We believe that responsible business is both smart and good business.
Responsible and environmentally, socially and economically sustainable business practices can often improve operational and financial performance of the company, enhance employee satisfaction and commitment, and bring a competitive advantage. At the same time, they can improve company’s risk management, helping to anticipate unexpected risks and impacts. They also enhance cooperation with stakeholders and strengthen social license to operate.
Responsibility at the core of our work
Assessment and development of responsibility are an essential part of Finnfund’s investment process. Investment has three criteria: profitability, responsibility and development impacts. Each investment is assessed on the basis of these criteria before the investment decision, and the investment is assessed and monitored over the entire life cycle. Corrective measures are taken when needed.
Finnfund’s mandate is to finance companies in challenging environments where, for example, the state is often not able to ensure realisation of human rights. Therefore, understanding the operating environment and the context is a key element in assessing and monitoring responsibility. Responsible companies can become forerunners and promote sustainable practices within their own activities.
Ensuring corporate responsibility is part of everyone’s work at Finnfund. There is also a specialised team of environmental and social advisers as well as experts in responsible tax, corporate governance, and in the know-your-customer process. External experts are also used when needed.
International standards and best practices
Responsibility, like Finnfund’s other activities, is based on the Finnfund Act, Finnish Development Policy and steering by the Ministry for Foreign Affairs of Finland, Finnfund’s strategy, and Environmental and Social Policy, which utilizes international best practices and cooperation with other European Development Financiers (EDFIs).
Finnfund’s experts provide support for the companies in using best practices such as IFC Performance Standards, and implementation of Finnfund’s own guidelines. More information about policies and guidelines can be found at the bottom of this page. Requirements are determined case-by-case based on a detailed assessment of the investment and industry risks.
Finnfund also encourages companies to acquire international responsibility and quality certifications.
The work is based on continuous development of responsibility, cooperation and monitoring. Typically, agreed targets must be met, for example, before disbursements. The aim is that the company develops its responsibility according to international principles so that it reaches a required level within a reasonable time.
Finnfund’s requirements for investees
Bases for responsibility include, e.g.
- Host country regulations
- IFC Performance Standards and guidelines
- Applicable ILO conventions and core labour standards
- Depending on the project, other sector-specific standards and practices (e.g. FSC, RSPO, Global GAP) and/or management system standards (e.g. ISO 14001, SA8000)
- Finnfund’s policies, e.g. on responsible tax
Requirements in practice are, e.g.
- Environmental and social impact assessment (ESIA)
- Environmental and social action plan (ESAP) & implementation
- Management system, incl. moniroing and reporting systems
- Sufficient resources, staff and operating budget for the implementation of responsibility
- Continues dialogue and cooperation with local communities throughout the investment life cycle
- Grievance mechanism for stakeholders such as employees and local communities
- Monitoring and reporting to Finnfund
- Monitoring and auditing visits
- Certification bodies and auditors
- External experts employed by financiers
- Monitoring and visits by Finnfund
Reports and publications
Finnfund regularly publishes various publications and reports. Annual publications include, inter alia, the annual report, corporate responsibility report and report of development results.
Interested to know more? Read our latest reports and publications.