THIS IS NDF
This section provides a window onto our values and strategy, which form the cornerstones of our work and define our added value and approach in addressing climate change and development challenges together with our co-financing partners. To show how all of this comes together in practise, we present a selection of projects, each illustrating one of our three strategic pathways: Advancing Nordic leadership, Early-stage design and structure and Catalytic financing for launch and scale.
Photo: African Development Bank
Key facts
Joint Nordic international finance institution (IFI) focusing on the nexus between climate change and development in lower income countries.
EUR 1.37 billion
paid in capital
Co-financing with strategic partners through grants, loans and equity as stand-alone or blended
Geographical focus: Sub-Saharan Africa
Established in 1988 by the Nordic countries Denmark, Finland, Iceland, Norway, and Sweden.
Staff
28
Photo: Vincent Tremeau, World Bank
Our values
Our purpose – in fact, the reason we exist – is to take firm and concrete action against climate change. We operate in the least developed parts of the world where climate change poses the most severe negative threats. We work to support vulnerable societies and individuals affected by climate change. Every day, we work to make the world a better place by financing high-impact projects. To add value to our partnerships, we make waves wherever we go by leveraging our financing and competence. Our belief is that an inclusive and diverse organisation, where people show each other compassion and care, provides the foundation for us to have the most positive impact. Our values are guided by this belief, and they steer our decision-making, our day-to-day work, our communication and our collaboration. We hold our values true and important, and worth defending. Thrive Together is based on the power of collaboration, trust, respect, and transparency. We believe that we always need to Strive for Excellence in everything we do. By continuously improving, learning from others, and from mistakes, we can achieve the best possible results. We Drive Change, within our own organisation, with our partners, beneficiaries and ultimately within entire societies. We Thrive Together and Strive for Excellence to Drive Change.
Thrive together
The key to great collaboration in the workplace community is transparency, respect and trust.
Strive for excellence
We foster an environment where we learn, innovate, allow mistakes and celebrate success.
Drive change
We make a difference by joining forces with partners to leverage our financing and competence.
Photo: Sun Culture
Strategy 2025
Our Strategy 2025 is a roadmap taking us from our Mandate to the fulfilment of our Purpose, guided by our Principles and Pathways.
Our Strategy components - from Mandate to Purpose
Our Mandate has been defined by the five Nordic countries and provides the framework and foundation for NDF’s work. Our Principles of engagement aim to ensure the best added value for NDF in the climate finance landscape, while our Pathways describe the main avenues of activities to fulfil our Purpose.
As an organisation with a clear focus on having an impact, we have chosen to formulate our objectives and aspirations as a Purpose. The Purpose describes the overarching objectives and what we are striving to achieve.
To ensure quality and integrity in our work, we have developed several policies to guide our operations. You can find them on our website.
Photo: MiPesca
Guiding targets
Strategy 2025 defines three guiding targets for NDF’s work.
CLIMATE
At least 50% directed towards adaptation projects
COUNTRY FOCUS
At least 60% targeted towards Sub-Saharan Africa
CONCESSIONALITY
At least 50% of financing with grants
This is how the strategic targets are reflected in our projects in 2021. The data is collected from our active portfolio of 46 projects, which have started, are ongoing or have been finalised during 2021. To measure our climate focus, we use the OECD Rio Marker definitions. The total value of our active portfolio in 2021 was EUR 319 million.
Climate
Country focus
Concessionality
Photo: Ministry of Public Works and Transport of Lao PDR
Strategic pathways
Pathway 1: Advance Nordic Leadership
As a joint Nordic finance institution, NDF supports the climate and development agenda of the Nordic countries by co-financing of projects in areas that are underserved and rank as a high priority for the Nordic countries. These high-need areas include climate adaptation, biodiversity on land and in the oceans and the blue economy with focus on least developing countries, particularly in Sub-Saharan Africa, fragile countries and small island developing states (SIDS).
As a concessionary financier, NDF co-creates and designs climate solutions, complements its partner efforts and actions by adding value, and convenes them for increased support and amplified visibility around Nordic action in these priority areas.
