{"id":86,"date":"2021-04-23T15:38:50","date_gmt":"2021-04-23T13:38:50","guid":{"rendered":"https:\/\/norfund.wpenginepowered.com\/annualreport-2020\/?page_id=86"},"modified":"2025-06-13T13:41:22","modified_gmt":"2025-06-13T11:41:22","slug":"climate-and-environment","status":"publish","type":"page","link":"https:\/\/reports.norfund.no\/annualreport-2024\/this-is-norfund\/a-responsible-investor\/climate-and-environment\/","title":{"rendered":"Climate and environment"},"content":{"rendered":"\n

Climate change significantly threatens global development, with developing countries bearing the burden of its impact. In response, Norfund is strengthening its commitment to supporting the transition to net zero across the portfolio.<\/strong> <\/p>\n\n\n\n

In 2024, we made significant progress in implementing our Net zero strategy. We increased climate finance, improved climate competence by training investment teams, and developed tools to assess climate risk and Paris alignment in our investment process. <\/p>\n\n\n\n

Supporting the transition towards net zero<\/h2>\n\n\n\n

Our Net zero strategy (2024-2030)<\/a> describes the role Norfund plays in the net zero transition in developing countries. We need to focus on transitioning sectors with high emissions (such as cement and paper manufacturing), alongside supporting the sectors that are providing climate solutions (such as renewable energy). <\/p>\n\n\n\n

These are the concrete steps we are taking:<\/h3>\n\n\n\n
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  1. Invest heavily in climate finance: <\/strong>Step up annual investments in climate finance and seek to invest in climate projects across all investment areas. <\/li>\n<\/ol>\n\n\n\n

    Progress:<\/strong> Climate finance refers to the financial investments to support climate change mitigation and adaptation projects, to reduce emissions and adapt to climate impacts. The criteria used to assess climate finance at Norfund are defined in the IDC\/MDB\u2019s Common Principles for Climate Mitigation Finance Tracking<\/a>, and The MDB\u2019s Joint Methodology for Tracking Climate Change Adaptation Finance<\/a>. In absolute figures, Norfund increased its climate finance commitments in 2024 by 6.2% compared to 2023, totaling to 3.6 billion NOK. However, relative to new investments, the share fell to 47%, from 52% in 2023, and a step-up is needed to reach the ambition of 64% climate finance as set out in the Net Zero strategy. Renewable energy (both development mandate and climate mandate) represents most of the climate finance, while the other investment areas accounted for 3.5 % of total new investments. Additionally, Norfund mobilized 5.87 billion NOK in private capital in the climate finance commitments in 2024.  <\/p>\n\n\n\n

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    2.<\/strong> Support transition to low-carbon economy: <\/strong>Several high-emitting sectors are essential for development in emerging and developing markets. Thus, investing in emission reduction initiatives in such sectors is crucial to contribute to a \u2018just transition. Supporting the transition also entails applying decarbonization measures in existing portfolio companies with medium and high emissions.<\/p>\n<\/div><\/div>\n\n\n\n

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    3. Ensure all new investments are Paris-aligned over time: <\/strong><\/p>\n\n\n\n

    Apply Paris alignment methodology to new investments and work actively with investees in the ownership phase.  <\/p>\n\n\n\n

    We strive to support our investees in the transition to net zero, minimize transition risks and reduce stranded asset risk, ensuring our portfolio supports a sustainable and climate-resilient future. <\/p>\n\n\n\n

    Paris alignment assessments are done through our climate assessment tool (see box). <\/p>\n<\/div><\/div>\n\n\n\n

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    4. Limit portfolio exposure to fossil fuels<\/strong>:<\/strong> Transitioning away from fossil fuels is essential to limit emissions. Norfund has low exposure to fossil fuels and does not make new investments in the fossil fuel value chain except in special circumstances and in line with the Paris agreement. <\/p>\n\n\n\n

    Norfund and the other European Development Finance Institutions (EDFI) have identified a list of sectors and activities in which we do not invest in (the EDFI Fossil Fuel Exclusion List<\/a>). Norfund has further strengthened its approach to fossil fuels with the Norfund Fossil Fuel Standard<\/a>. <\/p>\n<\/div><\/div>\n\n\n\n

    Climate assessment tool<\/h3>
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    Norfund has developed a climate tool to do climate assessments in the investment process. The purpose is to make better and more climate-informed investment decisions, as well as future-proofing and professionalizing investees on climate by identifying opportunities and ways to reduce risk.  <\/p>\n\n\n\n

    In this tool we address Norfund\u2019s climate objectives and cover: <\/p>\n\n\n\n