Private capital mobilisation for climate action by European public financial institutions: the cases of Banque publique d'investissement, KfW and Cassa Depositi e Prestiti

Public financial institutions (PFIs) are often vital to governments’ efforts to achieve their climate and economic objectives. The primary mandate of PFIs is to provide long-term concessional capital to support the delivery of public missions. They often do so by focusing on private capital mobilisation – the use of public finance and other policy levers to crowd in commercial finance towards investments that align with these missions.

This report explores the role of private capital mobilisation through PFIs, focusing on the domestic-facing activities of Bpifrance, KfW and Cassa Depositi e Prestiti (CDP). The authors cast new light on the mechanisms through which these state-owned or government-sponsored entities support climate-related investment, deepen financial markets and achieve core policy-oriented objectives targeting the real economy. The report highlights some of the main features, business models and financing approaches of Bpifrance, KfW and CDP that may provide lessons for their international peers.

Core findings

• Balance sheet mobilisation, principally through debt issuance, can be a major source of funding for PFIs.
• This supports efforts to leverage their strong credit ratings and achieve scale.
• Close collaboration with the private sector allows PFIs to draw on the expertise, capacity and reach of private financial institutions.
• PFIs can play a unique role in providing catalytic equity, particularly in frontier investments and sectors.
• By drawing on their own expertise, PFIs can provide technical assistance and capacity-building to a wide range of actors across the investment ecosystem.
• Greater transparency in PFIs’ current practices and clearer, quantified mobilisation targets would support the growth of private capital mobilisation through these institutions.