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4. Assessment of Finnvera’s alignment with the Paris Agreement

We assess the ‘Paris alignment’ of Finnvera based on a methodology specifically developed to evaluate the alignment of ECAs with the Paris Agreement (Shishlov et al., 2021b). This methodology conceptually and practically builds on existing approaches to ‘Paris alignment’ developed for other financial institutions, such as multilateral development banks (MDBs). Most notably, this includes the structure and rationale of the Public Development Banks’ Climate Tracker Matrix by the environmental think tank E3G, which, in turn, is based on the six building blocks of the Paris Alignment Working Group (PAWG) by major MDBs. The assessment of ECAs like Finnvera differs notably from these two approaches since it transparently underpins each assessment dimension (hereafter referred to as ‘dimensions’) with specific key questions (3-5 questions per dimension, in total 18 questions) as well as specific benchmarks (four benchmarks per question, in total 72 benchmarks). The four benchmarks correspond to four labels of Paris alignment (Figure 1).
Unaligned
0.00 - 0.50
Some progress
0.51 - 1.50
Paris aligned
1.51 - 2.50
Transformational
2.51 - 3.00
Figure 1: Labels of Paris alignment and corresponding score ranges.
This methodology also notably differs from other approaches to assess the ‘Paris alignment’ of financial institutions since it applies a weighting approach to the assessment dimensions. This permits the emphasis of some dimensions over others as some dimensions are more imminently important to reaching the Paris climate goals (e.g., mitigation is more important than disclosure). The selection of weights reflects a careful consideration of priorities and is based on the expertise of experts from research and civil society organizations (Shishlov et al., 2021b). The final scoring for each question is carried out by evidence-based expert judgement. Finnvera received an overall assessment score of 2.20/3.00 and therefore received the label ‘Paris aligned’. The following presents a justification for the scoring of each question per assessment dimension.

4.1 Dimension 1: Financial and non-financial disclosure and transparency

The first dimension is underpinned by four key questions regarding the transparency of financial and non-financial disclosures of ECAs. This dimension is a crucial prerequisite to evaluate the Paris alignment of ECAs in subsequent dimensions and to hold governments accountable for supporting businesses abroad against their commitments under international treaties, such as the Paris Agreement. Furthermore, it is especially important since ECAs were found to particularly lack transparency in the past (Shishlov et al., 2020). The methodology weighs this dimension
with a total of 20%, recognizing that transparency, while important, is only a precondition for decarbonization itself.
In this assessment dimension, Finnvera was rated with ‘Some progress’ with an assessment dimension sub-score of 1.25/3.00. 
Q Nr.
Dimension 1 – key questions
Rating
1.1
To what extent can the GHG intensity of all activities supported by the ECA be assessed based on publicly available data? (Non-financial disclosure)
Paris aligned
1.2
In how far can the share of fossil fuel finance over total portfolio be assessed? (Financial disclosure)
Some progress
1.3
In how far can the share of climate finance over total portfolio be assessed? (Financial disclosure)
Some progress
1.4
To what extent does the institution adhere to the Recommendations and Supporting Recommended Disclosures of the Task Force on Climate-related Disclosure (TCFD)?
Some progress

Q1.1: To what extent can the GHG intensity of all activities supported by the ECA be assessed based on publicly available data? (Non-financial disclosure)

The assessment question was rated with ‘Paris aligned’. For the year 2022, Finnvera reported for the first time the total CO2 emission-equivalents (CO2e) of its outstanding commitments, based among others on the recommen­dations of the Partnership for Carbon Accounting Financials (PCAF; Finnvera, 2024b). Finnvera calculates and reports its produced (scope 1, 2) as well as financed emissions (scope 3) both domestically and internationally as well as by sector (see further Q3.1) which indicates that Finnvera's emissions from financing operations decreased by 35% compared to 2021 (see Figure 2),
Despite a ten-fold increase of emissions related to business travel (ibid.).
 as the baseline year after the COVID-19 pandemic in 2020 (Finnvera, 2024e). No higher score could be given as data for 2023 data is not (yet) available and since Finnvera does not additionally report GHG intensity on project level (see further Perspectives Climate Research, n.d.). Besides, Finnvera does not (yet) report information on lifetime GHG emissions of assets.
Finnvera's carbon footprint 2021-2022, t CO2e
2022
2021
Change %
Scope 1, Fuels
42
80
-47%
Scope 2, Electricity, district heating and cooling*
104
359
-71%
Scope 3
5,832,915
9,042,275
-35%
Category 1: Purchased Goods and Services
35
83
-58%
Category 2: Capital Goods
23
0
100%
Category 3: Fuel production and energy transmission losses
53
22
139%
Category 5: Waste management
6
47
-86%
Category 6: Business Travel
275
25
1,019%
Category 7: Employee Commuting
11
21
-48%
Category 15: Financed emissions
5,832,512
9,042,077
-35%
Carbon footprint in total*
5,833,061
9,042,714
-35%
* The market-based electricity and district heating coefficient used in the calculation.
Table corrected 16 February 2024
Figure 2: Finnvera’s own and financed emissions in 2021 and 2022
Source: Finnvera, 2024c, p. 24
We recommend Finnvera to start reporting transparently on project level from the Annual Report 2024 on, to be aligned with this best-practice used by other ECAs such as US-EXIM, together with information on lifetime GHG emissions of assets. We further recommend publishing Finnvera’s GHG calculation methodology and new commitments in English on its website (Finnvera, 2024c).

