The Climate Fund's finances

The size of the Climate Fund’s balance sheet decreased by around 2.3 billion euros during the third quarter, when Neste Oyj’s shares owned by the Climate Fund were transferred back to the owner in September. The Climate Fund has approximately €369 million in liquid assets for financing its operations (Q3/2023). These liquid assets are invested in interest-bearing bank accounts, fixed-term deposits and bond funds. A total of around 275 million euros of the liquid assets are committed to the investment decisions made and taxes to be paid on the transfer of Neste Oyj’s shares. Circa 94 million euros of uncommitted funds are available for future investment decisions and operative expenses.

The Climate Fund’s operative budget for 2023 is €6.2 million, of which €3.2 million consists of personnel costs. The company’s second-largest expense item consists of due diligence and other expenses related to the preparation of investment decisions, totalling €1.9 million.

The companies invested in by the Climate Fund typically receive the funding in instalments over several years as conditions specified in the financing agreements are met. The target for 2023 is to make €130 million in investment decisions for scaling up climate solutions.

Personnel costs, i.e. salaries, remuneration to Board members, and indirect costs, totalled roughly €2.6 million in 2022. Eleven new employees were recruited during the year to enable the growth of operations. Of these, eight are permanent employees and three are trainees with temporary contracts.

The preparation of investment decisions involves due diligence audits commissioned from external service providers and other preparatory work, as well as legal services for drawing up the financing agreements. A company’s compliance with the Climate Fund’s financing criteria is ensured through external due diligence audits and other measures during the investment process. These external audits include an objective examination of the company’s business plans, emissions reduction potential and ESG issues, technology and production, the market, as well as finances, taxation and legal issues. In 2022, Climate Fund’s share of expenses related to due diligence audits, the preparation of investment decisions, and financing agreements was €1.66 million. This sum corresponds to approximately 2% of the year’s investment decision volume. The remaining expenses incurred by the investment decision preparation team were related to the development of the Climate Fund’s investment operations and projects initiated in previous years. A total of €1.8 million has been reserved for due diligence and other expenses related to the preparation of investment decisions in the 2023 budget, corresponding to roughly 1.4% of the €130 million target volume for investment decisions in 2023.

Communications and reporting costs include studies and surveys conducted in support of investment operations, the Climate Fund’s annual reporting, carbon footprint calculations, external assurance of the annual report, the company’s website and other external communications, membership fees of sustainable investment organisations, as well as various events.

Both the realised office expenses for 2022 and those budgeted for 2023 mainly consist of the rent for the office space in Helsinki. The increase in the cost of the office space is affected by the expiration of the sublease agreement in November 2022, after which the Climate Fund rented a temporary office space before the move to a permanent new office in the fall of 2023.

ICT costs include office equipment and the tools of our personnel, ICT maintenance and development, as well as software licences for, e.g. dealflow management and Board work.

Administrative and other expenses include recruitment, accounting, auditing and legal services as well as insurance, employee benefits, travel and training expenses, and the service and deposit fees charged by banks.