NDF brings a wide range of Nordic solutions to the global effort to mitigate and adapt to climate change. Nordic knowledge and solutions related to flooding, coastal erosion and the planning of sustainable cities are showcased in the cities of Copenhagen and Malmö – two Nordic cities with resilience solutions in place for storm-water management, green planning and flood control. Building on this knowledge, NDF supports long-term climate-resilient planning and management in peri-urban Dakar, Senegal, and in Kigali, Rwanda, by improving storm-water drainage and flood prevention. NDF supports climate adaptation and resilience through the transfer of Nordic technologies and experiences for urban climate solutions via the Kenya-Nordic Green Hub and the Urban and Municipal Development Fund for Africa.
Nordic development cooperation supports mangrove restoration and conservation, and several Nordic research programmes focus on tropical ecosystems including wetlands and mangroves. In the MiPesca project in Honduras, NDF supports indigenous fishing communities in advancing their artisanal fisheries value chain, while preserving the mangrove ecosystems on which their economy depends.
The Nordic countries are also front-runners in many areas of circular economy and have been promoting circular economy solutions in Africa. NDF’s support in this area is best exemplified by the Africa Circular Economy Facility, an initiative that seeks to mainstream circular economy as an inclusive green growth strategy for Africa.
SEFA – A flagship clean energy fund for Africa
In support of the move to more inclusive green growth in Africa, The Sustainable Energy Fund for Africa (SEFA) was designed to catalyse private investment in early-stage renewable energy and energy efficiency markets.
This NDF-supported fund is a delivery vehicle for the African Development Bank’s New Deal on Energy for Africa, which finances clean energy projects through concessional investments in the form of equity, debt, guarantees, results-based financing and grants all aimed at scaling up sustainable energy.
Backed by its clear focus on clean energy and energy efficiency in Africa, SEFA promotes several Nordic development policy priorities, including climate change mitigation and adaptation, poverty reduction, job creation, inclusive green growth and gender equality, which is a cross-cutting theme across the fund’s activities.
SEFA’s climate change mitigation activities through mini-grids and off-grid technologies can also deliver strong adaptation benefits such as increasing resilience to climate variability and extreme heat and drought.
As African countries gradually transition out of the pandemic, SEFA is actively working to build back better and greener through its COVID-19 Response Program, which provides risk financing for companies in the off-grid renewable energy sector that have been running cash deficits due to the negative economic effects of the pandemic.
The fund was originally established by Denmark and the Africa Development Bank (AfDB) in 2011 and later joined by Norway and Sweden. NDF support for SEFA further strengthens Nordic leadership on clean energy in the fund, which could act as a platform for broader Nordic cooperation in the energy sector in Africa.
Top image, photo: Bboxx
Bottom image, photo: African Development Bank
NDF CO-FINANCING
EUR 10 million
PARTNERS
African Development Bank, Danida, DfID, Norad, Sida
Pathway 2: Develop early-stage designs and structures
Part of the NDF value add comes from the concessional financing we provide to validate, develop and test innovative, early-stage climate and development projects; investments and solutions in need of financing; and project design support. This is with the aim of mitigating the high risk that is often associated with early-stage projects, while helping unlock financing on a larger scale.
As a concessionary financier, NDF co-creates with its strategic partners on the design, preparation and delivery of early-stage projects, investments and climate solutions, complementing the market by mitigating the issues related to lack of financing and support due to perceived risks related to early-stage financing. NDF involvement also helps convene public and private sectors to help raise further financing once a project is proven to be viable and scalable.
Several projects show how NDF has influenced the design of early-stage project proposals. For a project on climate-resilient urban infrastructure development in Africa, NDF was active in discussing the contents and design of the project to bring in a Nordic approach to the city planning. NDF’s involvement at the design stage also strengthened the climate change aspects of the fund’s activities and allocations. For example, in a pilot adaptation plan for high inter-valley communities in Bolivia, NDF reoriented the project to strengthen its focus on the adaptation needs of local communities, and elevated climate resilience considerations to the project’s top line objectives.
NDF provides financing for preparatory phases and technical assistance for projects in sectors typically financed by the public sector, such as adaptation. For example, NDF’s validation of the Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT) concept at the early stage was instrumental in its launch.
