The Climate Fund, a state-owned special-assignment company, decided to invest in seven climate solutions in 2021 and granted a total of €45.5 million in capital loan funding. The theoretical cumulative emission reduction potential of the investment targets is 186 Mt CO2-eq. over a period of ten years, or nearly 50 Mt CO2-eq. when adjusted for risk. The year 2021 was characterised by the charting of potential investment targets and strong growth in personnel, as well as development of the company and its operations.
Climate Fund investment decisions in 2021
The Climate Fund launched its financing activities with seven investment decisions totalling €45.5 million. Potential future investment targets were also compiled and analysed over the year, and the company currently has more than 300 identified potential investment targets.
Financing was granted to Solar Foods, a manufacturer of low-emission protein; Elstor, a producer of emissions-free steam for industrial processes; Magsort, a circular economy solution for the steel industry; an emissions-reducing digital platform for the concrete industry by Betolar; Aurelia Turbines, a company that accelerates the hydrogen transition in industry; P2X Solutions, a company building a green hydrogen production facility; and a biomass torrefaction plant being constructed by Joensuu Biocoal.
If the business plans of all seven investment targets would succeed fully, their theoretical cumulative emissions reduction potential would be approximately 186 million carbon dioxide equivalent tonnes over a period of ten years. However, as all business plans involve risk, and as a considerable part of the emissions reduction potential arises from two of the investment targets, the risk-adjusted estimate of the emissions reduction potential is just under 50 million carbon dioxide equivalent tonnes.
A year of personnel growth and governance development
The year 2021 was also a year of diverse governance development and personnel growth for the Climate Fund’s own operations. The company employed 9 people in early 2021 and by March 2022 the number was 18, with three more professionals set to join us later in the spring.
In the spring of 2021, the company’s Board of Directors approved a strategy laying out the key policies for fulfilling the Climate Fund’s operational guidelines issued by its owner. The company’s decision-making and oversight mechanisms were described in its Governance Report. A Code of Conduct was also drawn up for guiding the company’s operations from the ethical standpoint. Other governance documents drawn up during the year included the Internal Auditing and Risk Management Guidelines, disqualification guidelines and operating models for management and personnel, an Investment Policy and a Sustainability Programme. The Climate Fund also published its first Corporate Social Responsibility Report for 2021. The carbon footprint of the Climate Fund’s own operations in 2021 was calculated at 77 CO2-eq. tonnes excluding portfolio investments and due diligence costs.
The Climate Fund’s Investment Council conducted its first assessment in the autumn of 2021. The key conclusion of the assessment was that the Climate Fund’s governance framework is clear and provides good support for the policy goals of the various administrative branches. The company’s strategy was considered to be a logical continuation of the operational guidelines, and the Council found that the Climate Fund’s investment criteria guarantee the allocation of funding to the focus area of accelerating the digital green transition. In summary, the assessment found that the Climate Fund’s operations have been launched in accordance with the expectations set during the preparation stage and did not see a need for major changes at this stage.
In 2021, the Climate Fund’s Board of Directors was chaired by CEO Perttu Puro, with Permanent Under-Secretary Petri Peltonen as Vice Chair and CEO Mirva Antila, Senior Programme Manager Kari Hämekoski, Board Professional Mammu Kaario, Chief Development Officer Juho Korpi and Executive Vice President Erja Turunen as members. The Annual General Meeting of 30 March 2022 elected to continue the mandate of the Board for 2022. The CEO of the Climate Fund is Paula Laine, MSc(Eng.).
Financial key figures
The Climate Fund’s profit for the 2021 financial period was €38.3 million, its financial income amounted to €51.2 million, and the company’s balance sheet total on 31 December 2021 was €2.9 billion. The company paid €1.4 million in salaries and fees during the year, with the CEO’s salary representing €252,000 and the monthly fees and meeting fees paid to the Board of Directors representing €116,150 of this total.
The company owns 8.3% of the shares of Neste Oyj. The market value of these holdings was approximately €3.8 billion at the beginning of 2021 and approximately €2.8 billion at the end of the year. The decrease in market value is due to a decline in the price of Neste shares in 2021.
Significant events after the financial period
The Climate Fund will continue preparing and implementing investment decisions in 2022. To date, it has announced a single capital loan of €3.3 million granted to Quantitative Heat Oy.
The war in Ukraine increases uncertainty with regard to the Climate Fund’s existing and future investment targets. The crisis also affects the company through the equity risk and price development of Neste Oyj shares, affecting the market value of the Climate Fund’s holdings. At the same time, the situation highlights the importance of abandoning the use of fossil fuels as soon as possible, which is consistent with the Climate Fund’s mission.
More detailed information on the company’s year is available from the Climate Fund’s Sustainability Report 2021 (summary in English).
Climate Fund’s financial statements 2021 (in Finnish)
Annual Governance Report 2022 (in Finnish)
Presentation from the 2022 Annual General Meeting (in Finnish)
The mission of the Climate Fund has been defined as combating climate change, boosting low-carbon industry and promoting digitalisation. The Climate Fund finances projects that accelerate the industrial and commercial scale-up of solutions that produce significant climate and environmental benefits.
The company’s 1–20-million-euro contribution must provide verifiable added value to the investment targets – for example by being crucial to the project’s success or enabling it to be realised sooner or on a larger scale. The Climate Fund’s investment targets are selected according to criteria that emphasise impact.
Investment decisions in 2021:
|Company||Financed activity||Instrument type||Monetary amount|
|Solar Foods||Demonstration facility in Finland||Capital loan with a convertibles option||€10 million|
|Elstor||Accelerating the rollout of a heat storage solution||Capital loan with a convertibles option||€4 million|
|Magsort||Funding equipment investments||Capital loan with a profit component||€4.5 million|
|Betolar||Commercialisation of a digital platform||Capital loan with an interest rate premium||€7 million|
|Aurelia Turbines||Financing working capital for turbines with significant emission reduction potential||Capital loan with a convertibles option connected to a sustainability incentive||€5 million|
|P2X||Invest requirements for the first green hydrogen production plant||Capital loan with a convertibles option connected to a sustainability incentive||€10 million|
|Joensuu Biocoal||Financing for the first biomass torrefaction technology demonstration facility||Capital loan with a convertibles option||€5 million|
Saara Mattero, Communications Director, the Climate Fund, tel. +358 400 114 777, firstname.lastname@example.org
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.