Norfund’s impact objectives

Norfund’s key objective is to contribute to job creation and to improve living standards. We invest in sectors that are important to achieving this mission: clean energy, financial institutions, green infrastucture and scalable enterprises. We have defined strategic impact objectives for each of these sectors, which are aligned with the UN SDG agenda. Our investments in clean energy, for example, contribute directly to achieving SDG targets 7.1 and 7.2. Our investments in financial institutions are contributing directly to meeting SDG targets 8.10 and 9.3.


Theory of change

A theory of change is a methodology for planning and evaluation which describes how and why a desired change is expected to happen. We have developed theories of change for each sector in which we work, to explain the relationship between the input we provide to clients, the SDG targets, and the overall impact we want to achieve. These theories of change also highlight other relevant effects of our investments.


Each theory of change has three components:

  • A narrative with a problem statement, hypothesis of change, and an assessment of the evidence base
  • A diagram visualising the causal pathway, and details of the intermediary steps
  • A framework for monitoring and evaluation


Annual reporting

Each year, Norfund collects and monitors data on the key development effects of our portfolio companies. In 2018, we collected data from more than 700 companies. Over 80 per cent have reported data for two years or more, and this has allowed us to monitor their progress. Changes in the composition of Norfund’s portfolio (exits, loan redemptions and new investments) mean that some of the figures that describe the impacts of our investments fluctuate sharply from year to year. To show the development of our portfolio enterprises more accurately, we are also reporting changes from year-end 2017 to year-end 2018 for those enterprises that were included in the portfolio and submitted reports for both years.


Improving our methods

Our portfolio companies report on the direct effects of their operations, using the Harmonised Indicators for Private Sector Operations. These metrics identify both sector-specific effects (for example, energy production or financial services) and portfolio-wide effects (jobs, local purchases, and taxes).

We wish to improve our understanding of the indirect effects of our investments. The case studies and independent evaluations we support give us valuable insights into these issues, such as the effects of job creation in the value chain, and the productivity effects of power generation. We are working with other EDFI members to explore available methods and models that could help us to estimate such indirect effects of Norfund’s investments more broadly.