April 8, 2025
Norfund’s investments in developing countries aimed at creating jobs and avoiding greenhouse gas emissions have delivered average annual returns of 5.1 percent and 14.4 percent, respectively, according to new figures*.
“Good returns are key to fighting both poverty and the climate crisis,” says Tellef Thorleifsson, CEO of Norfund.
Norfund, the Norwegian government’s investment fund for developing countries, has since 1997 invested in businesses that create jobs to help reduce poverty. Despite operating in some of the world’s most challenging markets, the fund’s development mandate has delivered an average annual return of 5.1 percent in investment currency—or 8.6 percent in NOK—since inception.
“At a time when one third of aid risks disappearing, mobilizing private capital has become even more critical to closing the investment gap and fighting poverty. To attract meaningful private capital, we must demonstrate that investors can achieve reasonable returns,”
Tellef Thorleifsson, CEO AT Norfund
High returns reflect demand for climate capital
Since 2022, Norfund has also managed the Climate Investment Fund, which seeks to accelerate the global energy transition by investing in renewable energy in developing countries with rapidly growing fossil power production. The fund has so far generated an average return of 14.4 percent in investment currency, or 19 percent in NOK.
“These returns reflect the fact that demand for capital in these markets far exceeds supply, especially for the type of equity investments we provide,” Thorleifsson explains.
The Climate Investment Fund’s portfolio of NOK 5.5 billion supports projects expected to avoid 17.6 million tonnes of CO₂ emissions annually—more than one third of Norway’s total annual emissions.
Efficient operations and capital recycling
Norfund also works to keep total management costs low. For 2024, total costs amount to just 0.99 percent of committed capital.
“Reasonable returns and low costs allow us to deliver effective contributions to both poverty reduction and climate mitigation,” says Thorleifsson.
Since 2022, Norfund has received NOK 1.68 billion annually for its development mandate and NOK 1 billion for the Climate Investment Fund. Just before Christmas, Norfund also received NOK 250 million earmarked for investments in Ukraine. In 2024, Norfund invested NOK 7.7 billion—up NOK 1.2 billion from 2023.
“Returns and exits enable us to invest nearly three times what we receive from the state, but the needs are growing even faster,” says Thorleifsson.
*For 2024 alone, Norfund’s development mandate yielded an 8.3 percent return in investment currency (19.7 percent in NOK), while the Climate Investment Fund delivered 9.3 percent (18.2 percent in NOK).