Development impact

    IFU is driving change

    By investing in the private sector in developing countries IFU is driving change towards more sustainable societies.

    IFU’s investments are made on commercial terms with the dual purpose of creating measurable, beneficial development impact alongside a financial return. Investing in poor countries has positive effects in the local economy, such as providing decent jobs, increasing the demand for inputs and the payment of local taxes. IFU’s ambition is furthermore to contribute to building a green, just and inclusive economy through its investments.

    IFU will support developing countries in their aspirations towards developing a greener economy by expanding the capacity to generate renewable energy, promoting a more efficient use of resources and contributing to a circular economy.  A green economy will prevent global temperatures to rise and enable developing countries to avoid the unsustainable development path that high-income countries have followed.

    A just and inclusive economy is a necessity because there is a strong need to reduce inequalities and poverty by addressing the fact that billions of people lack access to essential goods, services and rights. Through its investments, IFU can enable underserved groups in local societies to access basic products and services provided by the private sector, such as energy, healthcare, water and financial services.

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    IFU investments support the sustainable development goals

    IFU’s impact priorities are in line with the sustainable development goals (SDGs), which are set to create a better and more just world towards 2030.

    IFU’s investment contribute to the achievement of several of the SDGs. IFU’s overall impact priorities of contributing to a green, just and inclusive economy support SDG 8, Decent work and economic growth, SDG 10, Reduced inequalities, and SDG 13 Climate action. Furthermore, SDG 5 on gender equality also plays an important role in many of IFU’s investments. IFU’s investments are focused in five focus areas that each contribute to sector-specific SDGs:

    • Healthy lives (SDG 3)
    • Healthy foods (SDG 2)
    • Financial inclusion (SDG 1, 8 and 9)
    • Energy, water and waste (SDG 6, 7, 11 and 12)
    • Transformational business (SDG 10, 13, 8)

    Gender equality in IFU’s investments

    Gender inequalities are still deep-rooted in many societies. Women experience lack of access to decent work and face occupational segregation and gender wage gaps. In many places, they have limited access to basic education and health care and are victims of violence and discrimination. However, women play an important role in the economy of the developing countries, and their integration in the labour market and in the private sector has a significant impact on the livelihood of families.

    Promoting gender equality and contributing to SDG 5 is a cross-cutting objective of IFU’s investments. To further step up this effort, IFU has joined the 2X Challenge launched by the development finance institutions of the G7 countries in 2018. The aim is to advance opportunities for women through enterprise support, leadership and career progression, quality employment and products, as well as services that enhance women’s economic participation.

    In 2020, IFU established two targets related to 2X investments: Not less than 30% of the new investments each year must have a gender focus, and by the end of 2024, 40% of the portfolio should be 2X eligible or have plans to become 2X eligible.

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    Mobilising capital

    IFU's task is to mobilise capital in developing countries through investments, as they are often avoided by private investors due to high commercial and political risk.

    IFU is mobilising capital through the establishment of public-private partnerships like the Danish SDG Investment Fund and through single investments, where IFU is only providing part of the total financing.

    By setting up the Danish SDG Investment Fund, IFU has mobilised close to DKK three billion primarily from Danish pension funds, and through a climate investment fund set up in 2014, IFU mobilised DKK 775 million, which is now invested in climate-related projects in Africa, Asia and Latin America.

    The mobilisation of additional capital has in recent years made it possible for IFU to more than double its annual investment volume, which reached DKK 1.3 billion in 2023. Including investments from other investors in the individual projects, the total value of contracted new investments was DKK 3.8 billion in 2023.


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    Employment alleviates poverty

    One of the most important development effects is employment, because jobs create income, greater purchasing power and the possibility to invest in the future, which enables poor people to improve their standard of living.

    More than 377,000 people are employed in the projects included in IFU’s active portfolio. They are only the tip of the iceberg. According to UN research one direct job leads to one or two indirect jobs in the local supply chain or companies providing services etc.

