MOVE.BG has published a special report, "Mission Green Innovation: A Prosperity Compass," which contains over 200 ideas for developing green innovation as a path to positive public development. The recommendations in the Compass are based on the ideas of 50 leading experts, who MOVE.BG brought together to formulate systemic solutions for the development of green innovation.
The five stops in the Compass
The Compass includes five stops on the road to public prosperity with the help of green innovation: Democracy, Education, Economy, Municipalities, and Finance. Each stop presents the ideas of leading Bulgarian experts with proven experience in the fields of science, business, sociology, the civil sector, the media, as well as representatives of political parties and the financial sector.
Today, we present the ideas from the Finance Stop, which is dedicated to targeted financial instruments, attracting businesses to co-finance the green transformation and financing green startups. This stop presents ideas on how the state and municipalities can attract investors, as well as how to support young entrepreneurs in their growth here in Bulgaria.
Finance Stop
The following experts took part in the panel dedicated to finance and green development:
- Kamen Slavov, Co-founder of SCION Society, Panel Moderator
- Ivaylo Stanchev, Editor-in-Chief of Capital
- Iskren Mitev, Director for Fundraising at the Bulgarin Entrepreneurial Association, Member of Parliament for We Continue the Change at the 47th, 48th and 49th National Assemblies
- Associate Professor Manyu Moravenov, PhD, Chief Executive Officer of the Bulgarian Stock Exchange, Co-founder of Green Finance and Energy Centre, Lecturer at the Higher School of Insurance and Finance
- Max Gurvits, Founder and Managing Partner of Vitosha Venture Partners
- Radoslava Maslarska, Chair of the Managing Board of the Bulgarian Association of Licensed Investment Intermediaries, Chair of the Board of Directors of Elana Trading AD
- Svetoslava Georgieva, Chair of the Board of the European Innovation Council (EIC Fund Board), Member of the Investment Committee of InvestEU, Executive Director and Member of the Managing Board of the Fund of Funds (2017-2020)
- Teodor Radonov, Head of the EIB Group office in Bulgaria
The experts participated in their personal capacity rather than as representatives of the institutions or organisations where they worked as of January 2025.
Before we present the ideas of the experts, let us have a look at this topic of the panel and the place of green development in it.
Green development and finance: why do we discuss them together
Providing the funds needed to implement climate policies is a key element of the successful attainment of their goals. Sustainable finance plays a crucial role in this process.
“Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects. Environmental considerations might include climate change mitigation and adaptation, as well as the environment more broadly, for instance the preservation of biodiversity, pollution prevention and the circular economy”, reads the EC overview of sustainable finance.
In the Eu approach, sustainable finance includes financing both the development of projects/activities that are already environment-friendly (green finance) and activities/projects transitioning to environment-friendly performance levels (transition finance).
Why is sustainable finance important?
Some 20-25% of the resources needed for a successful green transformation in the EU are expected to come from public funding and the remaining 80% need to be private investment. An analysis published in the blog og the European Investment bank reads that unlocking sufficient capital for green investment may be challenging because of the difference between “traditional” investments and green investment that tends to entail higher risks for financial investors because of the need to support new technologies that are still under development.
According to the estimates of the European Commission, additional investments of EUR 620 billion annually will be needed to meet the objectives of the Green Deal between 2023 and 2030. It will be necessary for the European Union to mobilise private savings on an unprecedented scale, and far beyond what the banking sector can provide, said Mario Draghi, former Prime Minister of Italy, former President of the European Central Bank and author of the important Report on the Future of European Competitiveness, the first pillar of which is closing the EU innovation gap.
“The innovation gap is at the root of Europe’s slowing productivity growth relative to the US. So, we must bring innovation back to Europe […] We also call for a profound review of how we spend public money on innovation in Europe. If spent wisely, public funds can be a powerful tool to launch breakthrough technologies. These technologies are often too risky or require too much financing for the private sector to undertake alone, especially in an environment like ours is where scaling up is typically difficult”, Draghi said in his address at the presentation of his report to the European Parliament.