Q1.2: In how far can the share of fossil fuel finance over total portfolio be assessed? (Financial disclosure)

This assessment question was rated with ‘Some progress’. Data on the share of fossil fuel finance is available as per the E3F joint transparency reporting (E3F, 2023b). However, the lack of more granularity of the publicly available data does not allow for a higher score. The information on the total amount of resources earmarked by Finnvera is available while disaggregated information at project level is not. In its Annual Reports, Finnvera still lumps together fossil fuels and clean sources as the ‘Energy’ sector, stating only relative but not disaggregated absolute figures per year (Finnvera, 2022b, 2023c, 2024e).
Overall, we recommend more clearly distinguishing between support to fossil fuels, clean and other energy in Finnvera’s Annual Reports. Similar to Sweden’s ECA SEK (Schmidt et al., 2024), Finnvera should publish an annual overview of sectors exposed to transition risks and other assets. We further recommend disclosing granular project-level information on transactions that continue to be within the extensive value chains of fossil fuel-related and -dependent infrastructure, particularly cruise shipping, and reflecting the E3F reporting modalities in all of Finnvera’s Annual Reports. This would allow to make evidence-based decisions for aligning the ECA with the Paris Agreement and ensure greater public accountability. Ideally, reporting should also be made publicly available with an option to download as EXCEL tables to facilitate public data accessibility and processing.

Q1.3: In how far can the share of climate finance over total portfolio be assessed? (Financial disclosure)

This assessment question was rated as ‘Some progress’, for the same reasons stated in Q1.2 regarding the E3F joint transparency reporting. However, while data is provided on the supported RE activities to the E3F, this alone is not sufficient to assess the share of broader climate finance. Similar to Q1.2, the lack of more granularity of the publicly available data and of a clear definition of ‘climate finance’ does not allow for a higher rating, even considering Finnvera’s climate criteria for export financing (see further Table 2 in Q4.4).
We recommend reporting climate finance both for new authorizations and total exposure as a broader category that includes finance for RE and related infrastructure but also cross-cutting activities for both mitigation and adaptation. Climate finance encompasses cross-cutting activities including both mitigation and adaptation activities (Shishlov and Censkowsky, 2022). Such an approach should be based on sound definitions of all subsectors on exhaustive or near-to exhaustive lists of activities. For instance, an established practice for MDBs and the OECD provides guidance when support may be deemed eligible under international climate finance commitments (MIGA et al., 2022; OECD, 2022a).

Q1.4: To what extent does the institution adhere to the Recommendations and Supporting Recommended Disclosures of the Task Force on Climate-related Financial Disclosure (TCFD)?