    Counting direct as well as indirect jobs, the total number of jobs created or preserved in all the projects IFU and IFU managed funds have invested in is close to one million.

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    Investments create economic growth

    IFU projects impact economy in host countries by implementing new technology, training employees and paying taxes.

    New technology implemented
    When investing in local companies, IFU strengthens the transition to a greener and more resource efficient economy. For all new investments IFU assesses the possibility of introducing new technology that can contribute to reduce CO2 emissions.

    Investing in new technology enables developing countries to create more advanced products and services. It makes the countries more competitive and cost efficient, which also leads to higher incomes for individuals, companies and society.

    Implementing modern technology will normally also benefit the environment, because it is less polluting and more energy efficient. Since 2020, IFU has for all new investments, assessed how the use of technology can contribute to reduce CO2 emissions from single projects.

    Training enhances skills
    In countries where formal vocational education is scarce, company sponsored employee training is essential. This will contribute to boost the general level of education and enhance the skills of employees. Consequently, people receiving such training will be better qualified and more employable in the labour market.

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    Sound businesses pay taxes

    Corporate tax contributes to development of local welfare.

    IFU and IFU managed funds only invest in project companies presumed to be economically viable. In most cases, the companies succeed in creating positive revenue, which is a condition for having a lasting development impact in relation to, for instance, securing and increasing the number of jobs, buying from sub-suppliers, and not least, paying taxes in the host countries.

    Since 2013, IFU has collected information on corporate taxes reported by the projects in the active portfolio. These figures do not include taxes paid by employees and VAT.

    In 2022, IFU project companies reported close to DKK 9bn in corporate taxes to host countries. 24% was reported from companies operating in Africa and 42% from companies in Asia.

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    IFU is committed to the Paris Agreement

    IFU's carbon footprint was estimated at 817,000 tCO2e in 2021

    IFU is committed to contribute to the transformational changes that the 1.5 °C target of the Paris Agreement entails over the coming years, and make its investment flows consistent with a net zero pathway, as stated in IFU’s Climate Policy

    In the 2020 annual report, IFU calculated the climate footprint of its outstanding portfolio for the first time. The assessment was a pilot effort to learn and refine relevant methodologies. In 2021, IFU recalculated this footprint considering changes to the methodology and the availability of improved data collected through the year. In 2022, the portfolio assessment has again been strengthened and is based on 2021 data.

    The climate footprint is estimated as the total annual emissions generated by IFU’s outstanding portfolio and based on the methodology described in the Global GHG Accounting Standard developed by the Partnership for Carbon Accounting (PCAF). IFU uses an attribution calculation related to both GHG emissions and avoided GHG emissions as defined by the standard. It also includes considerations that are specific to IFU and expands on the PCAF standard to allow for a full assessment of IFU’s portfolio. Read the full methodology paper here.

    The emissions calculated are related to the Scope 1, 2 and 3 emissions of companies and projects in which IFU is investing. The financed emissions are defined in alignment with the “follow the money” principle, meaning that the money from loans and investments should be followed, as far as possible, to understand and account for the climate impact in the real economy.

    IFU will repeat the calculation of the climate footprint every year to measure how IFU’s portfolio is performing on GHG emissions over time, allowing IFU to track the journey to net-zero emissions.

    As such, IFU is developing a GHG emission tracking tool to measure against commitments set in IFU’s 2022 climate policy.

    As presented in the figure above, portfolio emissions attributed to IFU in 2021 are estimated at 817,000 tCO2e, an increase of 10 per cent on the 2020 estimate of 740,000 tCO2e. This is due to an increase in the portfolio size, which has grown by 23 per cent from 2020 to 2021. The largest proportion of emissions comes from funds, banks and the cement sector investments. Renewable energy projects also feature high in proportion, due to a large number of the projects being in the construction phase and thus having high emissions.