Mario Draghi highlighted another serious challenge: EU companies invest much less in R&D than their US competitors and continue to use the same technologies as decades ago. In 2021, for instance, EU companies spent around EUR 270 billion less on R&D than their US counterparts.
What happens in Bulgaria?
Bulgaria will need substantial resources to modernise its economy that continues to be the most resource- and energy-intensive economy in the European Union, as pointed out in the previous chapter of this report dedicated to the economy and green development.
On the other hand, the results of the first national survey of green initiatives in Bulgaria
Green Solutions from Bulgaria 2024 commissioned by MOVE.BG suggest a positive trend with 42% of green startups report that they develop innovation which is unique globally.
However, green innovators encounter many barriers to their development according to the survey. Only 20% of green startups were supported with VC capital and a mere 7% received government support. As to the amount of leveraged equity, 38% of green innovative SMEs reported none and only 1% had leveraged over EU 1 million. More than 36% of innovative SMEs were in the scale-up phase and, still, over 40% had three employees on average, a significant impediment to unlocking their full potential.
Generally, financing Bulgaria’s green transition requires substantial effort and investment at all levels: central government, local authorities, financial sector, and businesses.
“Bulgaria’s green transition offers powerful geopolitical, socio-economic and financial advantages. Yet, the nation is facing substantial obstacles and lagging behind other Central and Eastern European countries. To secure a sustainable future, Bulgaria must take decisive action – both politically and financially – to build a stronger economy, enhance living conditions and promote a healthier environment. Achieving these goals hinges on mobilising robust political support for the transition, tapping into public finances beyond EU funding, boosting private investment, and fostering international engagement through participation in global initiatives”, reads the E3G analysis Financing Bulgaria’s Green Transition.
The opinion of experts
What happens to funding green development in Bulgaria?
The experts in the panel discussed two important topics: what new measures and approaches are needed to involve businesses in co-financing the green transformation at the central and local government levels, and what new measures and approaches are needed to fund green innovative entrepreneurial ideas.
The section below presents a summary of the opinions expressed by the panel participants.
The ideas are summarized and grouped together by the team of MOVE.BG without any claims that they have been approved unanimously by all participants in the panel.
Challenges
List of some major challenges as specified by the participants
- Insufficient involvement of Bulgaria in EU processes of developing sustainable finance
- Bulgaria is absent from the green bonds issuance map – in spite of the growing popularity of this financial instrument in the EU, Bulgaria has issued no significant green bond at the national or local level
- Lack of interest on part of municipalities in developing sustainable finance
- Lack of financial literacy among the population, including investment matters – there is exceptional growth of deposits without any investor behaviour by retail savers
- Lack of sufficient resources at the central and local levels
- Multiple administrative obstacles to starting up green entrepreneurial projects
- Lack of a well-developed market for alternative funding of green projects
- Small number of accelerator programmes focused on green innovation
- Unawareness of the EU programmes to support the development of innovation – lack of information about the ways to apply for support and lack of experience of entrepreneurs in preparing the relevant documentation, as a result of which Bulgarian innovators rarely apply for support from the large-scale programmes of the European Commission (e.g. the programmes of the European Innovation Council, the European Institute of Innovation and Technology, LIFE programme)
Solutions Compass
Ideas of the experts in relation to attracting business to the co-financing of green transformation at the central and local government levels
- Develop a roadmap with measures to promote private investment in green projects over the period from 2026 to 2050. The roadmap should be prepared by the end of October 2025. Set up a working group to draft the roadmap with the participation of all stakeholders, including representatives of the Ministry of Finance, the Ministry of the Environment and Water, the Ministry of Energy, the Ministry of Energy, the Ministry of Innovation and Growth, the Ministry of the Economy and Industry, the Ministry of Regional Development and Public Works, the Ministry of Agriculture and Food, the Ministry of Transport, the Ministry of Tourism, the Ministry of Health (the participation of all these ministries would ensure the implementation of a horizontal approach), representatives of the National Association of Municipalities in the Republic of Bulgaria, representatives of the business and financial sector, including the Bulgarian Stock Exchange and regulatory authorities, as well as representatives of science and civil society organisations
- Ensure that the roadmap builds on the principle of targeted involvement of investors in specific projects for the implementation of specific policies rather than general talks with the business sector about all measures and policies
