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.
Targets of the company
Climate change is the most pressing challenge of our time. Thus, the European Union and Finland strive to become carbon neutral in the near decades by accelerating emission reduction measures and strengthening carbon binding sinks.
The next 10-15 years in particular are critical in order to stop global warming. Ambitious climate goals necessitate substantial public and private sector investments to achieve the green and digital transitions. International and national regulations strive to make climate friendly investments more attractive. However, their full realisation takes time.
During its February 2020 climate summit, the Finnish Government announced plans to form a Climate Fund based on the Finnish State Development Company Vake. The company focuses on combating climate change, boosting low-carbon industry and promoting digitalisation. As a government tool, the Climate Fund contributes to boosting the necessary additional investments in order to achieve carbon neutrality.
The Climate Fund’s mission is to decrease the carbon footprint and strengthen the carbon handprint – in other words, to lower climate warming greenhouse emissions and add the emission reduction potential – by advancing new climate and digital solutions. In addition to decreasing greenhouse emissions, the company aims to improve the use of natural resources and advance biodiversity.
The Climate Fund’s mission is to decrease the carbon footprint and strengthen the carbon handprint
What does the Climate Fund invest in?
Moving to a low-carbon economy requires investments to develop for instance circular economy, clean technology solutions and energy efficiency.
The Climate Fund invests in large-scale targets with significant climate and environmental impacts. The operations of the Climate Fund are guided by its funding criteria. According to the preconditions defined in these criteria, the Climate Fund’s operations are limited to funding self-supporting projects which can be realised earlier or at a larger scale with the Climate Fund’s investment. Before making an investment, the Climate Fund also verifies that the investment target fulfils the minimum criteria set for environmental objectives in the EU Sustainable Investment Regulation.
When preconditions are met, the Climate Fund prioritises and selects investment targets according to their impact and monitors the realisation of that impact during the lifetime of the investment. Emissions reduction potential in Finland and globally as well as productivity potential and business potential are defined as key impact goals in the funding criteria.
The Climate Fund’s investment targets are scaling up climate solutions to an industrial scale or infrastructure enabling the commercialisation and scaling of climate solutions; accelerating the sales of a pre-existing climate solution; or the development of a new digital climate solution, a feature that enable emissions reductions or a data platform. Approximately 65 per cent of the Climate Fund’s investments relate to combating climate change and about 35 per cent to digitalisation enabling it.
The Climate Fund’s operational guidelines permit the Fund to award equity or debt financing and mezzanine funding. Capital loans have been defined as a suitable instrument for the Fund’s initial stages. The operational guidelines state that the Climate Fund can establish funds, invest in funds and, in principle, use state aid for its funding instruments. However, awarding funding classified as state aid will require a specific Act. The company will not award direct grants or subsidies. The Climate Fund’s investment is limited to a maximum of 50 per cent of the total funding and the ticket size is typically between 4 and 40 million euros. The annual financing volume is approximately 130 million euros.
As a state-owned special-assignment company the Climate Fund aims at fulfilling its task as efficiently as possible and creating societal impact instead of maximising its own revenue. In the long term the Climate Fund’s investments and funding must, however, be self-sustainable when assessed as a whole.
Investment process and decision-making
You can use the form available on our website to provide basic information regarding an investment proposal that you hope the Climate Fund will participate in. A three-stage criteria has been created for the Climate Fund’s participation. Each investment proposal is assessed against these criteria, based on the information provided by the applicant and possible interviews.
The Climate Fund’s Board of Directors makes decisions regarding the company’s investments. The company’s operational team prepares investment proposals to the Board in collaboration with the applicant and possible external evaluators. If the company’s investment exceeds 20 million euros, the investment decision must also be supported by the Ministerial Committee on Economic Policy.
Detailed guidelines and descriptions of the Climate Fund’s investment process and decision-making are available under the heading ”Interested in funding?”.