This assessment question was rated as ‘Some progress’. Finnvera has been adhering to the TCFD, but only since 2023 when the ECA launched climate risk assessments as part of its new environmental and social risk management process. Therefore, the ECA has not yet provided comprehensive TCFD-aligned reporting in its Annual Report for 2024, but aims to do so by 2026, relying on the full three year-period to align with TCFD reporting modalities (Finnvera, 2024e) and according to the European Corporate Sustainability Reporting Directive (CSRD). Against this background, however, Finnvera – which is also behind other Nordic countries
Denmark’s ECA EIFO, for instance, began its comprehensive climate risk disclosure in its 2022 Annual Report and Sweden’s EKN published its TCFD Pilot Report in 2021 already (EKN, 2021; EIFO, 2023).
 – cannot be scored higher.
We recommend that already from the Annual Report 2024 on, Finnvera comprehensively reports on all the TCFD recommendations and the newly developed IFRS S1 and S2 reporting standards of the International Financial Reporting Standards Foundation that integrates all the TCFD recommendations (IFRS, n.d.),
In early 2024, the work of the TCFD has been completed and companies‘ progress on the TCFD recommendations is now tracked under the International Financial Reporting Standards Foundation‘s IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (IFRS, n.d.).
 thus increasing the degree of detail of the reported information.
Going beyond the European Sustainability Reporting Standards which are the standard used to fulfill obligations of the CSRD and which were aligned with the TCFD previously. See further https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FED_ESRS_AP4.pdf.
 We further recommend that Finnvera starts adhering to the Task Force on Nature-related Financial Disclosures (TNFD) whose recommendations promise a more holistic approach to disclosures on environmental risks and opportunities.

4.2 Dimension 2: Ambition of fossil fuel exclusion or restriction policies

The second assessment dimension is underpinned by three key questions covering the ambition of fossil fuel exclusions and/or restriction policies by type of fossil fuel. Today, the most notable policies emerged from the signatories of the Statement on International Public Support for the Clean Energy Transition and members of the E3F coalition. However, the majority of G20 governments only vaguely committed to climate- and or sustainability-related targets, that have substantive interpretative leeway. Due to the pre-eminent importance of rapid phase out of public support for fossil fuel value chains, the methodology weighs this assessment dimension with 40%. 
In this assessment dimension, Finnvera was rated as ‘Transformational’ with an assessment dimension sub-score of 3.00/3.00. 
Q Nr.
Dimension 3 – key questions
Rating
2.1
Coal: How ambitious is the ECA regarding exclusions or restrictions for support of coal and related value chains?
Transformational
2.2
Oil: How ambitious is the ECA regarding exclusions or restrictions for support of oil and related value chains?
Transformational
2.3
Natural gas: How ambitious is the ECA regarding exclusions or restrictions for support of gas and related value chains?
Transformational

Q2.1: How ambitious is the ECA regarding exclusions or restrictions for support of coal and related value chains?

This assessment question was rated as ‘Transformational’. As a member of the E3F, Finland together with Sweden and Denmark communicated in November 2022 its National Approaches on the implementation of the COP26 Statement on the Clean Energy Transition Partnership (CETP; E3F, 2022).
Norway, however, does not have existing policies aligned or nearly aligned with the CETP (OCI, 2024b).
 In Finnvera’s case, the 2021 CETP commitment has been implemented via sectoral policies agreed on in September 2022 which end all new public export finance for fossil fuels across their value chains, with only very limited exceptions (Finnvera, 2022a).
 These sectoral policies, in turn, followed Finnvera’s 2021 policy to no longer provide export credits for new coal-fired power plants, as was previously agreed on at OECD level (Finnvera, 2021). As is shown in greater detail in section 4.3, Finnvera has not approved a single fossil fuel transaction since 2021 (E3F, 2023b).

Q2.2: How ambitious is the ECA regarding exclusions or restrictions for support of oil and related value chains?

This assessment question is rated as ‘Transformational’. The above justification applies (see Q2.1). Finnvera’s O&G exclusion policy has been in force since January 2023 (Finnvera, n.d.b), explaining why the ECA still has a pending approval of the O&G-powered CCI Parque Industrial Power Plant in Mexico filed in 2021 (Finnvera, 2023b; OCI, 2024a). As soon as the case has been closed, Finnvera should publish all documentation related to this application, including the financial support applied for as well as expected lifecycle emissions. For this decision as well as updates of Finnvera’s O&G sectoral policies (Finnvera, 2024e), the ECA should be guided by the best-available climate science as well as its climate and reporting obligations under the E3F and CETP.

Q2.3: How ambitious is the ECA regarding exclusions or restrictions for support of gas and related value chains?

This assessment question is rated as ‘Transformational’. The above justification (see Q2.1) applies.

