Vanliga frågor

Yes. Our operational guidelines state that the Climate Fund’s primary investment targets are industrial scale-ups of, for example, new technology demonstration projects. The size of these investments is typically 10–50 million euros.

Yes. Approximately 65% of the Climate Fund’s investments relate to climate change and about 35% to climate-related digitalisation. For now, the financing of the Climate Fund related to digitalisation will be restricted to the development and commercialisation of a new digital climate solution, a feature that enables emissions reductions, or a data platform. 

Our investment targets related to digitalisation can include software, hardware, or other digital solutions that support combating climate change and boosting emissions reductions. 

Each investment target must have a credible plan for at least a self-supporting business regarding, i.a., competences and financing.

The Climate Fund usually takes part in the scale-up phase of the company or solution. For research and development, it is possible to apply for public funding from e.g., Business Finland.

The focus of our financing is on companies registered in Finland. The Climate Fund can finance targets with impact potential and  funding use in Finland or outside Finland. The investment target can be a company registered in Finland, including Finnish subsidiary or project company (SPV*) of a foreign company, or joint-venture with a Finnish company. We can also finance companies registered outside Finland if the use and target of the funding (e.g. facility, development project or similar) is located in Finland. A foreign company without any interface to Finland is outside of the Climate Fund’s focus. Demonstration of the Climate Fund’s  geographical focus can be found here.

According to our investment criteria, every potential investment target is also evaluated against general impact criteria such as business potential, productivity benefits and added value that the investment package enables for other registered actors operating in Finland.

The Climate Fund’s ticket size is typically between 4–40 million euros. The lower end of the range is considered to be more suitable for digital investment targets, whereas the upper range is more suitable for facility investments. 

The Climate Fund can also participate with larger ticket sizes. However, when the company’s investment exceeds 20 million euros, the investment decision must also be supported by the Ministerial Committee on Economic Policy. 

We do not award direct grants or subsidies.

We operate on market terms in a minority role (maximum 50 % of total funding). As a rule, the Climate Fund also requires projects to have a significant amount (at least 30 per cent or so) of other market-based funding.  

We can be an anchor investor in a fund investment, but not with a capital loan instrument.

We operate in a minority role (maximum 50% of total funding). Other financing can include new capital, loans or public funding.

The interest and principal of capital loans are subordinate to all other debts in case of liquidation or bankruptcy of the company, i.e. it is so–called junior loan. In the debtor’s accounting, a capital loan does not increase the company’s equity but can be added to equity for the purpose of calculating solvency in certain cases. Due to these properties, capital loans are often suitable for the Climate Fund’s customers’ funding needs when aligned with the Fund’s investment categories.   

Due to these properties, capital loans are often suitable for the Climate Fund’s customers’ funding needs that align with the Fund’s funding categories. The primary recipients of the Climate Fund’s capital loans are SMEs and growth companies, for which the subordinate status of a capital loan can be important for the realisation of their total funding. The profit-sharing component linked to a capital loan, often based on convertibles, is also a natural part of the total price of funding for such companies. 

The Climate Fund’s capital loans are offered typically on market terms by setting the interest rate according to the reference interest rate table published by the EU. The minimum reference interest rate is based on the loan applicant’s credit rating. The total interest rate is based on the total risks of the project and market-rate pricing. 

Alternatively, we can offer funding jointly and on equal terms with a private investor if the private investor in question contributes a significant share of the total investment (> 30%). 

In addition to this interest rate, there is typically a yield unit that can consist of an interest rate premium exceeding the minimum rate, convertibles and/or profit sharing. 

The Climate Fund’s capital loans are usually connected to an interest rate premium, convertibles and / or profit sharing.  

• The interest rate premium is a separate interest rate above the minimum interest rate (minimum interest rate is specified based on the loan applicant’s credit rating, see the earlier question). 
• With the convertibles component, the lender has the right to convert the loan – either in full or partly – and interest into shares in the company. 
• The profit-sharing component can be used for example when funding projects, where the Climate Fund receives a share of the project’s profit in addition to the base interest of the loan.

The payback period and payment schedule for the loan are negotiated together with the customer. Usually, the loan period is medium or long term, e.g., between five to eight years.

