Finnish Climate Fund in 2022: EUR 79.9 million in investment decisions to further green transition – with combined potential to reduce emissions by 101 million tonnes

The Climate Fund’s investment decisions in 2022

• Aeromon: More accurate quantification of fugitive emissions. EUR 2.4 million capital loan.
• DataSpace Europe: Data intermediation service around the food chain. EUR 1 million capital loan.
• Finn Recycling: Foundry sand recycling solution. EUR 8 million capital loan.
• Hycamite: Demonstration plant to promote the production of emissions-free hydrogen and industrial carbon. EUR 10 million capital loan.
• Infrakit: Information management service for reducing emissions from infrastructure projects. EUR 6 million capital loan.
• Norsepower: Rotor sail technology for reducing maritime emissions. EUR 10 million capital loan.
• QHeat: Medium-deep heat wells. EUR 3.3 million capital loan.
• Taaleri Bioindustry I private equity fund: Sustainable investments in bioindustry. EUR 15 million investment.
• The Finnish Climate Fund also made three as-yet-unpublished investment decisions.

“There is a clear and established demand for our funding. With the investment market becoming more and more challenging all the time, clients’ need for financing from the Finnish Climate Fund in particular has in fact grown from around EUR 1 billion to approximately EUR 1.5 billion. To meet this need, we have increased our annual funding volume target to EUR 130 million from 2023 onwards”, says Paula Laine, CEO of the Finnish Climate Fund.

Finnish Climate Fund in 2022

• The Finnish Climate Fund’s CEO is Paula Laine. No changes took place in the composition of the Board of Directors during the year, and Perttu Puro continues as Chairman of the Board.
• The Finnish Climate Fund employed 24 people at the end of the year.
• The Finnish Climate Fund’s strategy and investment criteria were revised.
• The carbon footprint of the Finnish Climate Fund’s own operations (scope 3 upstream) was 99 tCO₂-eq.

In addition to analysing and implementing investment decisions, the Finnish Climate Fund’s focus in 2022 was on developing the company’s performance and increasing the funding volume: the investment criteria was clarified, the instrumentation and the funding categories were revised, and the average ticket size of investments was increased to between EUR 4 and 40 million. Recruiting and inducting new personnel were also an important part of 2022.

“The increased uncertainty in the operating environment, continuing even in the recent weeks, has emphasised the role of actors like the Finnish Climate Fund in the market. The strategy changes that we have made are designed to better meet the funding needs of our clients”, explains Perttu Puro, Chairman of the Finnish Climate Fund’s Board of Directors.

The Act on the Finnish Climate Fund, which entered into force in February 2023, opens up new opportunities for having a wider societal impact. The new law enables the Finnish Climate Fund to utilise asymmetric instrumentation, i.e. to accept a lower return on its investment or to take on a higher level of risk than the private investors involved in a project, thus accelerating climate solutions even further.

Finnish Climate Fund’s finances and performance assessments

• Net income: EUR 38.1 million
• Income from assets and investments: EUR 53 million
  • Dividend income from Neste Corporation: EUR 52.4 million
  • Interest income from operational investments: EUR 0.4 million
  • Interest income from liquid assets: EUR 0.2 million
• Operating expenses: EUR 5.1 million
  • Staff costs: EUR 2.6 million
  • Investment decision preparation: EUR 1.7 million
  • Other operating expenses: EUR 0.8 million
• Tax footprint: EUR 11.2 million
• Based on the authorisation from the Finnish Government, the ownerrecapitalised the Finnish Climate Fund with EUR 200 million in December 2022.
• Closing balance on 31 December 2022: EUR 3.1 billion
  • The Finnish Climate Fund’s balance sheet consists, for the most part, of an 8.3% stake in Neste Corporation (the market value of the holding was approximately EUR 2.75 billion on 31 December 2022).

The company’s liquid assets are invested in bank accounts, short-term fixed-term deposits and bond funds. Unrealised losses from bond funds stood at EUR 298,701 at the end of 2022, but the declines were recouped during the first months of 2023 and the combined value of the bond funds was approximately EUR 275,000 in profit at the end of February. No impairment losses have been identified or recognised in respect of the Finnish Climate Fund’s operational investments.

Based on the Investment Council’s annual assessment, the Finnish Climate Fund’s operations have gotten off to a good start and its investments are in line with the company’s mission. According to a third-party assessment carried out by KPMG at the request of the Ministry of Economic Affairs and Employment, the Finnish Climate Fund has positioned itself in the financial market appropriately and performed well in its first two years in business. The company’s operations have a clear societal impact, and the investment decisions that have been made and the formed dealflow are consistent with the Climate Fund’s special assignment role and objectives.

*The theoretical total cumulative ten-year emissions reduction potential of the Climate Fund’s investment targets in 2022 is 101 Mt CO₂-eq if the customers’ business plans are fully realised.The theoretical total cumulative ten-year emissions reduction potential of the company’s entire investment portfolio is 287 Mt CO₂-eq. There is nevertheless significant uncertainty as to whether the emissions reduction potential can be realised in full.