 250 employees, or consortia consisting of at least one large enterprise and one research organisation. The minimum funding amount is 10 million złotys. The requirements for this programme are quite strict, including meeting the criteria of innovation and market introduction (commercialisation), and the investment must be completed by the end of March 2026. Regarding environmental conditions, the project should aim to create a more efficient economy, such as increasing the amount of recyclable raw materials, reducing the use of primary raw materials in production processes, or reducing the amount of waste sent to landfills.

Other sources of funding
In addition to the funding forms described above, individual banks and other financial institutions offer tailored ‘green products’, such as ‘green bonds’ or dedicated loans for financing investments based on sustainable development principles. The range of offerings for businesses is expanding, and it is expected that the coming years will bring more opportunities to obtain funding on preferential terms, as long as specific environmental standards are met.

Green financing is becoming a key tool supporting the transformation of businesses. It is important to remember the numerous detailed requirements associated with obtaining support. Nevertheless, the benefits of securing such funding can be seen as significant for the operation of the company. And obtaining this type of funding will signify that the company has embarked on the path of sustainable development.