    Changes in the portfolio footprint and emission intensity between 2020 and 2021 are a result of different factors, including new investments entering the portfolio, investments exiting the portfolio, changes in project activities (increase or decrease in production or the use of new technology), changes in the type and quality of data reported by projects, and the respective assessment methodology applied. IFU is continually increasing efforts to improve the quality of the reported data and assessment methodology. The changes in the portfolio emission estimates from 2020 to 2021 reflect the above factors.

    In conclusion, the average GHG emission intensity estimate for 2021 is 129 tCO2e per million DKK invested. This is a decrease of approximately 10 per cent, when compared to the 2020 estimate of 143 tCO2e/ per million DKK invested.

    To meet climate policy targets, IFU will need to keep reducing the average GHG emission intensity across the portfolio, to support the net zero pathway.

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    Agribusiness investments combat hunger

    Investing in agribusiness increases food supply and provides jobs in the supply chain.

    Investments in agribusiness are crucial for creating economic growth and social progress in developing countries. Consequently, IFU has during the years been investing in agribusiness projects along the whole value chain from farm to fork. At year-end 2021, the active agribusiness portfolio included 42 projects companies at a total of DKK 1.8bn in contracted investments. The project companies employed more than 19,000 people.

    One investment is in a blueberry producer in southern Africa. The company is employing more than 500 people and uses several thousands of seasonal workers. Moreover, the company sources blueberries from small farmers growing them on their own fields. Another investment is Danper in Peru, which has grown from a small greenfield company to become one of the largest agribusiness exporters in the country.

    Food waste is a serious problem. Every year, one third of total global food production is wasted, and according to FAO food waste is responsible for around eight per cent of the world’s CO2 emissions. In developing countries one of the main reasons for food waste is insufficient and ineffective storage and transport facilities.

    Consequently, investments in improving and upgrading agribusiness infrastructure have the potential to decrease food waste, reduce undernourishment and increase farmers income. Examples of IFU’s investments in this kind of business is cool storage in Chile and Peru and freeze drying of food in India.

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    Financial services create local development

    IFU’s microfinance investments have made small loans possible for 16 million people.

    In most developing countries access to financial services is sporadic. This is not least the case in rural areas, and it hampers the ability for people to invest in and grow their business. To improve access to capital IFU has in recent years invested more than DKK 600 million in microfinance funds and institutions in Africa, Asia and Latin America.

    One of the investments is in Alliance, which provide financial services to more than 150,000 people in northern Myanmar around Mandalay. Another is Nordic Microfinance Initiative that through an investment in AB Bank Rwanda has enabled one of the borrowers 32-year-old Grace Masengesho to expand her business and attract more customers.

    IFU’s investments in microfinance contribute to reaching a total of 16 million people, of whom 92% are women. Thereby, women in particular get better options for improving their livelihood.

    IFU has also engaged in financing local banks in developing countries. The focus is on supporting banks targeting small and medium-sized local companies, which can develop and grow their business through loan financing. Investing in banks enables IFU to better service the local business community in developing countries compared to direct investments in individual small companies.

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    Selecting the right projects

    IFU is carefully analysing investment opportunities and selecting those with high impact potential.

    The overarching ambition of IFU’s investment strategy is to become a best-in-class impact investor. Therefore, new investments are guided by a set of impact priorities that steer the selection based on the investments’ potential and ability to assist developing countries in improving the livelihood of people and contributing to building a greener economy.

    IFU’s project screening tool integrates impact criteria with the general investment criteria, which all project ideas are submitted to. This ensures that IFU does not engage in preparing a project that is on the investment exclusion list or a project that does not positively contribute to IFU’s impact priorities of building green, just and inclusive economies.

    When an investment opportunity is approved for consideration, IFU engages in a thorough due diligence of the project. The impact potential is assessed further in relation to the SDGs, and project-specific impact areas are identified.

