Investments that improve the environment and the responsible management of environmental risks are at the core of Finnfund's investment operations. In particular, the mitigation and adaptation of climate change are key objectives of Finnfund's operations.
In the assessment of the environmental and social risks and impacts of the projects, in compliance with its environmental and social policy, Finnfund complies with the standards of the International Finance Corporation (IFC, member of the World Bank) as well as industry-specific guidelines. These guidelines define good practices for example on emissions, waste management, responsible water use and biodiversity enhancement. The funding is subject to the obligation of the beneficiary to comply with the guidelines when appropriate.
In addition, many projects have industry-specific standards and certifications, such as the FSC® (Forestry Stewardship Council).
Climate change mitigation and adaptation is one of the key objectives of Finnfund's operations. Finnfund aims to finance projects that reduce greenhouse gas emissions or help adapt to climate change. The company’s strategy focuses on projects on renewable energy or improving energy and material efficiency as well as projects for sustainable forestry.
The company does not finance any coal-fired power plants or hydropower projects involving large dams that will cause extensive displacement of local people.
With external experts, Finnfund has developed a tool for calculating carbon emissions (CO2) in accordance with international practices. Two versions have been created; one for renewable energy projects and the other for forestry projects. These allow the company to calculate the gross emissions and the net emission reductions of projects. Since beginning of 2015, calculations have been made for applicable energy and forest projects (see figure below). The tools have been constructed to apply the guidelines of the Intergovernmental Panel on Climate Change (IPCC), CDM (UNFCC Clean Development Mechanism) and the Greenhouse Gas Protocol. They also employ the methodology of the International Financial Institutions (IFI) to harmonize project-level greenhouse gas accounting.
In 2017, Finnfund strengthened its operations by launching a carbon footprint calculation of the investment portfolio, which will be completed in 2018. The calculation is done by external experts and takes into account the international financial sector recommendations and the Greenhouse Gas Protocol guidelines. Calculation provides information on the carbon footprint of the portfolio, carbon sequestration, and avoided carbon dioxide emissions. The carbon footprint of Finnfund's investments will be calculated starting from 2016 and will be monitored annually.
In compliance with the requirements of the Organisation for Economic Co-operation and Development (OECD), Finnfund submits regular reports to the Ministry for Foreign Affairs of Finland on projects that are significant in terms of climate change mitigation and adaptation. Finnfund’s operations create climate finance flows, and thus contribute to Finland’s international climate finance commitments.
In 2017, Finnfund made payments worth EUR 75.5 million to companies or funds whose operations help climate change mitigation or adoption. In practice, this means e.g. clean energy production, sustainable forestry and agricultural development. The breakdown of funding for mitigation and adaptation is described in the figure below.
Projects under which a new investment decision was made during 2017 has been estimated to have a total emission reduction of 30,762,500 tonnes CO2eq over the entire investment period.
Finnfund's operations require staff to be thoroughly acquainted with the projects and actively participate in the management of investments. This requires regular visits to target countries. These travels generate greenhouse gas emissions. Finnfund continuously develops its electronic tools and encourages its employees to actively use them, for example, to attend meetings remotely.
Greenhouse gas emissions caused by commuting are reduced by encouraging the employees to use public transport with an employer-subsidized commuter tickets and to work remotely for part of the time.
Water consumption and waste generation within the Finnfund organisation are minor. However, the company aims to improve material efficiency in its operations by, among other things, reducing office paper consumption, promoting electronic document management, sorting waste and using energy-saving office equipment and lighting solutions. The company is not aware of any environmental damage caused by its operations