- Introduce a special section in the roadmap on measures to incentivize private funding – introduction of tax allowances for investing in green projects
- Reduce corporate tax rates for investing in green technologies
- Introduce accelerated depreciation rates for green assets to reduce the capital expenditure burden
- Set up a working group to analyze the need and opportunities for green bonds issuance by municipalities – the working group should be established by the Ministry of Finance and comprise representatives of the National Association of Municipalities, the financial sector, including the Bulgarian Stock Exchange and the regulatory authorities, the relevant line ministries (see above), science, and the civil society sector. The experts in the panel highlighted the following advantages of municipal green bond issues: effective and transparent management of costs; greater openness to the operations of the municipality; access to information for a wide range of investors; attracting institutional investors in municipal funding operations; opportunities for secondary trading; easier exit from the investment
- The working group should focus on the analysis of municipal bond issues to fund energy efficiency projects and green buildings, the development of sustainable transport and urban mobility, the development of green urban spaces and climate adaptation measures, including the implementation of nature-based solutions
- Introduce a system to measure and disseminate the benefits from investing in green projects, including training for businesses and municipalities on how to measure and analyze benefits. The system should be set up and maintained by the Ministry of Innovation and Growth
- Adopt amendments to the Investment Promotion Act – introduce incentives for private investment in green projects
- Adopt a Multifunds Act emphasizing the promotion of investment in green projects after a broad public discussion and introduction of safeguards
- Develop a programme to strengthen the capacity of the administration and municipalities for the purpose of attracting private investment. Highlights of the programme should be project management, including training on how to develop a project, planning how to attract investment, protection of public interests, and performance monitoring. Other key elements of the programme should be the development and management of infrastructure projects and how to attract investments to them. The programme should be drafted by the Institute of Public Administration, the Ministry of Finance, the Ministry of Innovation and Growth, the National Association of Municipalities in the Republic of Bulgaria, and representatives of the financial sector
- Develop municipal programmes to promote the participation of citizens in energy communities – the programmes should explain the importance of financial participation and the long-term benefits for family budgets from the participation in energy communities
- Rehabilitate state-owned companies and involve them in the implementation of green policies and measures - implement the necessary rehabilitation reforms, providing the relevant human and financial resources for the rehabilitation. After the state-owned companies are stabilized, their listing on the stock exchange could be considered individually or in a cluster to attract private investment and professional management. Then these enterprises could join the implementation of key measures aimed at green development
- Involve public-private partnership in contracts guaranteeing energy savings (ESCO contracts)
- Develop a programme for financial literacy of the population by the end of June 2025. This is a way to promote investor behaviour and release investment capital which is currently throttled by the fear of people keeping their resources as savings
- Ensure Bulgaria’s more active participation in EU processes to develop sustainable finance through various activities, such as participation in mechanisms to attract institutional investors, including pension funds; introduction of a mechanism for more efficient adaptation of regulations to the needs and developments in the environment; introduction of mechanisms for more effective use of EU public funds to attract private investors, including training programmes for asset managers to educate pension funds; introduction of mechanisms for public guarantees for losses
Ideas of the experts on how to support green innovative entrepreneurial ideas
- Develop programmes supporting green innovation development within the framework of the Bulgarian Development Bank
- Introduce capital market development policies to attract investment into green companies by natural persons
- Introduce policies to develop the market for green bonds to finance startups developing innovative environmentally friendly solutions
- Set up a green innovation market similar to the BEAM market
- Introduce policies to align the development of the capital market to other markets, including efforts to attract institutional investors at the central and local government levels
- Establish a mechanism to develop and coordinate green project investment programmes – strike a reasonable balance between grants and financial instruments
- Develop a national platform providing access to capital for green innovation of the one-stop-shop type. The platform should be developed and administered by the Ministry of Innovation and Growth
