Assessing environmental and social impacts of our projects
Across our 30-year journey as a green financier, Nefco has developed stringent procedures for environmental and social assessments, project management and monitoring, and financial and integrity due diligence. The green impacts of a project are assessed in broad terms, using our deep understanding of the environmental and sustainability aspects. Societal and gender aspects are also given thorough consideration.
All these elements are integrated into the investment process. In addition to our own funds, we manage trust funds and implement projects on behalf of various donors, which may have different environmental priorities and goals. In principle, we use the same methodology for these funds whenever applicable.
Nefco’s Environment and Sustainability Department continuously assesses financed projects. Our Environmental and Sustainability Guidelines give a detailed view of how we assess project proposals and verify results. We strive to ensure sustainability is incorporated throughout the client organisation. The aim is to support our clients in better understanding sustainability aspects as a whole and help them in their transition to becoming greener.
During project implementation, clients shall report on the impacts of their project on a yearly basis. We also expect clients to cooperate with us once a loan has been fully repaid or the agreement exited. Annual and final monitoring allow us to track the operational performance of projects and reflect on lessons learned together with clients.
Bottom-up approach for concrete results
We focus on financing with a ‘bottom-up’ approach, processing a large number of projects by companies, public entities and other organisations. In our financing activities we assess
- the potential positive environmental impact of the project,
- the potential adverse effects,
- the potential for scaling up or replicating the project solution or technology, and
- the results of the projects on an annual basis during implementation and after completion until the loan has been repaid or until the exit phase.
What kind of projects meet Nefco’s criteria?
Many of the projects in Nefco’s portfolio are at the forefront of technological innovation and aimed at testing the application of Nordic green solutions with scale-up potential in local, non-Nordic contexts.
In identifying the environmental benefits of a project, we primarily use the six environmental objectives established by the EU Taxonomy framework.
However, ‘green’ is not defined by the EU Taxonomy alone. For economic activities that are not yet covered by the EU Taxonomy, we use our own definitions based on the spirit and logic of the EU Taxonomy.
- Is the EU Taxonomy difficult to grasp? For a quick summary, see our fact sheet on the EU Taxonomy
How we assess our financing activities
In our Environmental and Sustainability Guidelines, we describe how we assess the environmental and sustainability aspects of the projects we finance. This sustainability assessment covers not only the activity being financed but also how sustainability is integrated throughout the client organisations. Through dialogue, we aim to increase understanding of sustainability aspects within client organisations and support effective implementation and management of their green projects.
Our aim is to ensure that:
- projects generate substantial positive environmental impacts and contributes to and accelerates the green transition;
- possible environmental and other sustainability risks are sufficiently considered and appropriately mitigated; and
- clients work strategically and formally to anchor sustainability in their business plans and daily operations.
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