New policy statement guides Finnfund’s investment activities in strengthening natural values and biodiversity

Development financier and impact investor Finnfund has adopted a policy statement that brings together the guiding principles and goals based on which Finnfund strives to strengthen the well-being and diversity of nature and to mitigate possible nature and biodiversity risks in its investment activities.

The policy statement recognises biodiversity loss as a significant threat to the well-being of the planet and the sustainable development of societies and the economy. Companies and investors can actively protect and strengthen biodiversity through their own activities. Correspondingly, strengthening biodiversity can create new business opportunities and reduce business risks.

“Biodiversity loss and climate change are among the biggest crises of our time, and the effects are already visible across of the world. We firmly believe that an active investor can play a significant role in fostering biodiversity,” says Finnfund CEO Jaakko Kangasniemi.

“This means both channelling funding to the right players and sharing expertise and cooperation with investees and other financiers. In this work, we want to be at the forefront now and in the future, Kangasniemi continues.

The new statement complements Finnfund’s Sustainability Policy and the previously published Climate and Energy Statement.

“Biodiversity has been an important theme for Finnfund for many years, but with the policy statement we aim to clarify further and strengthen this work,” says Anne Valto, Senior Development Impact Advisor at Finnfund.

Finnfund commits to:

1. Ensuring there is no net loss of biodiversity in our investments

Finnfund invests in companies whose operations do not cause negative net effects on biodiversity. The risks and opportunities related to nature and biodiversity are assessed for each investment decision, and they are monitored and managed throughout the investment’s life cycle. Special attention is paid, for example, to the protection of critical and natural habitats and to the rights of indigenous peoples and other local communities and cooperation with them.

Since 2005, Finnfund has evaluated and minimized risks related to nature and biodiversity in its investments using the IFC Performance Standards framework. For example, in 2023, risks related to nature and biodiversity, which require active risk management, were identified in almost half of Finnfund’s investments.

2. Developing and fostering nature and biodiversity net-gains

Finnfund seeks investment opportunities that develop and implement solutions contributing to the goals and targets set by the Kunming-Montreal Global Biodiversity Framework (GBF), including mechanisms that address both biodiversity loss and climate change, both directly and indirectly affecting the drivers that cause and accelerate them. These drivers of biodiversity loss include land and sea use changes, pollution, invasive species, or unsustainable use of natural resources.

For example, since 2022, Finnfund has been working with the agroforestry company MLR Forestal operating in Nicaragua, aiming to restore 554 hectares of degraded forest land and strengthen the natural values ​​of the entire area.

3. Promoting more systematic, harmonised, and transparent nature-related financial disclosures and reporting

Global frameworks and standards to identify, monitor, report, and disclose biodiversity- and nature-related risks and impacts are just becoming established. Finnfund is committed to pushing for more systematic, harmonised, and transparent nature-related financial disclosure and reporting practices both in its own operations and to encourage the companies it finances and other investors to do the same.

An example of this is Finnfund’s commitment to the Taskforce on Nature-related Financial Disclosures (TNFD) initiative. In addition, Finnfund is also developing a new investment evaluation tool that can be used to evaluate and monitor both the positive and negative planetary effects of investments. Discussions and cooperation with various stakeholders have also played a central role in the preparation of this policy statement.

“The fight against biodiversity loss requires cooperation. Sharing good practices and know-how is also an essential part of our work as an impact investor, and we would like to thank everyone for the valuable discussions in the preparation of this policy statement,” concludes Kaisa Alavuotunki, Director of Impact and Sustainability at Finnfund.

Read the policy statement at Biodiversity – Finnfund

Read a blog post by Anne Valto: Taking Finnfund’s biodiversity work to the next level – Finnfund

More information:
Anne Valto, Senior Development Impact Adviser, tel. +358 44 356 4590, anne.valto@finnfund.fi
Kirsi Pere, Communications Manager, tel. +358 (0)40 620 9767, kirsi.pere@finnfund.fi (media contacts)

Finnfund is a Finnish development financier and impact investor. We build a sustainable future and generate lasting impact by investing in businesses that solve global development challenges. We invest 200–250 million euros in 20–30 companies in developing countries each year. Our focus sectors include renewable energy, sustainable forestry, sustainable agriculture, financial institutions, and digital infrastructure and solutions. Today Finnfund’s investments, commitments, and investment decisions total about 1.23 billion euros, half of them in Africa. The company has 97 employees based in Helsinki and Nairobi. For more information, please visit www.finnfund.fi