Norfund invests to create jobs, improve lives and support the transition to net zero.
Throughout 2023, we continued to invest in regions where access to capital was notably scarce. We maximize developmental impact and additionality in our investments by focusing on select sectors and countries, thereby significantly contributing to economic growth in these regions. Our approach includes prioritizing equity investments, mobilizing and circulating capital for greater impact, and meeting high ESG standards.
Norfund’s strategies towards 2026 are focused on impactful investments in Renewable Energy, Financial Inclusion, Scalable Enterprises and Green Infrastructure.
Read about Norfund’s Development Mandate and Climate Mandate
The diagram below illustrates Norfund’s operations and impact in 2023, showcasing the efforts in job creation, expanding energy accessibility, and advancing financial inclusion. Investments are strategically exited once they no longer require additional support, with the proceeds reinvested in enterprises that have a greater need for risk capital. This ensures a continuous cycle of impact and sustainable development in the specified areas.
Being a responsible investor
Norfund is a responsible owner of our portfolio companies, contributing with expertise and helping our investees to have sound corporate governance and improve on their environmental and social performance.
Recognizing that inadequate management of environmental and social risks can lead to harm for both people and the environment, addressing these risks remained an integral part of Norfund’s investment process last year. We are aligned with the Environmental and Social Sustainability Performance Standards of the World Bank’s International Finance Corporation (IFC), utilizing these eight standards as the foundation for our assessments and ongoing interventions.
At Norfund, we held our employees and business partners to high standards of business integrity and maintained a clear no-tolerance approach, which we communicated to all stakeholders.
Commitment to responsible investment principles
Since 2017, Norfund has been a signatory to the Principles for Responsible Investment (PRI) initiative. These principles, six in total, underscore the growing significance of environmental, social, and corporate governance considerations in investment practices. Norfund also provides annual reports on its adherence to them.
Impact management
Norfund is a founding signatory of the “Operating Principles for Impact Management.” These principles, introduced by the International Finance Corporation (IFC) and developed in consultation with key stakeholders, establish a market consensus for impact investment management. They serve as a benchmark against which the impact management systems of funds and institutions can be evaluated. We have published Disclosure Statements annually since 2020, outlining the efforts to align investments and operations with the Impact Principles.
A minority investor with strategical partners and co-investors
Norfund invests jointly with other partners, and always as a minority investor – a principle defined in the mandate. By being a significant minority investor, Norfund has influence, while supporting local ownership and encouraging other investors to invest in developing countries.
Equity is our preferred instrument, and we often take up Board positions in our portfolio companies.
Our ownership always remains below 35 percent, reinforcing our reliance on capable and trusted collaborators. We meticulously assess potential partners, considering factors such as their expertise, track record, societal roles, and reputation. Co-investing this way enables us to leverage additional capital and to provide the industrial and local knowledge needed for each investment.
Responsible tax policy
The principles that guide our approach to tax-related issues and what we expect from our portfolio companies and co-investors are outlined in Norfund’s Responsible Tax Policy. The guidelines are based on internationally agreed principles and were drawn up with input from civil society. It consists of seven fundamental principles. They include requirements regarding transparency, that Norfund’s investees shall pay taxes to the countries in which they operate and where the income occurs, and that third countries must only be used when necessary to meet the Norfund’s development priority of investing in high-risk markets and to protect the fund’s capital.
Business Support
Norfund’s Business Support facility aims to enhance the sustainability and development effects of our investments.
By leveraging Business Support, we can exercise responsible ownership and create value additionality for our investments in high-risk sectors and segments.
The Business Support strategy aligns with our overall strategies, and targets ESG risks and the four cross-cutting issues: human rights, anti-corruption, climate and environment, and gender equality.
Frontier Facility
The Frontier Facility is primarily used for projects that have a risk level which is higher than other investments in Norfund’s core portfolio and to be used in our most demanding markets. Particularly in fragile states and Least Developed Countries (LDCs). These projects are therefore managed as a separate facility and are not included in Norfund’s overall portfolio valuation.
Frontier Facility is funded by the Norwegian Ministry of Foreign Affairs and serves two purposes:
- Enabling early phase project development within Norfund’s investment areas.
- Risk mitigation for commercial investors that wish to invest in Norfund funded projects, throughout the project cycle