Access to Green Finance

Cultural and creative enterprises often need help with access to finance. In the EU’s policy documents, this is often attributed to their higher perceived risk, lack of tangible assets to provide collateral, and difficulty of valuing the sector’s intangible assets. Eviota aims to support access to green finance, which can alleviate the problems of many businesses.

The Creative Europe’s guarantee facility for the cultural and creative sectors and industries was based on the assumption in 2016 that the financing gap of the CCSIs was up to 1 billion euros per year ¹. In our view, this gap increased in the 2020s because the earlier estimate assumed a “business as usual” and did not estimate the transition costs to zero carbon.

The sustainable finance package estimates that to make the EU climate-neutral by 2050, Europe needs between €175 to €290 billion in additional yearly investment in the following decades². Because according to the European Investment Fund, with varying sizes in European countries, on average, 5.5% of the EU value added is related to cultural and creative sectors. We assume that the industry should be able to absorb about €8-15 billion for its transition to a more sustainable development path³. While this “financing gap” is based on a different methodology and should be seen more as a “gross financing need”, which includes the replacement of infrastructure and amortisation of infrastructure, which is in corporate finance seen as business continuity by any of means, the financing gap is enormous.

The European Green Deal has the financing capacity to meet this demand⁴. Still, in our experience with music and audiovisual enterprises, the absorption capacity towards sustainable finance is lower than with traditional, non-sustainable finance. The Survey on access to finance for cultural and creative sectors: evaluate the financial gap of different cultural and creative sectors to support the impact assessment of the Creative Europe programme identified mainly business model problems and small enterprise size as the main culprit. Our Eviota for Music highlighted another critical problem: oversimplified management controlling/reporting systems that cannot support the creative enterprise’s and its stakeholders’ business decisions. The oversimplified accounting system must provide more information for a loan application and a green loan application.

Our Eviota system hits two birds with a stone: we improve the quality of the management information and connect it with reliable sustainability indicators. We are developing ways to adhere to the requirements of the Corporate Social Responsibility Directive⁵ (i.e., the modification of the EU Accounting Directive and auditing rules) within the scope of simplified accounting typical for microenterprises. We are working on an objective measurement tool that can be used both by creative enterprises to convince their public donors, corporate sponsors, banks, insurers, and investors that their economic activities are sustainable; or to work for financial intermediary organisations to assess the financial, environmental, social and governance sustainability of their potential lenders or investees.