Finnish development financier and impact investor Finnfund has developed its own framework to support its goal to foster sustainable development by providing investment opportunities for private investors.
The firm said the framework was designed to support the continuation of its green, social, and sustainability bond issuances.
Olli Sinnemaa, chief financial officer of Finnfund, said: “Establishing a Sustainability Bond Framework is an important step for us. We strive to mobilise more funding for sustainable development and climate actions as well as to provide other investors an opportunity to join this work. We are living in challenging times that highlights the importance of investors like us. Even if the global situation is challenging in many ways, it also creates new opportunities for investors.”
Finnfund’s mission is to generate lasting impact by investing in businesses that solve global development challenges. In its strategy, adopted in January 2022, one of the company’s targets is to fund 50% of its investments with private capital by 2030.
According to Finnfund, the framework will allow it to issue three types of bond:
- Green bonds, to finance and/or refinance eligible green lending, equity investments, and mezzanine financing mainly targeting the objective of climate change mitigation and adaptation (Green Projects)
- Social bonds, to finance and/or refinance eligible social lending, equity investments and mezzanine financing mainly targeting improved living and health conditions for unserved groups (Social Projects)
- Sustainability bonds, to finance and/or refinance a mix of Green Projects and Social Projects (Sustainable Projects)
Finnfund’s most recent annual report indicates that around half of the firm’s investments are in Africa. It claims to have a portfolio of €780m. It claims that it invests €200-250m a year into twenty to thirty projects that emphasise renewable energy, sustainable forestry and agriculture, financial institutions, and digital infrastructure and solutions. It says that its investments and commitments total around €1.126bn. The vast majority of its shares (95.9%) are held by the Finnish state.
Writing at the time of its release, Jaakko Kangasniemi, CEO of Finnfund, said: “Africa is and will be the place to be for us and for European development financiers. It is a continent where jobs and investments are very much needed. Therefore, we are now strengthening our already strong focus on Africa (currently 57% of investment decisions) by opening a regional office in Nairobi, Kenya. In 2021, preparations were made to complete it in 2022. The office will play a central role in strengthening our position in the East African market.”