2023-11-06 12:00

Unlocking sustainability funding opportunities for businesses in the Czech Republic

As part of the EU's commitment to promoting sustainability, businesses in the Czech Republic, particularly small and medium-sized enterprises (SMEs), have access to an excessive amount of funding opportunities in this area.

This financial support aims to empower companies to make their operations more sustainable, reduce their carbon footprint, and enhance their competitiveness on the global stage.

The aim of this article is to raise awareness among companies about these essential incentives and explore the key funding sources.

Why it could be interesting for your business

The shift towards sustainability and responsibility is no longer a luxury but a necessity for companies of all sizes. The benefits are multiple - from improving your public image and aligning with customer values to achieving long-term savings and resilience. Sustainability subsidies in the Czech Republic play a pivotal role in this shift, providing financial incentives for companies looking to invest in green operations or socially sustainable activities but are wary of the initial costs.

Areas of support under the ESG

If we were to differentiate subsidy options according to ESG criteria, which correspond to the three pillars of sustainable development as promoted, for example, by the United Nations, the vast majority would currently fall into the environmental category.

This is because at the moment the Czech Republic has an unprecedented amount of money from the European Union at its disposal and a large part of this money is to be directed towards climate measures.

There are huge opportunities for companies to green their business and contribute their fair share to the Green Deal commitments.

An important area is the energy sector, which is responsible for the highest share of emissions in the Czech Republic. In this case, companies can use subsidies to reduce the energy intensity of their buildings and operations. At the same time, they can receive funding to install solar panels on the roofs of their buildings, which also leads to energy savings.
There is also great potential to green a company's business in the transport sector. For companies whose core business is transporting goods from point A to point B, switching to alternative fuel vehicles instead of diesel vehicles can mean a significant reduction in carbon emissions. For non-manufacturing companies, employee commuting also accounts for a non-negligible percentage of the company's carbon footprint. Companies will be able to take advantage of subsidies to purchase alternatively powered cars, whether electric or hydrogen powered. The calls are not yet open but should be in the foreseeable future.
The “E” (Environmental) category, however, comprises much more than just measures to reduce emissions. The circular economy is also an integral part of this. In the Czech Republic, there is a subsidy programme that supports research, development and innovation in the circular economy, the use of renewable energy sources, the reduction of consumption, waste recycling and the development of new technologies for the circular economy specifically aimed at companies.

The second pillar “S” (Social) also offers funding opportunities.

Czech companies and businesses can use EU funding to support the training of their employees. This can include training, retraining, skills development or career development.
In the area of reconciling work and family life, funding is available for the establishment of company crèches, which can help improve working conditions for employees and facilitate their return to work.
European funding can also be used for projects aimed at reducing inequalities in the labour market, including the gender pay gap.

For the last category “G” (Governance), there is not much in the way of subsidy opportunities at the moment.

Examples of sustainability subsidies in the Czech Republic

The Czech Republic can benefit from a wide range of European funds and initiatives in this decade. As mentioned earlier, the country has an unprecedented amount of money from the European Union at its disposal at the moment. A significant amount of this money is available to foster a greener business environment.

1 Cohesion policy

Cohesion policy is the main long-term investment instrument in the EU, recurring in regular seven-year cycles as it is linked to the EU's long-term budget. It is an important area that contributes to closing the economic, social and environmental gaps between European regions and seeks to strengthen their competitiveness. Five European funds fall under this area. The most relevant for the purposes of this article is the European Regional Development Fund (ERDF) which finances innovation and research, digital agenda, support for SMEs enterprises, or a low-carbon economy and from which companies can benefit. In the Czech Republic, this fund finances for example the Operational Program Technologies and Application for Competitiveness (OP TAC) which is mentioned here because it is directly aimed at small and medium-sized enterprises.

2 Modernisation Fund

In addition to the Cohesion Policy funds, a number of other funds and initiatives are available. The most important ones in terms of the volume of funding are, for example, the Modernisation Fund, a programme specifically focused on modernising the power sector and wider energy systems, boosting energy efficiency and renewable energy, and facilitating a just transition. Unlike cohesion policy it is not financed directly from the EU multiannual financial framework, but it is funded by revenues from the auction of emission allowances from the EU's Emissions Trading System. At the moment, projects related to the decarbonisation of the heating sector and projects for the construction of photovoltaic power plants receive the most support.

3 Recovery and Resilience Facility

There is also the Recovery and Resilience Facility (known in the Czech Republic as the National Recovery Plan), a temporary financial instrument with the purpose of mitigating the economic and social impact of the COVID-19 pandemic. At least 37% of RRF spending must target climate transition and 20% digital transformation. Similarly to the previous two examples, firms are significant beneficiaries of subsidies.

At the moment, the Czech Republic is going to receive an unprecedented amount of money from the European Union over the next few years - a not insignificant amount is available for companies. The good news is that it is aimed not only for large companies but also for small and medium-sized enterprises. It can be quite daunting to familiarise yourself with the subsidy conditions especially if you're just starting to seek funding opportunities.

If you would like help mapping out subsidy opportunities relevant to your particular business, let us know.

_{Image by master1305 on Freepik}

Eva Mariničová