Similarly, NDF provides early-stage financing and technical assistance for mitigation projects. This is the case with the Facility for Energy, Inclusion Off-Grid Energy Access Fund (FEI-OGEF), an innovative, blended finance fund that aims to scale up access to affordable clean energy for off-grid households as well as for micro, small and medium-sized enterprises in Sub-Saharan Africa. FEI-OGEF also aims to facilitate a sustainable financing environment for energy access by mobilising local currency financing and crowding-in local financial institutions. NDF was closely involved in the early stages of the project development, providing a small grant for the preparation and establishment of the Fund and becoming a limited partner, enhancing the fund’s risk profile and supporting the crowding-in of impact and commercial lenders.
Other examples of the impact of early-stage financing include NDF’s investments in ADB Ventures and the Energy and Environment Partnership Trust Fund (EEP Africa), as explained in the case examples.
Lightsmith Resilience Partners (CRAFT) – Private equity can fight climate change
Lightsmith Resilience Partners is the first global private investment vehicle dedicated to growth-stage companies with technologies and solutions for climate change adaptation and resilience.
The investment vehicle, also known as the Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT), is structured as a blended fund that invests in private companies with climate resilience solutions and strong growth potential. These are in areas like weather and agricultural analytics, disaster risk modelling, distributed water solutions, and supply-chain analytics.
NDF was involved with Lightsmith Partners, who manage the fund, from the outset, giving an initial preparatory grant of EUR 0.5 million, together with the Global Environment Facility, in 2017, to help develop this unique strategy. At that time very little was being done in adaptation.
NDF later became the first investor to commit to the fund with EUR 8.5 million in junior equity and a grant commitment of EUR 1.5 million to the Fund’s Technical Assistance Facility.
This early-stage NDF support was instrumental in launching CRAFT and mobilising leading global investors, notably the Green Climate Fund, European Investment Bank, KfW, AXA Investments, Asian Infrastructure Investment Bank, and The Rockefeller Foundation, culminating in a final closing in early 2022 of USD 186 million in commitments.
So far, CRAFT has three companies under investment in Malaysia, India and Brazil, attesting to the fund’s two-fold strategy of growing companies to deliver greater climate adaptation and resilience to communities while delivering economic returns to investors.
Photo: SOURCE
NDF CO-FINANCING
EUR 10 million
PARTNERS
Lightsmith Resilience Partners Fund, European Investment Bank (EIB), International Climate Finance Accelerator (ICFA), KfW, Green Climate Fund (GCF), Government of Luxembourg, AXA Investments, Rockefeller Foundation, Asian Infrastructure Investment Bank, and others
EEP Africa – Mobilising resources and partners for clean energy
The Energy and Environment Partnership Trust Fund (EEP Africa) is a clean energy financing facility with a strong Nordic identity. It was originally founded in 2010 as a program hosted by the Finnish Ministry of Foreign Affairs. Legacy donors Finland and Austria were later joined by NDF in 2018 when it became an open-ended trust fund under NDF management. Switzerland joined the fund in 2021.
Through EEP Africa, NDF has provided early-stage grant financing to projects in active development through competitive, open calls for proposals, enabling entrepreneurs to achieve proof of concept and de-risking scaleup of clean energy solutions aimed at commercial viability. More recently, NDF also began piloting flexible follow-on debt financing for successful companies from the grant portfolio to close the financing gap and scale up commercially viable solutions.
Guided by a vision for a climate-resilient, zero-carbon future, in line with Paris Agreement and UNSDG targets, EEP Africa provides early-stage grant and catalytic financing to promising clean energy projects, technologies, and business models in 15 countries across Southern and East Africa. Along the way, project financing is also supplemented with technical support, investment facilitation and knowledge sharing, all aimed at advancing the investment readiness of fund grantees.
The Fund’s main value-add in the African clean energy sector is providing grants for proof of concept that serve to de-risk the scaleup of viable solutions. These grants are allocated through open competitive calls for proposals and need to be matched with at least 30% of co-financing.
The total project value of the 55 active EEP Africa projects at the end of 2021 was EUR 78 million of which EUR 21 million came from EEP Africa and EUR 57 million from co-financiers.
