The Climate Fund's finances

The size of the Climate Fund’s balance sheet decreased by around 2.3 billion euros during the third quarter, when Neste Oyj’s shares owned by the Climate Fund were transferred back to the owner in September. As a consequence of the transfer of the shares, the company also incurred a tax expense of ca. 149 million euros, which was paid in January 2024. The Climate Fund has approximately €357 million in liquid assets for financing its operations (Q4/2023). These liquid assets are invested in interest-bearing bank accounts, fixed-term deposits and bond funds. A total of around 280 million euros of the liquid assets are committed to the investment decisions made and taxes to be paid on the transfer of Neste Oyj’s shares. Circa 77 million euros of uncommitted funds are available for future investment decisions and operative expenses.

The Climate Fund’s operative budget for 2024 is €4.7 million, of which €2.9 million consists of personnel costs. The company’s second-largest expense item consists of due diligence and other expenses related to the preparation of investment decisions, totalling €0.8 million.

The companies invested in by the Climate Fund typically receive the funding in instalments over several years as conditions specified in the financing agreements are met. The target for 2024 is to make €70 million in investment decisions for scaling up climate solutions.

Personnel costs, i.e. salaries, remuneration to Board members, and indirect costs, totalled roughly €3.2 million in 2023. Two new permanent employees were recruited during the year. In addition, four trainees completed an internship in the Climate Fund’s investments team.

The preparation of investment decisions involves due diligence audits commissioned from external service providers and other preparatory work, as well as legal services for drawing up the financing agreements. A company’s compliance with the Climate Fund’s financing criteria is ensured through external due diligence audits and other measures during the investment process. These external audits include an objective examination of the company’s business plans, emissions reduction potential and ESG issues, technology and production, the market, as well as finances, taxation and legal issues. In 2023, Climate Fund’s share of expenses related to due diligence audits, the preparation of investment decisions, and financing agreements was €0.6 million. This sum corresponds to approximately 1.1% of the year’s investment decision volume. The remaining expenses incurred by the investment decision preparation team were related to the development of the Climate Fund’s investment operations. A total of €0.6 million has been reserved for due diligence and other expenses related to the preparation of investment decisions in the 2024 budget, corresponding to roughly 0.9% of the €70 million target volume for investment decisions in 2024.

Communications and reporting costs include studies and surveys conducted in support of investment operations, the Climate Fund’s annual reporting, carbon footprint calculations, external assurance of the annual report, the company’s website and other external communications, membership fees of sustainable investment organisations, as well as various events.

Both the realised office expenses for 2023 and those budgeted for 2024 mainly consist of the rent for the office space in Helsinki. The office space expenses budgeted for 2024 will decrease, as the Climate Fund moved to a new office in autumn 2023 from a temporary larger office space.

ICT costs include office equipment and the tools of our personnel, ICT maintenance and development, as well as software licences for, e.g. dealflow management and Board work.

Administrative and other expenses include recruitment, accounting, auditing and legal services as well as insurance, employee benefits, travel and training expenses, and the service and deposit fees charged by banks.