4.3 Dimension 3: Climate impact of and emission reduction targets for all activities

The third assessment dimension is underpinned by three key questions regarding the climate impact and GHG emissions reduction targets for all ECA activities. To achieve the objectives of the Paris Agreement, not only is rapid fossil fuel phase out required, but other sectors need to also drastically reduce absolute emissions levels (IEA, 2021). In the absence of comprehensive GHG accounting, the assessment of this dimension is difficult – however, where possible, we look at second-best indicators to proxy the emission intensity of an ECA portfolio (e.g., fossil fuel-related energy sector finance). The dimension is assigned an overall weight of 20%.
In this assessment dimension, Finnvera scored ‘Paris aligned’ with an assessment dimension sub-score of 1.67/3.00.
Q Nr.
Dimension 3 – key questions
Rating
3.1
Can a declining trend in GHG intensity of the total portfolio be observed? (tCO2e/EUR, Scope 1-3 emissions)
Some progress
3.2
How significant is the fossil fuel financing relative to total energy-related portfolio? (average of new commitments from the last three years where data is available)
Paris aligned
3.3
To what extent do all emission-relevant sectors have targeted GHG reduction targets and in how far are GHG reduction targets in line with benchmarks of acceptable 1.5°C pathways?
Paris aligned

Q3.1: Can a declining trend in GHG intensity of the total portfolio be observed? (tCO2e/EUR, scope 1-3 emissions)

This assessment question is rated as ‘Some progress’. In its Annual Report 2022, Finnvera (2023c) reported its financed (scope 3) emissions of all outstanding commitments for the first time. Figure 2 showed a big overall drop (35%) in emissions in 2022 compared to 2021,
From 7.7 megatons (Mt) CO2e (Finnvera, 2024c).
 but no higher score can be given since the ECA has provided data on tCO2e/EUR only for 2022 so far (see Figure 3). The drop in emissions is for two reasons: (1) More accurate emissions data was gathered in 2022 via questionnaires sent to the largest projects that Finnvera supports; (2) higher inflation following the COVID-19 pandemic and the Russian invasion of Ukraine impacted average monetary based emission factors, which also led to a sharp decline of 10% in energy sector financing in 2022.
As clarified in an exchange between Finnvera and the authors.
Further, Finnvera does not explicitly state the amount and value of drawn guarantees, which are necessary for making fully transparent the calculation of GHG intensity in tCO2e/EUR. Besides, Finnvera’s financed export emissions of 4.86 Mt in 2022 are still the equivalent of 11% of Finland’s total emissions in 2022 (45.8 Mt CO2e; European Commission, 2023), and therefore no higher score can be given.
Financed export emissions in 2022 by sector, in total 4,858,512 t CO2e [1]
Financed export emissions in 2022 by sector, in total 399 t CO2e / MEUR [1],[4]
Figure 3: Finnvera’s financed export emissions by sector, in 2022
[1] The emission calculation is based on 2022 data.
[2] Emissions calculated by ship (in other sectors mainly as company emissions).
[3] Includin emissions related to state and bank exposure.
[4] The figure has been calculated by dividing the total emissions by the total number of drawn guarantees on 31 December 2022.

Source: Finnvera, 2024c, p. 24
We recommend that Finnvera continues improving the transparency of its GHG (intensity) reporting (see Q1.1). Finnvera highlights that for 2023, more data have already been collected on individual projects (Finnvera, 2024e), but only full disclosure of GHG emissions on project level would be aligned with the best-practise of other ECAs (see further Perspectives Climate Research, n.d.). Therefore, progress on Finnvera’s ambition to measure, from 2024 on, outstanding commitments in domestic and export financing using tCO2e/EUR as indicator, should be made transparent. Full disclosure on and monitoring of Finnvera’s portfolio GHG intensity is crucial to ensure greater public accountability, considering that the ECA aims to develop its long-term emission pathways based on these emission intensity calculations (see further Q3.3; Finnvera, n.d.d).
As clarified in an exchange between Finnvera and the authors.
 We further recommend that Finnvera’s newly published ‘Environmental and social risk management policy for Finnvera’s financing operations’ are amended by explicit references to GHG emissions (Finnvera, 2024g) and reducing GHG intensity in line with the Paris Agreement. We also recommend that the Finnish government extends its net-zero target by 2035 to all scope 3 emissions financed by Finnvera, as voluntarily committed to by Sweden’s ECA SEK, for example (see further Schmidt et al., 2024).
As clarified in an exchange between Finnvera and the authors, by mid-2024 it was still not clear whether Finland’s net-zero goal was including projects/transactions abroad or not.

