Nordic Annual Environment Review Finance 2018 Corporation Contents 4 About NEFCO 6 Review by the Managing Director 8 Small steps to create greater impact 10 Highlights from our activities in 2018 14 Mobilising green finance 16 Key figures 2018 20 Environment & Sustainability 22 Green Growth in 2018 24 Climate in 2018 28 Arctic & Barents in 2018 32 Baltic Sea in 2018 34 Financing Options 36 Governance Editor: Josefin Hoviniemi Design: Staart / Annika Tenho Climate neutral printed matter ClimateCalc CC-000025/FI Hämeen Kirjapaino Oy L P TRA RIN U TE E D N M E T A T A T M E I R L C ClimateCalc CC-000025/FI HÄMEEN KIRJAPAINO OY 3 Photo: Tero Pajukallio Photo: Tero About NEFCO The Nordic Environment Finance own investment activities. Our financing Corporation (NEFCO) is an inter- has a catalytic role and high additionality, national financial institution (IFI) helping the Nordic governments and our established in 1990 by the five Nor- partners to reach their environmental and dic countries: Denmark, Finland, sustainability goals. Iceland, Norway and Sweden. We All our financing and We provide added value We help Nordic We offer risk capital for green invest- finance exclusively green growth ments to supplement other sources of activities are aimed to our stakeholders governments and our and climate projects in order to financing and create blended finance at green growth and through our focus on partners to reach their generate positive environmental opportunities through a combination climate action globally, small and medium-sized environmental and impact of interest to the Nordic of grants, loans and equity. Combined with particular focus projects sustainability goals governments. By focusing on small with hands-on environmental expertise, on Eastern Europe, the we help customers to build capacity and and medium-sized environmental Baltic Sea, and the Arctic mobilise additional financing for their projects and on achieving tangi- and Barents regions projects. ble and cost-efficient results, we Over the years, we have financed a to- provide added value to our owners, tal of about 900 small and medium-sized, partners and customers. private and public sector projects across different sectors in 51 countries. In ad- Our extensive network within the green dition, since the administration of the community and our proven ability to con- fund was transferred to NEFCO in 2014, nect stakeholders and financiers to rele- the Nordic Project Fund (Nopef) has pro- vant projects support NEFCO’s role as fund vided support to 356 green sector projects manager and implementing agency for a to help the companies undergo interna- number of trust funds in addition to our tionalisation across 56 countries. 5 Photo: Patrik Rastenberger for NEFCO for Photo: Patrik Rastenberger A new Swedish initiative for the development of long- term sustainable district heating systems in Ukraine was announced at the Nordic Green to Scale seminar in Kyiv in September 2018 by Magnus Rystedt, NEFCO's Managing Director, and Martin Hagström, the Ambas- sador of Sweden to Ukraine. Review by the Somerpuro Photo: Veikko In 2018, we saw some remarkable devel- global mandate has now also started to us for some time and is familiar with our opment in NEFCO’s operations. We are on take off. This allows us to build on our mandate, activities and organisation, I managing director track in terms of our environmental ob- financing activities through Nopef and am confident that he will continue the jectives, and our financial result was also facilitate the implementation of Nordic positive development of NEFCO’s financ- strong, partly thanks to profitable sales of smart and green solutions in their critical ing operations and lead the organisation shares in two companies and partly due to growth phase on global markets. to new success stories. improvements in the economic situation In October, the Green Climate Fund To wrap up, I believe the success of in Ukraine, one of our core countries of (GCF) decided to include NEFCO as one of NEFCO boils down to three major fac- operation. its accredited entities. We believe this is tors. First, we have managed to achieve We managed to increase our invest- an acknowledgment of our ability to man- good environmental results through our ment activities and approved a larger age funds efficiently and deliver results, projects. Second, our operations have re- number of investments than ever before while at the same time adopting and de- mained profitable despite some difficult in both the public and the private sector. manding the highest standards, policies times during the financial crisis in 2008 Our consistent work for many years with and routines in our activities. The accred- and the more recent crisis in Ukraine. municipalities in Eastern Europe is pay- itation to the world’s largest climate fund Third, and probably the most important ing off. Today, NEFCO is a sought-after -fi will allow us to scale up projects further