Development impact

Aiming for sustainable development and growth.

Finnpartnership executes development work and all activities must have a developmental impact. Development impacts are also evaluation criteria for projects. The work aims to support the UN Sustainable Development Goals through business.

Project evaluation criteria

Economic, social and environmental criteria are essential when evaluating the eligibility of an activity or project applying for support. Finnpartnership aims to ensure that supported projects are sustainable in relation to these evaluation criteria.

The purpose of the business partnership support is to support projects that have realistic possibilities of becoming profitable and that

  • promote the development of the target country
  • adhere to the laws and requirements of the target country
  • fulfil international standard requirements for environmental and social matters

Business profitability and feasibility

The basis for the evaluation is the feasibility of the projects especially in regard to their financial feasibility, profitability and suitability as funding targets. The applicant must demonstrate in their application that they have experience and sufficient commercial expertise in the project industry. The applicant must also have sufficient financial and personnel resources to implement the project plan. If the project is intended to be funded using external financial sources, the project’s business plan may also include an evaluation from the funder’s perspective.

When evaluating the financial profitability of completed projects, special attention is paid to the additional value created for the business activities being developed from the perspective of creating and sustaining a business partnership.

Development impact

Finnpartnership’s aim is to increase the commercial cooperation of operators in Finland and developing countries through projects that have a positive development impact in the target countries. The eligibility of projects to be supported is thus also evaluated from the perspective of development impacts. In addition, the environmental impact of the projects is also evaluated in accordance with the evaluation principles pertaining to environmental matters and social responsibility.

Picture: UN.org

 

Development impact refers to the project’s estimated and actual direct and indirect impacts, such as the following factors:

  • creating national income (additional value, such as wages, lease income, interest and profits that remain in the country)
  • employment in target country
  • diversifying production in target country
  • state tax and other similar income in target country
  • technology and knowledge transfer
  • increasing the expertise of workers in the target country (education)
  • working conditions and social benefits of the company and its environment (adhering to ILO provisions, occupational safety, wage levels, housing/health and other benefits)
  • especially positive environmental impact (e.g. renewable energy or another production method that supports sustainable development)
  • gender equality
  • improvements in the general infrastructure of target country
  • currency reserves of target country.
  • The applicant is to briefly define the project’s most significant development impacts for the target country in the business partnership support application. If necessary, Finnpartnership experts may contact the applicant in order to obtain additional information for completing the development impact assessment.

Finnpartnership aims to contribute to the fulfilment of the UN Sustainable Development Goals (SDG). Read more about UN Sustainable Development Goals.

Environmental and social responsibility

Finnpartnership’s main principle is that projects aided by business partnership support are to adhere to internationally accepted environmental and social responsibility standards and local legislation pertaining, among other things, to the environment and employee rights.

The basis of the projects’ environmental and social responsibility evaluation are the World Bank and IFC (International Financial Corporation) standards that govern environmental and social impact and their management and are accepted by international financing institutions (further information IFC Performance Standards and World Bank Group EHS Guidelines). It may be an advantage to the project if it applies higher standards than those mentioned above.

Considering and managing the environmental and social impacts and risks are important and beneficial to the company already very early on when preparing the preliminary plans for the project. Applications for business partnership support can be submitted for investigating environmental and social impact already as a part of the feasibility study (e.g. environmental and social responsibilities associated with the activities of the business partner and when selecting a location for the business). If necessary, the applicant can ask Finnfund’s environmental experts for advice on applying the aforementioned standards in projects.

An environmental expert will classify the projects based on their expected environmental and social impacts. The nature and phase of the project significantly affect the level of detail in the analysis and the necessary information. The aim is to ensure that the project includes as few as possible negative health, social or environmental impacts.

Environmental classification

Environmental Class A
A project that may have significant negative environmental impacts that could potentially extend beyond the project’s location. In practice, this refers to new production facilities and significant expansions to production facilities in critical industries and projects which are located in sensitive areas or in their immediate vicinity or that may have a negative impact on sensitive areas, for example.

Environmental Class B
A project that may have some negative environmental impacts, which are however less impactful and can be better managed than in projects classified as Environmental Class A.

Environmental Class C
A project that does not have any, or only minimal, potential negative environmental impacts.

The basis of the environmental classification of projects is the potential negative environmental impacts of the project. Special attention is paid to projects that have the following characteristics:

  • The project is in primary production, in forestry, agriculture or mining, for example, or employs a significant amount of uneducated and/or temporary labour.
  • The project is in a labour-intensive industry (especially in special economic zones).
  • Production within the scope of the project utilises raw materials or processes that are a health hazard.
  • Implementing the project may require people to be relocated or the project reduces the work opportunities of the local community.
  • The project is a privatisation project that may result in vast layoffs or reduce the availability of the community’s existing basic services.

It is important that the environmental and social impacts are considered already early on when planning the project. In addition, the reports to be drafted using Business Partnership support (e.g. project study, business plan, environmental and social impact assessment) are subjected to specific additional quality requirements for those projects that may have significant negative environmental and social impacts. If necessary, Finnpartnership experts and Finnfund’s environmental experts can be consulted on how to consider environmental and social responsibility for individual projects.

Upon request, Finnpartnership can provide more detailed information on the evaluation criteria used for projects on development impacts, environmental matters and social responsibility.

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