New dimensions of EU climate policy may also be directly reflected in the financing of Finnish companies

In 2021, businesses should look to the European Union to take a leap towards meeting ambitious climate targets with new sustainable finance regulation.

The EU's sustainable finance regulation aims to centrally steer the transformation of financial and investment markets towards greener investment. At the heart of this broad and complex regulatory framework is a taxonomy, a system of classifying businesses into different baskets based on sustainability. The taxonomy gets to the heart of how companies do business - for example, in the future, companies aligned with the taxonomy will be able to access finance at a lower cost. In addition, it will be more difficult for EU Member States to use state aid to finance activities that the EU does not classify as sustainable. So EU sustainable funding is not just for financial companies, but has implications for a wide range of sectors. The classification is carried out centrally from Brussels by the European Commission, with whom Finnish companies should engage in a direct discussion on how their business should be taken into account in the regulation.

Finnish companies that operate responsibly in environmental matters should see the regulation of sustainable finance not only as a threat but also as a major opportunity to stand out from the competition in the market. A precondition for this is, of course, that the European Commission, which prepares the legislation, must have a thorough understanding of the business activities of these companies and their positive environmental impact.

The Commission has already published the first draft of the taxonomy, which deals with climate change mitigation and adaptation. The Commission had planned to publish the final draft before the end of 2020, but due to a huge feedback loop from businesses, organisations and Member States, it decided to take a time-out and reassess the content. This is only the first step in an ambitious plan. In the future, European businesses can be expected to continue to protect their interests by closely monitoring, and also by commenting sharply on, the Commission's forthcoming proposals for sustainable finance legislation.

Blic's Brussels office closely monitors the EU's sustainable finance regulatory landscape, analysing its impact on different sectors and helping businesses to make their voices heard in the jungle of institutional processes.

Petja Piilola

The author is a partner at Blic and advises Finnish companies on EU matters.

Petja Piilola, Director at Blic

Petja Piilola

Partner, Head of EU Affairs+32 49 3300 429petja.piilola@blic.fi