Sustainable investments

    IFU’s investments should be sustainable and contribute to environmental and socially responsible development in the projects we invest in

    IFU’s objective is that our investments contribute to a lasting economic, environmental and social sustainable development through e.g. the creation of healthy and safe workplaces and the transfer of know-how and cleaner technologies. We wish to contribute to the social and economic development of the local community – and we also encourage the project companies to engage themselves locally.

    Sustainable business model

    IFU will not invest in projects involving activities on the exclusion list of the European Development Finance Institutions (EDFI).

    Sustainability Advisory board

    IFU has a Sustainability Advisory Board with representatives of important stakeholders within environment, human rights, development and company policies. We regularly invite these stakeholders to meetings about the challenges, dilemmas and possibilities of IFU’s sustainability work.

    IFU's sustainability policy and anti-corruption guidelines

    IFU is committed to ensuring that the project companies reduce sustainability risks, contribute to sustainable development and in general achieve high sustainability standards, which IFU believes add value to the project company and enhances business opportunities.

    Consequently, IFU’s sustainability policy and anti-corruption guidelines are ambitious and based upon international UN, ILO and OECD conventions, declarations, agreements and principles. It is widely agreed internationally that these represent the minimum framework and principles for sustainable development, including the UN Guiding Principles on Business and Human Rights,  which defines a number of criteria for handling human rights and labour rights.

    Sustainability handbook

    Our sustainability policy provides a framework for the environmental, social and governance (ESG) requirements that IFU require from the companies in which we invest.

    To support the sustainability effort of our project companies we have prepared a sustainability handbook called Sustainable investments – a handbook for our partners, which elaborates on how IFU’s sustainability policy should be understood and interpreted.

    Additionally, it provides recommendations on how the project companies can work strategically and proactively with sustainability issues. The recommendations are based on IFU’s long experience with sustainability in developing countries and emerging markets.

    Working with sustainability

    High sustainability standards add value to a company and enhance business opportunities in developing countries. IFU has extensive experience with sustainability issues and assists partners and project companies in finding the right solutions.

    Sustainability throughout the investment process

    IFU is aware of potential challenges and dilemmas in relation to sustainability. Consequently, identifying sustainability impacts is an integral part of  IFU’s investment process that consists of four phases; screening, due diligence, agreement and investment management as shown in IFU’s stainability workflow model:

    IFU's sustainability workflow model

    As a starting point, the project companies must comply with national legislation in the country in which they operate and work towards implementing relevant international standards.

    If gaps are identified in the screening process, a written action plan will be required describing the measures that need to be implemented within an agreed time frame.

    Additionally, when entering into an investment agreement, IFU requires project companies to:

    • Adopt a written sustainability policy
    • Appoint a person with overall responsibility for sustainability
    • Establish a system to ensure continuous improvements
    • Promote sustainability to partners and  suppliers
    • Prepare an annual sustainability report

    IFU's sustainability communication

    IFU believes that being open about our efforts and results is the best foundation for our external communication. We are prepared to share the methods and tools that we apply when we appraise the project companies, and how we contribute to the companies becoming sustainable through advice, training and competence building.

    Disclosure of information

    When it comes to our business operations, IFU is not subject to the Danish Open Files Act. Consequently, information from the project companies is treated confidentially. We are, however, subject to the Environmental Information Act. That means that we might be obligated to disclose information about the environmental impact of the project companies if journalists or other interested parties request access to information.

    We present our work on sustainability as part of our financial annual report as required according to the Danish Financial Statements Act.

    UN Global Compact

    We signed up to the 10 UN Global Compact principles in 2008, because they are a set of universal principles that help us underline our sustainability policy wherever in the world we create business, and we are committed to implementing and advancing these principles together with the project companies and within IFU’s sphere of influence.

    Through the Communication on Engagement (COE), we report  to the UN Global Compact annually about the progress in our efforts to implement the ten principles. As of 2016, IFU’s Annual Report constitutes the COE.

    IFU's sustainability tools and templates

    IFU has developed tools and templates to support the project companies in their sustainability work

    CSR self assessment

    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 any areas requiring further attention and to prioritise sustainability activities, and can also be a part of a learning process for both managers and employees.

    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.

    A short version of the tool can be downloaded here.

    Guideline on preparing a sustainability policy

    IFU encourages all our project companies to be transparent and informative about business and sustainability performance in order to create the best possible platform for a continuous and proactive dialogue with stakeholders.

    Like most other investors, IFU requires that IFU financed projects have a written policy that explains the objectives of the sustainability work.

    This guideline will help companies in taking the first step and adopt a sustainability policy as well as plan further sustainability communication.

    The guideline on preparing a sustainability policy can be downloaded here.

    Guidelines on supply chain management

    These guideline provide recommendations for how project companies can work towards ensuring acceptable sustainability conditions in their supply chain.

    The tool describes how the company can prioritise its suppliers, how the company can use codes of conduct and establish screening routines, how dialogue and partnerships can be organised and what the company can do if it identifies critical sustainability issues in its supply chain.

    Guidelines on supply chain management can be downloaded here.

    Template for the annual sustainability status report

    This tool provides guidance for a project company when preparing the annual sustainability status report for the company’s board.

    The tool is a reporting template that helps ensure that the status report reflects the company’s performance, that it is in accordance with IFU’s sustainability policy and can be used as a management tool to work to continuously improve sustainability issues.

    IFU’s template is available upon request.

    HIV/AIDS guidelines

    These guidelines describe what an HIV/AIDS policy should include. Project companies are required to adopt an HIV/AIDS policy and actively contribute to reducing the spread of HIV/AIDS, offer HIV tests and prevent the illness from being stigmatised. Project companies must consider providing antiretroviral treatment to infected employees.

    IFU’s HIV/AIDS guidelines are available upon request.

    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 of the many tools and their use and to choose the tools that correspond to the situation and the level of ambition of the project company.