The main criteria for NEFCO's participation in projects are:

• The project is located in one of NEFCO's countries of operation.
• The project has a relevant environmental effect.
• The project is based on long-term cooperation through investments in enterprises, primarily though the formation of joint venture companies or corporate acquisitions.
• The project has a Nordic company or institution as business partner.
• The project is economically, financially, institutionally and technically viable.

NEFCO can participate in a project through:

• Subscriptions of equity and shares, facilitating mobilization of the necessary equity base for a project. NEFCO then participates as a partner in the project.
• Medium and long-term loans and guarantees, which are usually provided on market terms. In some cases subordinated loans and loans with equity features may be provided. Often the loans are extended in addition to NEFCO's equity participation in the project.
• Since 1996 NEFCO also administers a special Nordic facility for concessional financing of selected environmental projects within the neighbouring region.

Through its participation NEFCO complements financing from other interested parties and/or financial institutions. The project structure should provide a reasonable balance between the different risks and benefits of the various participants in the project. NEFCO will not accept a majority ownership or a dominating position for itself.

The project should have relevant environmental effects. Priority will be given to projects that have substantial environmental effects for the Nordic region, i.e. projects that lead to reduction of pollution in the Baltic Sea and the Barents Sea or reduction of trans-boundary airborne pollution.

Projects resulting in positive environmental effects for the Nordic countries and the surrounding seas can for example be related to modernisation of industrial plants and energy utilities. Another group consists of projects carried out in cooperation with municipalities and other authorities to supply environmental services, such as purification of waste water or waste management. A third category consists of companies that manufacture environmental equipment and equipment for more effective use of energy, or that supply consulting and engineering services within the field of environment and energy to create better conditions for the realization of environmental measures. To some extent NEFCO also participates in projects of mainly local environmental interest but offering a desirable demonstration effect. A Nordic partner should take part in the project on a long-term basis. Generally this implies participation in an enterprise, and so acquisitions and joint ventures are typical. The Nordic partner is required to have sufficient experience of the business.

The project should be carried out in one of NEFCO's countries of operation in Eastern Europe. Namely, NW Russia, Estonia, Latvia, Lithuania, Ukraine and Belarus. The project must be feasible.

The environmental, technical, institutional, economical and financial feasibility of the project should be demonstrated, normally through an adequate feasibility study. NEFCO requires projects to meet reasonable profitability criteria but, this having been established, focuses more on the environmental effects. In this NEFCO represents a green equity concept, unlike commercial investment funds.