- Develop a platform for digital tracking of green investment, including blockchain technologies – the platform will ensure transparency and encourage more investors to join the support to green innovation. The platform should be developed by the Ministry of Innovation and Growth or one of the entrepreneurial organisations like BESCO or BVCA
- Establish a national green innovation framework and maintain a public registry of innovative green initiatives – the Ministry of Innovation and Growth should be in charge of this task
- Introduce measures to better integrate Bulgarian entrepreneurs in EU programmes – develop a training programme on how to apply for funding from EU innovation programmes. The programme should be operated by the Ministry of Innovation and Growth on a permanent basis with at least two training sessions per year to be held either in regional centres or online. Set up permanent advisory centres, e.g. a new version of the business incubator model
- Develop a crowdfunding platform focused on green entrepreneurial projects for direct funding from the public – the platform should be developed by one of the entrepreneurial organisations like BESCO
- Amend the existing legislation to obligate the public sector (municipalities, ministries) to include green innovation in public procurement procedures
- Amend the existing legislation to facilitate the start of green companies, including faster licensing procedures for startups in the renewable energy sector and simplification of the rules concerning environmentally friendly construction projects
- Introduce tax allowances for startups developing innovative environmentally friendly solutions
- Develop policies to engage banks and investment funds in more active support to green startups – introduction of better lending terms and conditions for environmentally friendly solutions
- Develop a programme to encourage big industrial and energy companies to invest or enter into partnerships with green startups for the introduction of decarbonisation innovation
- Develop a national strategy and a roadmap to develop accelerator and incubator programmes for green innovation (outside schools and universities; see similar programmes for schools and universities below) – the programmes should provide access to investment, tutorship by experts in green technologies, and partnerships with big international corporations
- Develop a mechanism to attract VC investors to support for entrepreneurial ideas at universities – allocation resources to support innovation by students. The amount of resources allocated for financial instruments should be equal to the amount allocated for entrepreneurship at universities
- Develop a national strategy and a roadmap for the promotion of green innovation accelerator programmes at universities, including support to spin-off companies with protected rights of young entrepreneurs. Provide central and/or local government funding for the implementation of their ideas
- Develop a programme to scale up green innovation – the programme should support the scaling-up of innovative solutions created at a university or research unit or for a ministry or municipality when there is potential for larger-scale implementation
- Develop a national programme to support technological transfer
- Open the infrastructure of universities and research units for testing green innovation created to overcome specific challenges at the municipal level
- Establish a mechanism to develop university endowment funds with investment programmes – the mechanism should envisage, among others, headhunting for programme managers
- Introduce policies to promote green entrepreneurial culture – introduce optional classes in green entrepreneurship at schools
- Develop a national strategy and a roadmap to develop green innovation accelerator programmes at schools, which should be focused on identifying innovative solutions to the challenges faced by the municipality where the school is located. Provide central and/or local government funding for the implementation of these ideas
- Set up a platform to connect schools, universities, ministries and municipalities to exchange information and promote cooperation in finding innovative solutions to specific challenges facing ministries, regional governors and municipalities
- Develop a programme to train municipal staff on the role of green innovation and green entrepreneurship – the programme should be developed and operated by the Ministry of Innovation and Growth, the Institute of Public Administration and the National Association of Municipalities in the Republic of Bulgaria
- Set up municipal green innovation development boards with representatives of the business sector, science, the civil society and municipalities. The establishment of these boards should be supported by the Ministry of Innovation and Growth and the National Association of Municipalities
The challenges and solutions outlined here are based on the ideas which the participants in the panel generated. The ideas are summarized and grouped together without any claims that they have been approved unanimously by all participants in the panel.
Check all recommendations in the Compass here (in ENG).
Mission Green Innovation
The Compass is part of the Mission Green Innovation, an initiative of MOVE.BG in support of green innovators in Bulgaria. At MOVE.BG, we know that Bulgaria has the potential to be among the green and innovative leaders in Europe. Therefore, we should support the creators of innovation that can change the face of the Bulgarian economy from a resource-based to a value-based one.
Learn more about the various initiatives of MOVE.BG in support of green and innovative development in Bulgaria here (in ENG).