reason, we have managed to create high nancing partner in this sector, and several and deliver results with greater impact. additionality to our owners, financiers new funds or initiatives for public projects A positive outlook on the future and customers with our catalytic early- were set up and assigned to NEFCO during stage financing and ability to find and the past year. After 19 years at NEFCO, the last 13 of implement projects in an agile and cost- From local environmental projects which as Managing Director, it is time efficient way. to combatting the global climate for me to hand over the role to my suc- crisis cessor Trond Moe. He was chosen from several candidates by the Board in Feb- Magnus Rystedt NEFCO has an important role in financing ruary 2019 and will take office on 1 June Managing Director green projects in Eastern Europe. The new 2019. As Trond has already worked with 7 Photo: NEFCO Green growth Baltic Sea Focus on projects with high We facilitate green growth by provid- The reduction of pollutants affecting Small steps to create demonstration value impact ing risk capital, grants and environ- the Baltic Sea has been a key priority mental expertise. Our objective is to for us from the very beginning. We NEFCO’s financing is targeted at small support the scaleup of Nordic smart, finance both public and private sector and medium-sized private and public green solutions globally and to create projects related to agriculture, waste- projects (SMPs) with demonstration val- positive environmental impact. water treatment and hazardous waste greater impact ue. Many of the numerous SMPs financed within the Baltic Sea catchment area by us are at the forefront of technological See more on pages 22–23. through our various programmes. innovation and aimed at testing the ap- plication of Nordic green solutions, with See more on pages 32–33. up-scaling possibilities in local, non-Nor- dic circumstances. Projects with a high demonstration value have the potential to grow and generate environmental im- pact that is orders of magnitude greater than our investment. The ultimate goal 3.9 million tonnes 979 tonnes P-tot of our activities is to successfully imple- ment solutions that benefit the environ- CO2 direct + CER 4,498 tonnes N-tot ment and climate in a cost-efficient way. reduced reduced Providing high additionality Climate Arctic & Barents = 3.6 million people flying from = annual untreated wastewater from By connecting stakeholders and various financiers to relevant projects, we provide To support climate change miti- We provide financing for project Helsinki to Bangkok and back all inhabitants in Copenhagen high additionality and help our partners gation and adaptation initiatives, preparation activities, studies and to reach their environmental and sustain- we mobilise new investments and demonstration projects with the aim ability goals. funding for projects related to re- to further develop and disseminate Our risk financing for small projects, newable energy, energy efficiency the best available technologies and growth companies and challenging geo- and the reduction of short-lived practices that contribute to energy ef- graphical regions supplements financ- climate pollutants and greenhouse ficiency, sustainable use of resources ing offered by the larger IFIs and other gas emissions in close co-operation and pollution mitigation, and a pos- financiers. We also offer hands-on envi- with governments, municipalities, itive impact on communities in the ronmental advice and capacity building companies and other organisations. Arctic and Barents regions. to enable smaller customers and bene- ficiaries to become better at mobilising See more on pages 24–27. See more on pages 28–31. additional financing. 9 Highlights from our activities in 2018 The year 2018 was very successful First Nordic institution to be Adoption of a new Gender Policy for us, with several remarkable accredited by the Green Climate The NEFCO Gender Policy was launched steps. Fund in February, with the aim of emphasising At its 21st Board meeting in October, the NEFCO’s commitment to the shared goals A major achievement was that NEFCO Green Climate Fund (GCF) decided to in- and objectives of its owner countries in was the first Nordic institution to receive clude NEFCO as one of its accredited en- promoting gender equality and the Nordic Green Climate Fund (GCF) accreditation in tities. GCF is a global fund created by the countries’ role as a leading example of de- October 2018. United Nations Framework Convention on livering on the Sustainable Development In our focus countries, Ukraine, Be- Climate Change (UNFCCC) to support the Goals, including, in particular, Goal 5 – Global mandate Accredited by the Strong Nordic Adoption of new larus and Russia, the situation was suf- efforts of developing countries to respond Achieve gender equality and empower ficiently stable for investments over the to the challenge of climate change.