Innovative approaches to environmental financing: Nordic Investment Bank

The purpose of this thesis was to propose to the international financial institution Nordic Investment Bank (NIB) a set of innovative financial tools and methods they may consider for future engagement in environmental investments. A case study research method was used to research NIB and an interactive model to research the financial industry; these two methods were used to produce an overlapping set of findings which could then be used to develop a set of proposals. The case study found NIB to be a dual mandated bank operating mainly using loan instruments but also with the capability to provide different types of financing (via trust funds and guarantees); however these options were either no longer in use nor part of NIB’s main business activities. The financial industry was researched from two perspectives: that of traditional financial institution’s that engage in impact investing and blended finance; and the solutions being developed and deployed in the alternative finance sector, namely blockchain and crowdfunding. These types of financing were defined and put into context within the financial industry; examples of each were also provided. The findings showed that NIB already had a number of financial instruments that are used for impact investing and blended finance, but had nothing suitable in place for the alternative finance solutions. However the low barriers to entry with the FinTech solutions would provide an easy testing ground for NIB to engage in new areas of environmental financing with the potential to derisk some investments. The first proposal is a revolving fund for long term environmental finance. Donors pay contributions into the fund which is then used for long term loans; repayments and interest are then re-used within the fund for new projects. The second proposal is establish a small portfolio of blockchain based token investments in the clean energy sector; this would make use of NIB’s lending expertise in the energy sector and its capable Treasury department set up