NDF - Financing for climate change and development projects

NDF marks 10 years of climate financing and 30 years in operation

Photo: Marjo Koivumäki
Standing from left: Lars Roth, Barbara Buchner, Jay L. Koh. Sitting from left Felix Bikpo and Karin Isaksson
Photo: Marjo Koivumäki
NDF Board Chair Lars Roth
Photo: Marjo Koivumäki
Video address by Development Minister Ville Skinnari
Photo: Marjo Koivumäki
Barbara Buchner
Photo: Marjo Koivumäki
Panel discussion
Photo: Marjo Koivumäki
Karin Isaksson thanking the panelists
Illustration: Sanna Turunen

Multi-stakeholder gathering and international panel deliberate on how to scale up innovative financing to fight climate change

On Monday 25 November 2019, NDF celebrated its 30-year journey so far, while keeping focus firmly on the future. Opening remarks from NDF Board Chair Lars Roth reminded the audience that the climate emergency is front and centre of world scrutiny and that NDF, despite its relative size, can continue to punch above its weight.

Roth first congratulated and thanked all NDF’s staff and partners. He then touched on NDF’s original mandate to strengthen development cooperation among the Nordic countries, while promoting concessional financing in the developing world in areas of common Nordic interest. More recently in 2009, NDF’s mandate shifted to take on climate change and development. And within the last ten years has successfully grown a portfolio of 107 climate mitigation and adaptation projects.

“We are the first generation to feel the effects of climate change and the last generation, who can do anything about it,” warned Roth, quoting former US President Barack Obama. “This is why we need to build on all the tools we have and the results achieved so far,” Roth added. “And NDF has a part to play in this.” In his remarks, Roth also reassured NDF stakeholders that he was not only here to look backwards but that efforts were underway now to help secure the organisation’s future financial resources. 

NDF well positioned with positive evaluation

Ville Skinnari, Finland’s Minister for Development Cooperation and Foreign Trade was up next, offering congratulatory remarks via video. Skinnari highlighted NDF’s recent positive third-party evaluation as well as the strong role the organisation plays as a blended finance vehicle. As Finland’s development minister, Skinnari also added some local context, notably his government’s ambitious target to make Finland Climate Neutral by 2035. This will require multi-stakeholder players, including innovative financing institutions, like NDF, which Skinnari praised for its role as an active early-stage risk-taker in private sector adaptation.

Skinnari also touched on the importance of Nordic cooperation, accentuating that a strong Nordic innovator like NDF could be even stronger in the future with the continuing good commitment of all the Nordic governments.

Major transformational shift needed in how we invest

Barbara Buchner, Executive Director of Climate Policy Initiative gave a sobering view of the current climate financing landscape. In 2018, the five costliest climate related disasters including hurricane Michael and the California wildfires clocked up damages in the area of 67.5 billion US dollars and the situation’s only going to get worse. While global investment into climate change reached a record high of USD 612 billion in 2017, this was followed by an 11% drop in 2018 to USD 546 billion. Given the urgency of climate challenge, Buchner cited surpassing the half trillion-dollar mark as a positive sign. But stressed that governments, development finance institutions, and investors still need to make a major shift in how they invest if we want to avoid catastrophic climate change.

Buchner, who has been named one of the 20 most influential women in climate change, opened up the conversation to her panel and led a thoughtful and at times provocative discussion on how best to scale up financing activities.

Private business active in adaptation and ready for scale

Jay L. Koh, Co-Founder and Managing Director of the Lightsmith Group, who last year launched CRAFT – the world’s first dedicated private equity fund to focus on investing in climate resilience. “The group is to find a way of connecting private institutional pools of capital to the climate adaptation problem,” Koh explained.

The good news is that many of the right tools to assess and manage climate risks and impacts are already out in the market. These tools can be divided into two types. First, information-based software, data analytics, modelling and forecasting. “If you can have actionable localised data about climate risks and impacts, then you can start to manage and address those risks.”  The second is existing physical products and services. CRAFT has identified 20 target market segments where private sector businesses are already active in the adaptation space and ready for scale.  These are in areas like weather and agricultural analytics, disaster risk modelling, and distributed water solutions.

Future of climate change is in Africa

Felix Bikpo, Group CEO of the African Guarantee Fund (AGF), cited a lack of coordination in Africa as one of the biggest barriers to progress as well as the need to unlock commercial lending to SMEs investing in green growth and climate resilience.  NDF has invested in AGF, via its Green Guarantee Facility. SMEs account for up to 90% of all businesses in sub-Saharan economies. And growth here can have an enormous transformational impact on both the African economy and the environment.

“The future of climate change is in Africa,” Bikpo asserted. Business is starting to understand the need to factor climate change into their business models or there will be no future business. And NDF is a critical partner in helping this along.”
Bikpo thanked NDF, for being so flexible in identifying the right new technologies and solutions as well as for their small investments that can be leveraged for much larger sums from institutional and other traditional investment sources. 

“In Africa we don’t need money. The money exists in the banks,” says Bikpo. “It’s now just a matter of convincing them to take it and do it. And they need to start now.”

Will we have this same conversation in ten years?

Echoing these remarks, Koh takes us ten years on to when NDF celebrates its 40th anniversary. “We can all meet back here and with a reasonable amount of certainty we know that the climate will have changed. We will have experienced at least two more hurricane cycles—each likely to be worse than the last—and at least a few more Cape Town Zero Day situations with major cities coming close to or actually running out of water. And we will have experienced a decade’s worth of increased risks and impacts.”

Today, we have a choice: in ten years, will we have the same conversation of today?” asks Koh, “or will we be in a far better position as a result of important – and attractive –investments made into climate resilience. The choice should be clear.”

Wrapping up with gender matters and Christmas cheer

NDF Managing Director Karin Isaksson gave closing remarks, likening NDF to the kind of finance landscape that is now needed – adaptable, innovative and resilient. Isaksson then thanked all NDF staff present for their contribution and dedication to the higher purpose of improving the lives of the world’s most vulnerable people.

While distributing Santa dolls to her panel, Isaksson then surprised her foreign guests with one final compelling fact – Santa Claus lives in Finland. Isaksson then went on to speculate whether Santa, whom no one’s actually met, might actually be a woman.

Written by Laurel Colless

Related articles:
Future of climate change finance lies in Africa
Global climate investment exceeds half-trillion USD dollar mark
Board chair Lars Roth sees NDF positioned to continue punching above its weight in combating climate change
Finnish Development Minister Skinnari sees strong role for agile risk takers like NDF in global climate financing future