Q3.2: How significant is the fossil fuel financing relative to total energy-related portfolio? (average of new commitments from the last three years where data is available)

This assessment question is rated as ‘Paris aligned’. As Figure 4 shows, no new support has been provided to fossil fuels in 2021 and 2022, as well as in 2023 so that all measures related to fossil fuels have been falling over the last three years (see also Figure 2 and Figure 3; Finnvera, 2024c). However, of the EUR 1.3 billion energy portfolio (2022: EUR 1 billion), fossil fuels made up a slightly higher share in 2023 (57%) than in 2022 (56%)
The remainder is allocated to peat (2023: 3%; 2022: 5%) and uncategorised guarantees (2023: 2%; 2022: 3%) (Finnvera 2024). 
 due to a time lag of granted support.
As clarified in an exchange between Finnvera and the authors.
 Though the stock value of fossil fuel finance is not zero yet, Finland’s policies to phase out fossil fuel support (see section 4.2) are ambitious enough to justify the score.
Even though Finland has until recently been a supporter of fossil export finance (EUR 1 billion since 2015) – almost twice as much as Sweden (EUR 0.6 billion) and ten-times as much as Denmark (EUR 0.1 billion) –, but only 3% of all E3F member’s fossil fuel support (E3F, 2023b).
Total
Gas
Oil
Coal
Oil & Gas (undefined)
Value Chain
Credit Value
Credit Value
N* of transa.
Credit Value
N* of transa.
Credit Value
N* of transa.
Credit Value
N* of transa.
Upstream
371
0
0
0
0
0
0
371
4
Midstream
0
0
0
0
0
0
0
0
0
Downstream
0
0
0
0
0
0
0
0
0
Power generation
581
518
11
64
2
0
0
0
0
Total
952
518
11
64
2
0
0
371
4
Supported transactions by targeted sectors on an annual basis (MEUR)
Gas
Oil
Coal
O&G
Total
Electric Infra.
Ren. Energy
Total
2022
0
0
0
0
0
0
89
89
2021
0
2
0
0
0
0
0
0
2020
112
0
0
0
112
0
0
0
2019
128
0
0
0
128
0
0
0
2018
0
0
0
0
0
0
24
24
2017
257
0
0
0
257
0
0
0
2016
20
0
0
0
20
4
117
121
2015
0
64
0
371
435
0
0
0
Figure 4: Fossil fuel transactions, 2015-2022
Source: E3F, 2023, p. 7
Finnvera has not been receiving many applications by the fossil fuel sector since its fossil fuel exclusion policy entered into force and has explored all options available under the OECD Arrangement on Officially Supported Export Credits and within its mandate (see further Q4.4),
As clarified in an exchange between Finnvera and the authors which includes national content requirements, minimum premium rates and fee waivers for green projects, among others.
 so that no additional recommendations can be made: Only a further and faster decreasing share of fossil fuel finance down to zero in the stock of the ECA will eventually increase its score to ‘Transformational’. 

Q3.3: To what extent do all emission-relevant sectors have targeted GHG reduction targets and in how far are GHG reduction targets in line with benchmarks of acceptable 1.5 °C pathways?  