    IFU uses its leverage to initiate improvement of the sustainability and impact performance of the project. Specific actions and targets are agreed with the company and an impact creation plan is established.

    How IFU measures development impact

    Reporting and follow-up is essential to IFU’s active ownership strategy.

    IFU’s investment strategy involves adding value to the project by playing an active role throughout the investment period, also in relation to sustainability and impact.

    For all new IFU investments, the specific possibilities for creating impact are defined and a corresponding Results Framework agreed with the investment company. The indicators used in the Results Framework are specific for that project, but in many cases IFU uses standard indicators that will allow results to be reported at sector level or across the entire portfolio.

    The investment companies must report annually on the progress in relation to the defined impact areas. Deviations from envisaged results are subject to a further dialogue with the company.

    Projects are also required to prepare an annual sustainability report to be discussed and approved by its management. The report serves as an important tool for the annual stocktaking of the project’s sustainability performance. The annual report must be submitted to IFU, which uses it as a tool to perform active ownership and provide transparent sustainability information about its investments.

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    IFU reports on impact management

    IFU is a signatory to the Operating Principles for Impact Management

    IFU has a clear objective to contribute to sustainable development. This is implemented through a number of measures during the investment process. To strengthen this work, IFU is a signatory to the Operating Principles for Impact Management, which provides a framework for investors’ work to ensure development impact. These impact principles are widely recognized, and more than 130 impact investors have committed not only to live up to them, but also to report on how the work is progressing.

    As a signatory to the Impact Principles, IFU is committed to report annually on its progress with developing procedures for impact management. The first progress report was published in July 2020. IFU’s impact management work was furthermore subject to an independent verification, which was carried out in 2021 by the American consultancy firm BlueMark, a market leader in impact verification. It concludes that IFU’s systems to manage and measure development effects are generally of a high standard, in particular the strategic focus and the assessment of the projects’ contribution to sustainable development in the preparatory phase. The Verifier Statement can be found here.

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    Environmental and social risks

    High environmental and social standards add value to projects as well as local communities and enhance business opportunities.

    Managing environmental and social (E&S) risks are an integral part of IFU’s investment process for both direct project investments and investments in funds, financial institutions and other financial intermediaries.

    Effective E&S due diligence reduces risks to workers, the environment, local communities and other stakeholders, improves impact and provides business benefits like access to markets, reduced staff turnover, cost efficiency in production and improved stakeholder relations.

    During appraisal IFU identifies E&S issues which may cause severe adverse impacts and are relevant for the project companies or the portfolio of funds and financial institutions. IFU also evaluates the project sponsor’s, project company’s, fund manager’s or financial institution’s awareness of and capability to manage E&S risks.

    Before the investment is approved, IFU ensures commitment to an action plan describing the actions to be taken to meet the requirements of IFU’s sustainability policy and the relevant sustainability standards over time.

    Throughout the investment period, IFU exercise active ownership and uses its leverage to monitor and assess the E&S performance as well as to ensure continuous improvement through the provision of training and tools.

    Risk of forced labour in solar supply chain
    IFU invests in solar power plants to support the green transition, which is one of IFU’s two overarching impact priority areas. IFU has like other financial institutions and businesses identified a risk of forced labour in the solar supply chain of IFU’s investments. Based on this IFU has decided that for all new investments, IFU will require the investee companies to have a responsible supply chain management system.

    IFU has prepared a memo to presents IFU’s approach to and leverage in managing the risks of forced labour used in the solar panel supply chain in IFU’s investments. IFU will continue to participate in dialogue and discussions in relevant national and international forums. Moreover, IFU will take stock of the development based on the American requirements and the expected EU ban.

    Sustainability tools

    IFU has developed tools to support the project companies in their sustainability efforts.

    ESG Self-assessment Tool
    The tool is a questionnaire that helps to determine to what extent a company meets the most fundamental rights and requirements regarding significant sustainability issues. It can be used to identify issues requiring further attention and to prioritise the sustainability effort.

