On a proposal from Commissioners Yves-Thibault de Silguy, Christos Papoutsis and Ritt Bjerregaard, the Commission approved, on 23 June 1995, the "Growth and environment" pilot project which will support SMEs carrying out investments in environmental improvements. The pilot project will be established following a request by the European Parliament, which set aside ECU 9 million for this purpose in the 1995 Community budget. This money will be used to fund loan guarantees in which the European Investment Fund (EIF) will play an important role. The pilot scheme could open the way to ECU 150 million of new loans for SMEs to support environmental projects. The "Growth and environment" initiative is geared towards enterprises investing in environmental improvements and related activities (e.g. energy savings). In relation to SMEs, the integration of environmental and sustainable development considerations has been moderate so far. Although modest in size, this financial incentive sends the right signal to SMEs: together with other Community funds (such as the Structural Funds), it provides direct practical assistance which should help to upgrade environmental performance and to install clean technology for the protection of the environment. The initiative will further demonstrate the EIF's role and potential as an important source of guarantees in support of loans to small firms. A limited amount of budgetary resources allocated in the form of loan guarantee premiums can produce a substantial leverage effect as the volume of guaranteed loans constitutes a multiple of the budgetary outlay. As many financial institutions might apply for loan guarantees, a call for expressions of interest will be organized in order to select the most promising and appropriate applications. This will allow interested banks to bring forward their proposals, including institutions interested in becoming involved as guarantors. An evaluation procedure will be implemented to select the most relevant and appropriate proposals, notably taking account of experience in appraising the environmental value of individual projects. While a broad coverage of the Union's territory would be desirable, this will be impossible to realize within the scope of the limited budgetary means available. The initiative should therefore concentrate on a limited number of qualified intermediaries so as to maximize the demonstration effect of the project and to achieve a meaningful test of the programme's objectives. This is fully in line with the specific nature of a pilot project, which is destined to test the feasibility for broader action. The pilot project will be followed by an overall evaluation of its impact, so as to assess the effectiveness of the concept as well as the feasibility of subsequent action on a Community-wide scale. This evaluation will notably provide more detailed information on the role which the EIF could play, in conjunction with the Community budget, as a provider of loan guarantees to small firms.