Home ImpactSustainabilityImpact assessment Impact assessment Good jobs in rural areas, more clean energy, fighting deforestation and climate change, tax revenue and payments to developing countries. These are some examples of the various development impacts that are generated by the companies Finnfund finances. Finnfund’s strategy guides us to invest in business projects that contribute to the Sustainable Development Goals (SDGs). Before any investment decision, we assess the investment against the SDGs. For each new investment, two SDGs and targets are chosen to describe the investment contribution towards the SDGs. In our strategy, introduced at the end of 2021, we also aim, for instance, to double our total impact between 2020 and 2025, and to maintain our investment portfolio as carbon net negative. Sustainable, responsible forestry is one key way to curb deforestation and climate change. Finnfund’s investee company Miro Forestry has operations in Ghana and Sierra Leone. Development impact in our investment process At Finnfund, every investment has three criteria: impact, profitability and sustainability. 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. Finnfund assesses the expected development impact of every investment before the investment decision, and monitors and manages the development impact throughout the life cycle, including at the exit. Development impact as part of Finnfund’s investment process. Operating Principles for Impact Management Finnfund is one of the first signatories to the Operating Principles for Impact Management (OPIM). The nine principles of OPIM provide an internationally recognised framework for investors, to ensure that impact considerations are purposefully integrated throughout the investment life cycle and to require a robust investment thesis of how the investment contributes to achieving an impact. Our alignment statement can be found below (pdf). In accordance with the requirements of the principles, an external verification was conducted to assess the extent to which Finnfund adheres to the operating principles in its operations. The verification report can be accessed below (pdf). The Operating Principles for Impact Management (OPIM) provide a framework to ensure that impact considerationsare purposefully integrated throughout the investment life cycle. Finnfund, OPIM disclosure statement 2025 (pdf) Finnfund's OPIM verification report (pdf) Theories of Change guide our impact work The basis for development impact assessments are sector-specific Theories of Change. These guide our impact thinking when we assess investments before financing decisions, monitor projects annually, and commission specific impact studies and surveys. The Theories of Change lay the foundation for all impact assessments by defining their broader social impact and their contribution to the SDGs, and by helping us better identify potential direct and indirect impacts of investments. You may find below a list of Theories of Change which have been made for Finnfund’s five key sectors. Forestry Digital infrastructure and solutions Financial institutions Agriculture Energy Development Effect Assessment Tool (DEAT) Impact is one of the key components in making investment decisions. Our tool for preliminary screening of investments before making an investment decision is the Development Effect Assessment Tool (DEAT). Each potential investment gets an impact score, which consists of its strategic relevance (e.g. its climate and gender impacts), its contribution to market and local economic development, and the additionality of Finnfund’s financing. Development Effect Assessment Tool (DEAT, pdf) Monitoring direct impact on an annual basis As part of the due diligence process, Finnfund collects baseline values for key indicators. In addition, Finnfund agrees with the client on impact key performance indicators (KPIs), which best measure the enhancement of the development impact of the investment. For these impact KPIs, the targets will serve as a basis for monitoring in subsequent years. Monitoring takes place annually. The majority of our indicators are based on the Harmonized Indicators for Private Sector Operations (HIPSO), or the IRIS+ indicators developed by the Global Impact Investing Network (GIIN) and hence collectively agreed upon by international development finance institutions and impact investors. For indirect and induced economic and employment impacts as well as for CO₂ emission calculations, where primary data is not available, Finnfund uses the Joint Impact Model (JIM). Development impacts are examined at different levels: direct effects of the company’s operations – e.g. good jobs, increased electricity generation, improved infrastructure indirect effects of the operations – e.g. the benefits of contract farmers, fight against deforestation and biodiversity loss, lower electricity prices and increased reliability of energy production impacts in wider society – e.g. tax revenues and payments to the government, economic growth, climate change mitigation Capturing indirect impact through studies, surveys, and modelling With direct impact being only a fraction of the total outcome, identifying indirect impact is a key aspect of understanding the results of our investments. For example, our interest is not primarily in the number of jobs, but in the impact these jobs create. We are interested in jobs because a decent job is the surest way out of poverty. For example, rapid stakeholder surveys help our investee companies to better understand who their stakeholders (such as employees, customers, and community members) are, how they experience the impact of the company, how significant the impact is, and what could be done to further improve the benefits. One benefit of the rapid surveys is that the results are available to enable the management to take action in due course, if it is deemed necessary. We also conduct more in-depth impact studies which are typically focused on specific sector or aimed at assessing a wider impact of one specific company, for example, as part of our Finnfund’s exit process. In addition, Finnfund Insights reports focus on topical issues, specific countries or regions. Reports In 2021, the New Forests Company, a Finnfund investee since 2014, conducted a stakeholder survey among the local tree out-growers community. Prior to answering the survey, the NFC team explained the principles, for instance, that it is voluntary, personal, and 100% anonymous. Photo: NFC Read more Impact Impact stories Impact results Our work in practice Reports and publications Finnfund Insights: Focus on Kenya About the report Kenya is the largest economy in East Africa and the fourth… Annual Report 2024 Hewatele, Kenya – Impact Performance Report Annual Report 2023 Finnfund Insights: Focus on Vietnam About the report Vietnam is one of the fastest-growing economies in Southeast Asia and… Annual Report 2022 Annual Report 2021 Review paper: Smallholder integration into commercial value chains through agricultural traders and local food security Background This study, contracted by Finnfund and conducted by E2 Research, aims at describing… A way to recovery: Trends and analysis on the impacts of the COVID-19 on markets and businesses in developing countries The COVID-19 pandemic has been an unprecedented shock to the world economy. 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