    The tool has been developed by the Danish Institute for Human Rights in cooperation with IFU, the Confederation of Danish Industry (DI) and the Danish Ministry of Economic and Business Affairs, and its official name is the Global Compact Self Assessment Tool. It can be downloaded here.

    Template for the annual sustainability status report
    IFU requires project companies to prepare an annual report that provides a status on sustainability issues and development impacts, including the implementation of the action plan and actions taken to address adverse impacts.

    The annual report must be submitted to IFU together with the annual financial report and IFU provides access to a digitalised template for which the company must use to prepare the report.

    Other tools
    A number of tools and standards developed by industrial organisations, consultancy firms and NGOs are also available. IFU can assist the project company in getting an overview and choosing the tools that correspond to the situation and the level of ambition of the project company.


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    Corporate governance

    Good corporate governance is essential

    IFU’s experience as an active participant in the governance of our project companies demonstrates that careful and continuous attention to governance is essential to achieve financial, sustainability and developmental goals.

    IFU sees corporate governance as an integral part of Environmental, Social and Governance (ESG) due diligence and a means to promote the rule of law, reduce risks, foster a more robust private sector and contribute to a sustainable and profitable business environment.

    IFU’s objectives in corporate governance of project companies are:

    • To ensure that the corporate governance framework of every IFU project company is fit-for-purpose and incorporates applicable best practices tailored to the enterprise’s size, industry, ownership structure and other characteristics.
    • To promote continuous improvement in the structure and practice of governance in project companies via our roles as shareholders, board member nominees and advisors.
    • To contribute to the development of a corporate governance culture in the developing countries in which IFU operates, through capacity-building, the introduction of best practices in project companies and the demonstration effect our companies serve in society and the broader economy.

    IFU strongly believes that we can best achieve our financial and developmental objectives by being an active investor. As a (minority) shareholder of our project companies, we will actively exercise our rights and responsibilities, including where appropriate through participation in the Board of Directors. IFU’s board member nominees will be empowered and encouraged to share and disseminate our extensive experience in hands-on governance.

    In order for our board member nominees to be prepared, IFU has developed a handbook on board work and corporate governance, which is based on our 50 years of experience. We hope that the handbook can serve as inspiration for others as well.

    View our corporate Governance Policy and Handbook on Board Work and Corporate Governance in the download box.

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    IFU's sustainability policy is the overall policy document, and a number of global sustainability issues are clarified in underlying policies.

    IFU’s Sustainability Policy sets out IFU’s commitment to invest in sustainable development. It outlines the sustainability and responsible business conduct requirements that apply to IFU itself, IFU managed funds, IFU’s direct investments in the form of equity and loans to project companies, as well as investments in private equity funds, financial institutions and other financial intermediaries.

    IFU’s commitments in relation to major global sustainability issues are clarified in underlying policies, that further explain IFU’s approach and implementation.

    Overview of the Sustainability Policy and underlying policies:

    IFU’s Sustainability Policy 2022

    Environmental sustainability policies
    Climate Policy, 2022
    Animal Welfare Policy, 2019

    Social policies
    Human Rights Policy, 2019
    Gender Equality Policy, 2019

    Governance policies
    Corporate Governance Policy, 2016
    Anti-Corruption Policy, 2021
    Tax Policy, 2019

    Exclusion list
    IFU’s exclusion list, 2022

    All policies are based upon and aligned with international UN, ILO and OECD conventions, declarations, agreements and principles for sustainable development, including:

    • UN Sustainable Development Goals
    • UNFCCC Paris Declaration
    • Addis Ababa Action Agenda on Finance for Development
    • UN Global Compact
    • UN Guiding Principles on Business and Human Rights (UNGPs)
    • OECD Guidelines for Multinational Enterprises
    • Rio Declaration on Environment and Development
    • Paris Agreement on Climate Change
    • UN Convention Against Corruption
    • UN Principles for Responsible Investment (UNPRI)
    • Equator Principles and Climate Action in Financial Institutions
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    IFU Whistleblowing and Grievances System

    IFU encourages an open dialogue on all issues related to IFU and its investments, including when concerns may arise. This is why IFU makes a grievance mechanism available to stakeholders (the “Grievance Mechanism”).

