Finnfund’s alignment with Operating Principles for Impact Management

Finnfund was one of the first signatories to the Operating Principles for Impact Management and still is the only Finnish company among its over 90 signatories.

Principle 9 requires the signatories to publicly disclose their alignment with the Principles. Finnfund is pleased to disclose its statement for public scrutiny.

From impact measurement to impact management

During the few past years, impact investment has gained prominence and increasing attention. However, there have been some confusion and differing views on what exactly we mean, when we talk about impact investing.

The nine Principles create a framework and global standards for what constitutes impact investing. The nine principles help investors to ensure that their investments are made with an intent to contribute to measurable positive social and environmental impacts, alongside financial returns. Importantly, the Principles drive the shift from impact measurement to impact management, for using the impact data to make better investment decisions and guarantee that impact is a central consideration in the investment process from the beginning to exit.

Impact measurement and management is an ongoing process

We believe that the hard work and robust processes we have created over years for impact measurement and management are paying off. At the core of our mandate is to enhance socio-economic development in developing countries. We have identified key sectors that we believe are especially conducive for private sector operations and important for furthering the Sustainable Development Goals, such as renewable energy, sustainable forestry, sustainable agriculture and financial institutions.

For each of these sectors we have created Theories of Change. They guide our impact thinking when we assess investments before financing decision, monitor projects annually, and commission specific impact studies. The Theories of Change, or impact pathways, describe how our financing and other inputs lead to changes in a company’s performance, generating direct, indirect and wider economic, social and environmental impacts.

“Our Board of Directors encouraged us to further deepen our impact system, especially its feedback loop to the decision making”, says Finnfund’s Senior Development Impact Adviser Juho Uusihakala. “We are developing a methodology to test and revisit our ex-ante assessments, so called DeatAlive, that analyses the robustness of our ex ante assessments. This will bring more information on how to assess the credibility of our impact assessments at the decisions making stage.”

There is certainly room for improvement, and we look forward to your comments and the independent verification of our systems scheduled for next spring.

[button class=”” text=”Operating Principles for Impact Management (pdf)” url=”https://www.finnfund.fi/wp-content/uploads/2020/04/Operating-Principles-for-Impact-Management-1.pdf” ]

More information: 
Senior Development Impact Adviser Juho Uusihakala, juho.uusihakala (a) finnfund.fi, tel. +358 50 549 3198

Finnfund invests EUR 15 million in Bank Respublika to support green finance and MSMEs in Azerbaijan

Finnfund is investing EUR 15 million equivalent in Azerbaijani manat in Bank Respublika, the…

Finnfund-backed Hewatele facility to cover 60% of Kenya’s oxygen demand

Global supply disruptions can have very local consequences. In Kenya, recent disruptions in international…
Adrienn Kiraly, Lauri Hirvonen and Marta Kos at the signing ceremony holding the signed agreement

EU Finnfund Global Connected Guarantee initiative expands to new regions and energy investments

The European Union and Finnfund, a Finnish impact investor, have agreed to expand the…
green landscape

Finnfund invests in landmark Ecobank Nature Bond to boost sustainable agriculture and biodiversity in Africa

Finnfund has invested 15 million US dollars in a Nature Bond issued by Ecobank…
Annual Report cover

Finnfund’s portfolio totals 857 million euros – more focus on advancing digitalisation and mobilising private capital through EU guarantees

Global tensions, shifting market conditions and growing geopolitical challenges shaped Finnfund’s operating context in…
Toucan Forestal view in Panama

Finnfund invests USD 15 million in Toucan Forestal to restore forests and advance nature‑positive impact in Panama

Finnfund, the Finnish development financier and impact investor, has signed a 15 million US…

Finnfund makes its first investment in Kyrgyzstan with a 10 million US dollar loan to Bailyk Finance, one of Kyrgyzstan’s largest microfinance institutions

Finnfund, the Finnish development financier and impact investor, has signed a 10 million US…

Finnfund Digital Access Impact Fund I invests in Ecofy to accelerate India’s retail green finance market

Ecofy, a pioneering green NBFC backed by Eversource Capital, today announced the successful closure…

Finnfund’s Economist Tangeni Shatiwa: A weaker dollar is steering global investors toward emerging markets

International investors are now allocating funds to emerging market (EM) assets at the fastest…
Hanna Loikkanen Chief Investment Officer Finnfund

Finnfund’s Hanna Loikkanen: Impact investing captivates private investors

The allure of impact investing among private investors is surging, with an increasing number…