2023 assessment of the Climate Fund: The Climate Fund’s actions have supported the clean transition of industry and its special assignment will remain relevant in the future as well

The Climate Fund’s Investment Council has issued its annual assessment of the company’s actions. According to the assessment, the Climate Fund has successfully established its position in the market for financing the green transition, and the Investment Council sees that similar financing will still be needed in the future, which should be considered in the preparation of the new investment company.

The task of the Climate Fund’s Investment Council is to ensure that the company’s actions are in line with the principles of inter-administrative cooperation and the goals of its state owner. The purpose of the Investment Council is to improve the impact of the Climate Fund’s actions, and the Council presents its annual assessment to the Ministry of Economic Affairs and Employment to support the company’s ownership steering.

Actions taken by the Climate Fund have supported clean industrial transition

The Investment Council finds that the Climate Fund’s actions have provided particularly strong support to the goals of the clean industrial transition through economic restructuring, investments, entrepreneurship and employment. Large-scale indirect social impact can be seen, for instance, in solutions that support the development and construction of the hydrogen sector and tools for measuring and reporting emissions.

The Climate Fund’s newest funding targets not only strive to facilitate climate change mitigation but also important objectives that are linked to climate-friendly materials and circular economy. Solutions developed by the Climate Fund’s portfolio companies can often be used for a wide range of applications globally, which is a testament to the Climate Fund’s commitment to strengthening Finland’s carbon handprint.

The Climate Fund’s special assignment is still relevant

The Climate Fund’s mission is to combat climate change, boost low-carbon industry and promote digitalisation in these areas. The Investment Council sees that the Climate Fund’s special assignment is still relevant, especially in terms of the goals of the government programme, Finland’s goal to achieve carbon neutrality, the tightened financing environment and the international competition for clean transition investments.

The government programme emphasises the importance of investments in clean energy and emission-reducing industries as the cornerstones of improving Finland’s competitiveness and economic growth. The programme includes ambitious goals for the investment wave in clean transition and the utilisation of the global demand for sustainable solutions. The significance of circular economy and biodiversity is also highlighted. New solutions must be piloted and launched if the goals of the government programme are to be achieved; this is where the Climate Fund may play a key role. Going forward, growing public R&D funding will also require strong public risk sharing in order for developed solutions to be released on the market.

The need for a clean transition financier like the Climate Fund is also evident in the company’s strong and growing deal flow. This situation has become more pronounced in the financing environment, which has become more challenging in the past year. The slowdown of the venture capital market and investors’ reduced willingness to take risks have maintained the need for the Climate Fund’s financial instrumentation and countercyclical financing.

Scale-stage financing will be needed also in the future

In the Finnish financing landscape, the Climate Fund has established its distinct role as the booster of the commercialisation of new technologies and business models and industrial-scale growth. By helping growing companies avoid the known financing pitfalls, the Climate Fund can help to improve economic growth, employment and reform of the business sector and efforts to attract investments in Finland. As a result, the Investment Council states that similar financing will also be needed in the future, which should be taken into account in the preparation of the new investment company structure. In the future, it should be ensured that there are sufficient funds for investments in the clean transition to avoid a situation in which Finland’s growth is impaired due to insufficient financing.

Due to its special assignment and impact-oriented financing criteria, the Climate Fund has accumulated special insights and expertise in the financing of the clean transition. The Climate Fund is also the only special assignment company tasked with promoting the effective use of natural resources and the preservation of biodiversity. The impact of public financing could be improved by adopting the environmental and climate impact assessment and the ‘Do No Significant Harm’ (DNSH) principle more widely in the new investment company.

Investment Council’s assessment of the Climate Fund 2023 (in Finnish)

More information:

Saara Mattero, Director, Communications and Sustainability, Climate Fund, tel. +358 400 114 777, saara.mattero@ilmastorahasto.fi

The Finnish Climate Fund is a Finnish state-owned special-assignment company. Its operations focus on combating climate change, boosting low-carbon industry and promoting digitalisation. The Climate Fund invests in large-scale projects in which the fund’s investment is crucial to enable the project’s realisation in the first place, on a larger scale or earlier than it would with funding from elsewhere.

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