    The Grievance Mechanism enables IFU’s employees, employees in projects financed by IFU or other IFU managed funds (“IFU Investees”), as well as other external stakeholders to raise a grievance if they identify irregularities with IFU’s commitments, policies and procedures, or any other legal misconduct, including concerns about impacts on human rights under the United Nations Guiding Principles on Business and Human Rights.

    IFU encourages employees of IFU and IFU Investees to discuss concerns with their immediate superior, another manager, or their human resources function. However, if this is not possible, or if you have done so and you believe that your concern has not been handled correctly, you may report the issue according to the IFU Whistleblower Policy, using the Grievance Mechanism.

    Who can report and where?

    The following persons may make reports governed by the Whistleblower Policy:

    • IFU’s employees
    • Employees in projects financed by IFU
    • Other IFU Project stakeholders
    • Third parties with a business relationship to IFU and IFU Projects
    • Other parties who are affected by IFU or projects financed by IFU

    Reports can be made through several channels. Electronic reports may be made by email directly to  or through a third party by means of a web portal available here . The external web portal is maintained by the law firm Bech-Bruun, which is independent from IFU. Bech-Bruun will receive the reports and determine how to proceed. The object of this external anchoring is to provide an anonymous channel for  reporting and to ensure impartiality and objectivity in assessment and processing.

    Reports made by post should be sent to:

    Chair of the Investigations Oversight Committee
    Fredericiagade 27
    1310 Copenhagen K

    What to report
    The Grievance Mechanism can be used to report concerns that are covered by the IFU Whistleblower Policy. In particular, the Grievance Mechanism can be used to report concerns about adverse impacts on individuals or communities by activities carried out by IFU or IFU Investees.

    The Grievance Mechanism can be used for reporting violations comprised by the Danish Whistleblower Protection Act, and thus you may file a report regarding

    • violations of specific areas of EU law
    • serious offences and other serious matters

    Protection of the identity of reporters/whistleblowers and witnesses
    IFU does not tolerate harassment, vengeful actions, or other types of sanctions against any person who in good faith files a report or who assists IFU in connection with the processing and investigation of a case.

    The identity of the reporter/whistleblower will be kept confidential to the extent possible, considering IFU’s need to make a thorough investigation. However, it may be necessary to disclose information about identity if the issue is reported to the police or if the case is taken to court.

    Persons who report in bad faith are not protected by the Whistleblower Policy and may be subject to civil, criminal and employment law sanctions, including possible dismissal.

    Deletion of personal data
    IFU is the data controller of the Grievance Mechanism. Personal data processed in connection with IFU’s Grievance Mechanism are kept for as long as deemed necessary for the purpose for which the data were collected.

    If the result of a specific case presents no evidence of any irregularity, the personal data will be deleted immediately and as a main rule by two months after closing the case.

    If evidence of irregularities is found, various storage periods apply, depending on factors such as whether legal action or disciplinary steps are taken against the reported person or against the person who filed the report, in cases where the report is filed in bad faith.

    Data may also be stored if they are anonymized.

    Please see IFU Whistleblower Policy for further information on your rights as a whistleblower/reporter, what and how to report and how IFU processes your report and personal data.


    You may also file a complaint with the Danish Data Protection Agency (Datatilsynet), Borgergade 28, 5., 1300 Copenhagen,

    If you do not feel safe using IFU’s Whistleblower policy, you may file a report via Danish Data Protection Agency’s external whistleblowing system, in writing or orally. The Danish Data Protection Agency’s whistleblowing system is available via

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