Additionality is a central part of Norfund’s mandate. We are additional when we invest in markets and businesses that are characterised by high risk and scarcity of capital, and when we provide financial instruments associated with high risk. We add value that goes beyond capital value, providing active ownership, promoting environmental and social standards, and supporting enterprise improvement.

Norfund participates actively in international networks, strengthening industry standards and the reporting of additionality. In 2018, OECD DAC members agreed on a common definition of additionality. This is an important milestone that now influences our work.

A common definition of additionality

Proving the additionality of our investments is challenging because it requires insights into what could have happened had we not invested. The lack of a common definition of what additionality is has complicated efforts to substantiate claims. OECD DAC members therefore developed a common definition of additionality to address this challenge.

The OECD’s definition of additionality distinguishes between financial and value additionality. A transaction is considered to be financially additional if it supports capital-constrained markets in which private sector partners are unable to obtain commercial financing due to high risk or if it mobilises investment from the private sector that would not have otherwise invested. Value additionality, in contrast, refers to “the provision or mobilisation of non-financial value that the private sector is not offering, and which will lead to better development outcomes, e.g. by providing or catalysing knowledge and expertise, promoting social or environmental standards or fostering good corporate governance”.


A refined additionality framework

We have refined Norfund’s additionality framework to ensure alignment with the new OECD definition. Our refined framework consists of ten additionality ambitions, reflecting both the financial and value additionality of our investments. Operationalisation is measured using a set of additionality indicators. The framework will inform our new investment decisions and how we report additionality. 


Additionality of new investments

Norfund invested in 16 new companies and funds in 2018. Each investment was assessed using ten additionality ambitions.