The details of the capital loan are agreed together with the customer. Payback of the loan depends on the nature of the funding agreement, for example whether the funding is targeted to scale up smaller solutions with working capital or to capitalise one larger investment. Bullet loans can be used in certain situations.  

The loan drawdowns are usually tied to milestones agreed in the company’s plan. Because the Climate Fund’s funding targets vary from each other, also the drawdowns can be linked to different types of objectives, e.g., realised emissions reductions. 

Our funding is mainly based on capital loans. However, depending on the case, we may have e.g. observer seat on the board.

Every investment decision proceeds from an initial overview towards a more detailed analysis, and the Climate Fund’s Board of Directors evaluates the proposals several times during the process as well as makes the final funding decision. Our team prepares the investment proposals for the Board, in collaboration with you as well as with possible external evaluators.

The investment process will usually take some months, at least around three months.

Every investment decision proceeds from an initial overview towards a more detailed analysis, and the Climate Fund’s Board of Directors evaluates the proposals several times during the process as well as makes the final funding decision. Our team prepares the investment proposals for the Board, in collaboration with you as well as with possible external evaluators.

The investment process will usually take some months, at least around three months.

We recommend contacting the Climate Fund when you already have other committed investors or financiers onboard. This is to make sure that our discussions can proceed as smoothly as possible.

In an ideal case, the investment should take place in about half a year, and all the necessary groundwork (such as environmental impact assessment, emissions reduction potential and profitability calculations, feasibility studies, etc.) should be ready or at least started and proceeding well.

However, you can contact the Climate Fund any time: we will guide and help you apply our investment criteria throughout the process.

Yes, but as a rule, the Climate Fund also requires projects to have a significant amount (at least 30 per cent or so) of other market-based funding.  

Funding from the Climate Fund can be used for the same purpose for which financing has already been provided by Business Finland, Tesi or Finnvera. The share of the Climate Fund in the total must not exceed 50% and the projects must have a significant amount (at least 30 per cent or so) of other market-based funding.

The public funding actors make their decisions independently, based on different criteria. Thus, in such a case, you can contact us to discuss funding.

The evaluation of the emissions reduction potential is based on the following:

• What is the greenhouse gases net emissions reduction potential over the value chain and lifecycle when making a comparison with a relevant reference product / service in the next 10 years?
• Which are the fundamental assumptions and sensitivities of the calculations? What are the most critical and difficult assumptions?
• What is the proportion of these emissions effects in relation to the total amount of greenhouse gas emissions in Finland?
• In which phase of the value chain are the emissions effects realised?

Guidance for counting the emissions reduction potential:

• Accounting needs to follow the principles of the emissions accounting: relevance, completeness, consistency, transparency, accuracy, and cautiousness.
• Accounting needs to cover all 7 greenhouse gas emission sources according to Kyoto Protocol: carbon dioxide (CO2); methane (CH4); dinitrogen oxide (N2O), HFC compounds, PFC compounds, sulphur hexafluoride (SF6), nitrogen trifluoride (NF3). These will be converted into carbon dioxide equivalents by using the conversion factors of the global warming potentials (GWP) according to the multipliers of the latest IPCC assessment report (currently AR5).
• Accounting needs to define the absolute emissions caused by the company.
• Accounting needs to define the emissions impact of the investment, which is a difference between two scenarios: 1) emissions, if the investment realises and 2) emissions, if the investment does not realise.
• The counting needs to define emissions effects for a 10-year time span. However, the impacts can be presented for a shorter or for a longer period of time.
• Accounting needs to indicate whether the emissions reduction impacts are direct or indirect, i.e., in which phase of the value chain the impacts are created.
• Accounting needs to contain at minimum the direct emissions impact of the company (e.g. primary effects in the GHG Protocol standard, or Scope 1&2 emissions in the EIB methodology). In addition, the most significant direct / indirect emission effects need to be identified (e.g., secondary effects GHG Protocol standard or Scope 3 emissions in the EIB methodology). These can be considered in the calculations, if they are relevant for the industry or the company in question, and they can be accounted according to the calculation principles.