MFA: Finland will make a major investment in climate work in the poorest countries

MINISTRY FOR FOREIGN AFFAIRS
http://formin.finland.fi/english

Press release 178/2017
12 October 2017

Embargoed until Thursday 12 October 2017 at 6.30 p.m. Eastern European time

Finland will make a major investment in climate work in the poorest countries

Press release 178/2017
12 October 2017

Finland and the IFC (International Finance Corporation), which is a member of the World Bank Group, will together set up a joint climate fund that will support renewable and clean energy solutions and other climate projects in developing countries. Finland will channel a total of EUR 114 million into the Finland-IFC Climate Fund, whose duration is 25 years. The funds will be invested in climate projects during the next five years. This will be the largest funding ever targeted at international climate work in Finland.

"With this investment, Finland will fulfil the promise it gave at the United Nation’s Climate Change Conference in Paris for directing a significant part of its development funding to climate actions. At the same time, establishing a joint fund with the world’s largest development financier will open for Finnish companies a door to the growing clean energy solution markets in developing countries", says Minister for Foreign Trade and Development Kai Mykkänen.

Compared with the IFC’s usual practice, the Finland Fund allows directing investments to poorer countries than before and focusing on earlier phase investments. Funds will only be invested in developing countries. Financial investments differ from grant based aid in that the capital invested will be returned and can be reused. In return for Finland’s financing, the IFC will also invest its own capital in all of the projects. The aim is also to attract a large amount of other private and public capital.

Funding targets comprise loans granted for companies operating in developing countries, capital investments and guarantees, for instance. Acceptable sectors include energy efficiency, renewable energy, sustainable forestry and land use, meteorology, and water and wastewater solutions. In addition to climatic effects, the investments also target development effects, such as increasing the number of jobs and tax revenue.

The IFC is the world’s leading private sector development financier. Philippe Le Houérou, CEO of the IFC, points out that trillions of dollars are needed for the world to transition to a low-carbon economy.

 "This represents a significant investment opportunity for the private sector. But it requires a coordinated approach by governments and businesses—to remove barriers to the adoption of low-carbon technologies, strengthen policy and regulatory frameworks, and overcome investor perceptions of high risk. Our partnership with Finland is an important step toward those goals."

New opportunities for international cooperation will open up for Finnish companies, because many of them have strong climate competence and expertise in the sectors emphasized in the fund.

"We need not leave the energy and water solution markets in developing countries to the Danish or other players who traditionally have a strong presence in the area. In December, we will start a tour in Finland to share information on the opportunities offered by the IFC Fund and our other new development funding instruments."

Further information (12.10. in EDT time zone):
Pasi Rajala, Special Adviser to the Minister for Foreign Trade and Development, tel. +358 400 464 393
Max von Bonsdorff, Director, Unit for Development Financing Institutions, tel. +358 295 351720