In 2017, Finland and IFC entered a partnership to respond to the threat of climate change and the necessary private sector investments needed to reach the United Nations Sustainable Development Goals. The Finland-IFC Blended Finance for Climate Program (BFCP) seeks to catalyze innovative investments and unlock private financing into climate-smart projects in low-income developing countries, creating markets and opportunities for the private sector in places that banks and other investors have traditionally deemed ‘too risky’. Finland is IFC’s first bilateral European partner in blended concessional finance for climate using official development assistance resources in an innovative manner to allow for reflows instead of traditional grant-based contributions. This partnership will help IFC to move ahead with innovative, early-stage climate projects and help Finland to achieve its climate change commitments.
Finland will co-invest €114 million alongside IFC in climate change mitigation and adaptation projects. The Program covers multiple sectors and business models, including investments in renewable energy (including distributed/captive energy solution), energy efficiency, green buildings, climate-smart agriculture, and forestry, among others.
The BFCP addresses market barriers that prevent faster, more widespread or longer-term sustainable adoption of low-carbon technologies and business models in least developed, low income, and lower middle-income developing countries. Blending concessional funds from the BFCP help mitigate uncertainties and risks that deter investors from entering frontier markets, rebalance risk-reward profiles of early movers and unlocks investments for high-impact climate projects for mitigation and adaptation activities.
Following the guidance of the DFI Enhanced Principles, IFC provides the minimum concessionality needed to catalyze projects and programs within a sector.
Collaboration and Business Development Opportunities for Finnish Companies
A key element of the Finland-IFC Blended Finance for Climate Program is to strengthen collaboration opportunities between IFC and Finnish stakeholders. These activities include e.g. increasing IFC’s visibility among Finnish private sector actors on business development opportunities in emerging and frontier markets; enhancing the know-how among Finnish private sector and sector-specific industries of procurement opportunities in IFC and World Bank Group projects; and building knowledge among Finnish stakeholders of business opportunities and financing potential especially in the BFCP sectors.