25 February 2022 - 11:50
Standing by European small and medium-sized enterprises
From the Next Generation EU’s SME strategy to Generali’s initiatives to support businesses hit by the pandemic: here is how to help the companies that make up the bedrock of the European economy, while enabling them to grow again, sustainably
Covid-19 has dealt a heavy blow to small and medium-sized enterprises across Europe, many of which were, and still are, at risk of being wiped out by the tsunami. One of the immediate economic consequences of the pandemic was a sudden lack of liquidity that particularly affected SMEs, and that discourages banks from lending them money, especially because of the sudden increase in perceived risk. That is why EU guarantees are needed to support these loans, together with reforms and investments dedicated to SMEs.
Financing and investment guarantees: EU measures to support SMEs
The Next Generation EU contains a specific package in this regard: the Recovery and Resilience Facility (RRF),1 which currently includes measures for the benefit of SMEs with an estimate of at least € 44 billion, but overall available resources could amount to around109 billion euros, equal to around 24% of the total expenditure. In addition, the Next Generation SME Strategy2 was approved on 19 January to urge the EU and Member States to provide SMEs with financial support as well as a favourable business environment with guarantees of equal conditions, the opportunity to win public contracts and investments, and streamlined administrative procedures, including for an easier access to EU funds.
By Markus Spiske su Unsplash
There’s more than Next Generation EU
But the tools provided by the Next Generation EU are not the only ones available to SMEs. In June 2020, the European Commission released 1 billion euros from the InvestEU Programme3 and the total estimated available funding now available of 8 billion euros will enable the European Investment Fund (EIF) to issue special guarantees to encourage banks and other lenders to provide liquidity to at least 100,000 European SMEs affected by the economic impact of the pandemic.
Also worthy of note is the Employment and Social Innovation Programme (EaSI),4 a funding instrument aimed at promoting a high level of sustainable and quality employment, guaranteeing adequate and decent social protection, combating social exclusion and poverty and improving working conditions.
What about the private sector and insurers?
The private sector can also provide support to the real economy. It is the case of insurance companies, which, with € 11 trillion of assets under management and solid expertise in long-term investments, can be investors and advisors supporting governments for the recovery and development of sectors such as the green and digital transformation.
They can also transfer solidity and resilience to the economic and social system, preparing for increasing systemic risks such as pandemics. In this sense, Generali has been actively engaged alongside public authorities in designing and implementing a Pandemic Fund, where the burden of systemic risks can be shared between national authorities, insurers, and capital markets. But the Lion's commitment on this front includes many other projects.
Investments, dedicated insurance solutions, and a culture of sustainability: Generali’s plan to revitalise European SMEs
Already in March 2020, Generali was among the first insurers to take action in the midst of the health and economic emergency, launching an anti-pandemic initiative that, during the year, identified ten investment opportunities constituting a total investment of € 1.05 billion. The insurance industry, national governments and institutions have therefore collaborated in covering the costs associated with business shutdowns.
Another important step was taken in February 2021, when Generali presented Fenice 190, a five-year € 3.5 billion investment plan, including € 1.05 billion invested in 2020, to support the relaunch of European economies affected by COVID-19. Resources dedicated to sustainable growth through international investment funds focusing on infrastructure, innovation and digitalization, SMEs, green housing, health care facilities and education.
Generali’s commitment includes insurance solutions especially dedicated to SMEs, which are key in the new strategic plan Lifetime Partner 24: Driving Growth. These are innovative and modular tools, enabling small and medium-sized enterprises to bridge their protection gap, for example through cyber risk protection coverage and parametric solutions in the agricultural sector. The offer also includes risk advisory services which leverage the most up-to-date technology and are enhanced by the significant assistance role of the Group’s agents network. A hallmark and fundamental resource for Generali’s ambition to be a Lifetime Partner to its customers.
SME EnterPRIZE, promoting sustainability in small and medium-sized enterprises
For a real green recovery and just transition, all actors of the European business fabric need to integrate sustainability into their business models. This is all the more important for SMEs, which account for over 99% of companies in the EU. It is not only a matter of caring for the environment and making proper use of resources, but also of taking care of communities and of the well-being of employees and their families.
That is why Generali launched SME EnterPRIZE, the initiative created to support SMEs in the sustainable transition and in adopting a culture of sustainability, in line with the European Union’s ambition for a greener and more inclusive economy, by providing visibility to the best practices implemented and stimulating public debate on the topic. Yet another element in the Company’s commitment to supporting SMEs – a commitment that includes a continuous exchange of views with national and European institutions as well as with academia and the private sector. That way, it is possible to examine the challenges and development opportunities for a business segment that is key to the sustainable growth of the continent’s economy.