Stockholm (NordSIP) – Among the panoply of multilateral development banks (MDBs) and development finance institutions (DFIs) one of the Nordic key players is the Nordic Development Fund (NDF). Although its development focus tends to leave it in the shadow of the Nordic Investment Bank, Helsinki-based NDF is an important player in the international impact investing world.
Established in 1988, NDF provides co-financing with strategic partners through grants, loans and equity as stand-alone or blended. since 2009, NDF has a mandate to support impact at the intersection of climate and development, focusing on low-income countries (LICs). In 2024, NDF reportedly contributed to mobilising €1.3 billion in additional climate finance, supported over 66,000 jobs, and increased access to clean energy for close to 32 million people with half being women.
The beginning of Autumn 2025 witnessed NDF take a lead in the impact space and highlighting different impact channels through which investors can help the world address development and climate goals.
The Importance of Blended Finance
At the end of September, NDF published a report describing its approach to blended finance, a tool it believes can contribute to catalysing innovation and impact in private sector investments.
Since refocusing its mandate in 2009, NDF has made investments worth US$131 million in 156 portfolio companies through twelve blended finance funds, with 66% dedicated to climate mitigation and 34% to climate adaptation. According to NDF climate adaptation investments represent a considerably higher share of its investments than is typically seen in the blended finance market. These investments are designed to attract additional capital to high-risk projects that might otherwise struggle to secure commercial or institutional backing.
NDF argues that its experience with blended finance provides good practice examples for effective, efficient, and institutionally implemented catalytic and concessional capital allocation. For small institutions with high risk tolerance mandates, funds can offer a pragmatic path to scale, efficiency, and impact. Early engagement in the investment process and helping to co-design interventions (what NDF calls “co-creation”) enables NDF to improve the efficacy of financial support and the quality of impact. However, while co-creation strengthens fund design, flexibility is vital to secure Limited Partner (LP) buy-in and preserve market viability. Equity investment are also critical to mobilise private investors into and developing economies. Last but not least, technical assistance facilities can be a sweet spot for impact and strengthen fund performance.
Nordic Climate Dialogues and the “Value Chain of Stakeholders”
The day after NDF publshed its blended finance report, it hosted the Nordic Climate Dialogues 2025. The event that gathered together government representatives, financial institutions, researchers and NGOs to build a network of professionals, inspire Nordic collaboration, and explore ways to mobilise financing at speed and scale. Reviewing the event, NDF highlighted important case studies of what NDF’s Deputy Managing Director & Director of Strategy, Outreach and Communications, Leena Klossner, described as the “value chain of stakeholders”.
“One term which I heard at this event was ‘value chain of stakeholders.’ That is a great, because we want to emphasise the different roles of different stakeholders and the dynamic relations between them. One group which we must never lose sight of are the local institutions in the countries where we work. They have a very important role in implementation as well as creation of local financing solutions,” Klossner argued.
NDF Highlights SOFF Impact Bond
The upcoming Impact Bond led by the Systematic Observations Financing Facility (SOFF) was one of the examples of successful stakeholder partnership that the Nordic Climate Dialogues highlighted. SOFF is a UN Fund co-created by WMO, UNDP and UNEP to close the climate and weather observations data gap in countries with the most severe shortfalls in observations, prioritizing Least Developed Countries and Small Island Developing States. In September 2025, SOFF announced it would take a leading role in the issuance of a US$200 million bond to fund initiatives around the globe that would support the collection of climate data.
Nordic countries and institutions were early champions of the SOFF. NDF and meteorological authorities in Denmark, Finland and Norway were among the initial group of partners. The United Nations Framework Convention on Climate Change (UNFCCC) further reiterated the intention of issuing this Impact bond in an Information Note marking Earth Information Day 2025, on October 16th. The UNFCCC noted that “SOFF plans to announce a SOFF Impact Bond at COP30, a pivotal step in mobilizing innovative climate finance solutions.”
Adaptation Finance Window for Africa
The Investment Mobilisation Collaboration Alliance’s (IMCA) new US$100 million Adaptation Finance Window for Africa was another important tool to channel impact funding highlighted during the dialogues.
Launched in 2023, IMCA is a global initiative led by the Nordic governments to create an investment pipeline to attract concessional public finance and catalyse private capital for climate action into emerging markets and developing economies at scale and speed. Members include the government of Denmark, Impact Fund Denmark, the government of Sweden, the Swedish International Development Cooperation Agency, the government of Norway, the government of Finland, the government of Iceland, and the Nordic Development Fund. The Adaptation Finance Window for Africa, is the third funding window launched by IMCA. It aims to support high-impact solutions such as climate-smart farming and technologies, coastal resilience solutions, nature-based solutions, climate-resilient infrastructure, and technologies addressing extreme heat and climate-related displacement and migration.
“We need to support long-term development, not just respond to disasters,” Sashi Jayatileke, Senior Director, World Climate Foundation’s IMCA Secretariat was reported to have said according to NDF. “This supports communities with climate-smart farming, coastal resilience, nature-based approaches, climate-resilient infrastructure and technologies addressing extreme heat and climate-driven displacement.”
Jayatileke also sharee ideas to improve efficiency in development finance, including reducing the cost of due diligence. She noted that every donor tends to ask for the same information, which increases the burden on the project. The standardisation of capital markets could provide inspiration to climate finance.
