1990 – year of foundation
The governments of Denmark, Finland, Iceland, Norway and Sweden signed an agreement to establish the Nordic Environment Finance Corporation (NEFCO) as part of the Nordic region’s environmental co-operation. NEFCO’s original purpose was to reduce pollution in the Nordic region by creating local capacity for producing environmental services and equipment in Central and Eastern European states bordering the Nordic countries.

1993 – co-operation with other international financial institutions
The first co-financing projects for reconstruction and development were signed with the World Bank and the European Bank for Reconstruction and Development. The projects concerned improved infrastructure and management of water supply and waste water treatment in Estonia, Latvia and Lithuania, all identified as ‘hot spots’ by the Baltic Sea Environmental Action Program in co-operation with the Helsinki Commission (HELCOM).

1994 – the Barents Sea region is given more attention
Working in collaboration with the Arctic Monitoring and Assessment Programme (AMAP) Secretariat, NEFCO took the initiative to identify high-priority environmental projects in the Barents Sea region. The project report was updated in 2003, leading to the creation in 2004 of the Barents Hot Spots Facility (BHSF). This facility is mainly tasked to look after the next step in the project cycle: grant financing of technical assistance for project preparation.

1995 – another fund was created for early implementation of high-priority environmental investments
The Nordic Council of Ministers decided to join NEFCO’s owners in the establishment of the Nordic Environmental Development Fund. Administered by NEFCO, this acted as a source of funding at terms below market, for the purpose of financing projects of high environmental priority that could not be implemented without ‘soft’ financing.

1996 – need for more capital for environmental investments
NEFCO’s capital was increased from an initial EUR 40 million to EUR 80 million, doubling its investment capacity. Today, NEFCO’s capital amounts to a total of EUR 113.4 million.

1999 – co-operation with the European Commission and other donors increases NEFCO’s management tasks for high-priority environmental projects NEFCO and the European Commission signed their first parallel co-financing and project management contract. This gave NEFCO the task, on behalf of the EU, of managing a total of EUR 30 million for six projects. Similar agreements later included a total of EUR 15 million on behalf of Nordic donors for two more projects, all of which contributed to reducing the pollution of the Baltic Sea.

2000 – 10 years of operation: a comprehensive portfolio of environmental investments demonstrates broad experience
After 10 years of operation, NEFCO had invested in 122 projects in Russia, Estonia, Latvia, Lithuania, Poland, the Czech Republic and Slovakia. 68 investments were made in
the private sector, and 54 in the public sector - and were divided between projects leading to reduced air and water pollution in sectors including industry, energy and public
environmental services.

2003 – the Baltic Sea Region Testing Ground Facility (TGF) was established and NEFCO was assigned the management task
NEFCO was given the task of administering the newly established Testing Ground Facility, a separate fund for the purchase of carbon credits under the Kyoto Protocol’s joint implementation programme.

2004 – a shift in geographic focus northward and eastward
Following several years of participation in meetings of the Arctic Council, NEFCO was appointed as an official observer. The organisation’s task was to give advice on the development and implementation of projects contributing to a reduction in ongoing pollution, nature conservation, and safeguarding the living conditions of the indigenous population of the Arctic. With the expansion of the European Union, NEFCO ceased
new investments in Slovakia, the Czech Republic and Poland, while making Ukraine a new priority country. It was also agreed that Belarus should become an area of operation starting with preliminary, small-scale factfinding activities.

2005 – a year of celebration for NEFCO after 15 years of successful operation
The 15th anniversary celebration took the form of a special seminar. The topic under discussion was the current state of the Baltic Sea in the wake of 15 years of activities to mitigate ongoing pollution. Included in the discussion was the most recent research work carried out on the impact of phosphorus and nitrogen along the Swedish coastline of the Baltic Sea. The Arctic Council Project Support Instrument (PSI) was established and NEFCO assigned the management task. After 15 years of operation, the total portfolio has grown to 253 projects, of which NEFCO has already completed its involvement in 69 projects. The focus of investments has shifted towards the north-east, with highest priority being given to investments in Russia and Ukraine. Operations are continuing at a slightly reduced level in Estonia, Latvia and Lithuania.

2006 – Magnus Rystedt was appointed as new Managing Director for NEFCO
In January 2006 Magnus Rystedt (Sweden) was appointed as new Managing Director of NEFCO. Rystedt succeeded Harro Pitkänen (Finland), who served as NEFCO's Managing Director during 1993-2006. Totally 60 new projects were approved by NEFCO's Board in 2006. Moreover, NEFCO managed to attract several new investors to the Baltic Sea Testing Ground Facility (TGF), which had been established three years earlier.

2007 – Demonstration project in China

2007 proved to be another active and eventful business year for NEFCO. The Corporation posted an exceptional result for the year, in part as a result of the recovery of previously recognised write-downs. The project business experienced high activity levels, with a total of 59 projects being approved under the various funds that were managed by NEFCO during the year. Furthermore, 2007 saw the approval of the first project in Belarus, as well as the approval of a demonstration project in China.