Photo: Yellow
NDF CO-FINANCING
EUR 22 million
PARTNERS
MFA Finland, Austrian Development Agency
ADB Ventures – Closing the climate demand-supply gap in Asia
ADB Ventures (ADBV) is a climate finance vehicle aimed at de-risking and accelerating market entry for climate technologies in South and East Asia. With a strong emphasis on gender equality, ADBV sets out to address the mismatch between the supply of climate technologies, more focused on developed markets, and the growing demand and need for climate solutions in developing countries.
The countries that make up this region include some of the fastest growing economies in the world, characterised by expanding industrial production and a rising middle class. This is driving energy consumption and making South East Asia a must win battle for climate change.
ADBV has a clear focus on climate change mitigation and adaptation through investments in clean technology sectors like energy efficiency, climate resilient agri-tech, inclusive fintech, green buildings, sustainable mobility and water efficiency. Nordic leadership in clean technology is visible in ADBV’s pipeline, which includes several Nordic clean-tech companies. ADBV’s strong contribution to gender equality with at least 75% of the investments having a strong female market and/or management participation is also in line with Nordic priorities.
As an early anchor investor, NDF had a significant impact on ADBV’s investment strategy, fund structuring, resource requirements, and its results monitoring and evaluation framework. NDF continues to have a catalytic impact in attracting future ADBV co-financiers.
Photo: E Green Global
NDF CO-FINANCING
EUR 10 million
PARTNERS
Asian Development Bank, Clean Technology Fund (CTF), MFA Finland, Republic of Korea
Dakar, Senegal. Photo: Otto Helkama
Pathway 3: Provide catalytic financing for launch and scale
One of NDF’s comparative advantages comes from its role in developing financing mechanisms that help close the gap on urgent climate and development needs. Needs that on one hand are exacerbated by climate change, and on the other, a lack of interest from risk-averse international private financiers. These financing mechanisms are intended to address deficits and needs in public and private financing packages that hinder the mobilisation of climate finance at the scale needed.
As a concessionary financier, NDF co-creates high-impact activities with strategic partners; complements the market by mitigating issues related to the lack of financing in early-stage financing and for the missing middle; and convenes public and private sectors to crowd in institutional investors.
NDF’s patient and risk-tolerant financing contributes directly to the mobilisation of finance from commercial and institutional investors. Through the Africa Guarantee Fund - Green Guarantee Facility, for example, NDF funds are expected to catalyse at least six times their value in private-sector lending.
NDF mobilises additional financing needed from public sources. A good example of the importance of early-stage financing is the West Africa Coastal Areas Management Program (WACA), as showcased below.
WACA – Integrated climate action on the West Africa coast
NDF is supporting the resilience of coastal communities in West Africa through the West Africa Coastal Areas Management Program (WACA). In 2015, NDF made a small grant (EUR 500,000) to help strengthen the institutional capacity of Benin, Togo, Ivory Coast and Ghana, as well as promote a more integrated and joint coastal management approach to combating climate change.
NDF’s early-stage support opened the way for other public and private financing, culminating in the launch and expansion of the WACA program into a multi-country regional response to support the resilience of coastal communities and assets in six western African countries vulnerable to erosion, flooding, and pollution.
WACA’s strong focus on building adaptation and resilience in Africa through a blue economy lens is in keeping with Nordic priorities in the region, and with Nordic know-how in integrated coastal zone management and Nordic experience in flood management and erosion control and has been well-received by WACA stakeholders.
The high relevance and positive impact of the WACA project in capturing numerous countries and sectors, makes WACA a textbook case for how a small amount of NDF seed capital can leverage much larger investments with far-reaching effects.
Photo: Vincent Tremeau, World Bank
NDF CO-FINANCING
WACA Benin: EUR 4 million
WACA Senegal: EUR 4 million
WACA Africa Regional: EUR 5,1 million
PARTNERS
WACA Benin and WACA Senegal: World Bank, Global Environment Facility (GEF), Global Facility for Disaster Reduction and Recovery (GDFRR) WACA Africa Regional: World Bank, Global Environment Facility (GEF)