Stockholm (NordSIP) – NEFCO, the Nordic Environment Finance Corporation, has announced the entering into force of a framework agreement signed by its five member countries (Denmark, Sweden, Norway, Finland and Iceland) to allow the institution to approve green growth investments outside Eastern Europe (one of its core operational regions). The NEFCO corporation administers funds to a total value of approximately €470 million.
The agreement was signed on December 14, 2016, and entered into force June 15, which also coincided with the adoption of the corporation’s amended statutes. “The agreement opens the possibility for NEFCO to geographically broaden its investment activities and to approve projects also outside Eastern Europe,” according to the most recent NEFCO newsletter. Until now, the corporation’s trust funds – including climate projects and support for Nordic SMEs – have been the only financing instruments operating at the global level.
With the entry into force of the new agreement, NEFCO will be able to break new ground by providing loan capital and equity for relevant green growth investments of interest to NEFCO members.
“The environmental priorities of the Nordic governments have changed since NEFCO was established in 1990 and the amendment to the NEFCO agreement will allow us to work with the global environment challenges identified and prioritised by the Nordic governments,” commented NEFCO Managing Director Magnus Rysted.
Investment activities will target small and medium-sized projects. The immediate effect of the upgrade will be the enhancement of synergies between NEFCO’s investment projects and support for the internationalisation of Nordic SMEs. The focus, however, will remain on Eastern Europe, with most of NEFCO’s operations taking place in Armenia, Belarus, Estonia, Georgia, Latvia, Lithuania, Moldova, Poland, Russia and Ukraine.
NEFCO has supported 250 Nordic SMEs in 38 countries through the Nordic Project Fund since 2014. The new mandate will enable NEFCO to provide loan financing for the further development of business operations in project countries. 144 new projects were approved in 2016 and NEFCO’s contribution to the reduction of direct CO2 emissions amounted to 5.1 million tons.
Other NEFCO news has included a €1.3 million distribution to fund feasibility studies for company-led green growth projects expected to leverage up to €86 million in project funding under the Nordic Project Fund (NOPEF), and the approval of two projects under the Arctic Council Project Support Instrument (PSI) aiming to reduce the release of short-lived chemical pollutants (SLCPs) from oil and gas and fisheries activities in the Russian arctic. It has also instituted a €2.5 million loan facility to promote electric vehicle purchase and charging infrastructure development in Belarus.