This assessment question is rated as ‘Paris aligned. As highlighted in section 4.2, since 2021 (coal) and 2022 (O&G) Finnvera has strong fossil fuel exclusion policies in place. In April 2021, as one of the first ECAs after Bpifrance and Norway’s Eksfin, Finnvera became a signatory to the Poseidon Principles, an initiative aimed at decarbonising the shipping sector.
Among others, the signatories commit to measure and publish the annual carbon impact of their civil ship portfolio with respect to the GHG reduction pathway for global shipping set by the IMO, using a shared methodology (Poseidon Principles, 2024a).
 As a signatory, financed shipping emissions is the only sectoral target (net-zero by 2050) already in place as of the time of publication (Finnvera, 2023d). Cruise shipping, however, accounts for 50% of Finnvera’s outstanding commitments (see Table 1) – making Finnvera the most concentrated ECA of all those assessed so far (Perspectives Climate Research, n.d.).
financed shipping emissions is the only sectoral target (net-zero by 2050) already in place as of the time of publication (Finnvera, 2023d). Cruise shipping, however, accounts for 50% of Finnvera’s outstanding commitments (see Table 1) – making Finnvera the most concentrated ECA of all those assessed so far (Perspectives Climate Research, n.d.).
Crucially, the principles are designed to track climate targets set by the International Maritime Organisation (IMO) but since the IMO’s intermediate targets themselves are not yet Paris-aligned (e.g., Mash, 2024),
The chair of the Poseidon Principles, Michael Parker, expects the IMO targets and thus the Poseidon Principles to be fully in line with the Paris Agreement’s targets by 2028 (ibid.).
 neither is Finnvera’s shipping target. We do acknowledge, however, that Finnvera has calculated the sector’s emissions for the third time already, in line with the Poseidon Principles and highlights itself the current lack of speed to bring down its own financed shipping emissions to zero by 2050.
Minus 13% in 2023 compared to 2022, but +57% in 2022 compared to 2021 (Finnvera, 2023d).
 This is not least since vessels powered by LNG account for two thirds of Finnvera’s outstanding shipping commitments (Finnvera, 2023d). 
Further, in 2023 – for the first time – Finnvera set a target for reducing the climate impacts of its operations. In its climate strategy, the measures are grouped into six areas: encouraging, measuring, managing risks, limiting, advocacy and competence. From 2024 on, Finnvera measures the impact of its measures with regard to outstanding commitments in domestic and export financing using a CO2/EUR indicator and accounts for the carbon footprint of own operations (scope 1 and 2 emissions) and financing portfolio (scope 3).
Lastly, the ECA aims to publish its long-term emission pathways in the course of 2024, based on  credible and internationally recognised decarbonisation scenarios (see below).
As this is work in progress, there could still be come some changes to plans/scenarios after stakeholder conversations, as clarified in an exchange between Finnvera and the authors.
 Finnvera uses a ‘Sectoral Decarbonisation Approach’ (SDA) in defining Finnvera’s emission pathway, allowing Finnvera to set intensity-based sector-specific targets and monitoring if necessary:
    • Finnvera uses the emission pathways of the Science Based Targets initiative (SBTi) for those sectors for which an emission pathway has been defined.
    • For the energy sector, Finnvera uses SBTi’s 1.5-degree emission reduction pathway, and for the forest sector and mining sector the IEA’s ‘well below 2 degree Celsius’ emission reduction pathways. 
    • For the telecom sector, a scenario published by the Telecommunication Standardization Sector (ITU-T) on the ICT industry’s 51% emission reduction by 2030 has been used.
    • For ship financing, a new scenario published by the International Maritime Organisation (IMO) in 2023 has been used (IMO revised strategy minimum).
    • Domestically, Finland’s climate strategy has been used, from which the impact of carbon sinks has been deducted. 
    No higher score could be given since the long-term emission pathways still have to published and cover all scope 1, 2 and 3 emissions. They will be essential to realise Finnvera’s organisation-wide long-term climate commitment (Finnvera, 2024d),
    To “measures that will promote the goal of the Paris Agreement of limiting global warming to 1.5 degrees.” (ibid.)
     and can – to some extent
    Excluding support to “[e]nergy production with fossil gaseous fuels” (Finnvera, n.d.b) – fossil gas – that is formally in line with the EU Taxonomy but contradicts other climate commitments.
     – build on Finnvera’s ‘climate criteria’ for its largest export sectors, including shipping (see Q4.4; Finnvera, n.d.a).
    We recommend that for developing its long-term emission pathways in 2024, Finnvera should continue to be guided by the best-available climate science and ensure the Paris alignment of all its financed sectors. These sectoral targets – both for 2050 and previous decades – should be made publicly available, start with the highest emitting sectors such as shipping, mining and metals and be reiterated in Annual Reports as well as key policy documents amended to reflect these targets.  

    4.4 Dimension 4: Climate finance: Positive contribution to the global climate transition

    The fourth assessment dimension is underpinned by five key questions regarding ECAs contribution to a just climate transition and sustainable development. Rapidly ramping up and improving climate finance is crucial to achieve the objectives of the Paris Agreement and contribute to a green and just post-COVID recovery (Averchenkova et al., 2020). This dimension is weighted with 10%.
    In this assessment dimension, Finnvera was rated ‘Some progress’ with an assessment dimension sub-score of 1.80/3.00.
    Q Nr.
    Dimension 4 – key questions
    Rating
    4.1
    What is the reported share of climate finance over total portfolio?
    Unaligned
    4.2
    How can the quality/appropriateness of climate finance earmarks be assessed?
    Unaligned
    4.3
    What is the share of clean energy financing over total energy-related financing? (average of new commitments from the last three years where data is available)
    Transformational
    4.4
    To what extent does the pricing structure take into account climate impacts of activities?
    Transformational
    4.5
    In how far does the institution ensure positive sustainable development contributions of its activities?
    Transformational

    Q4.1: What is the reported share of climate finance over total portfolio?

    This assessment question is scored with ‘Unaligned’ since climate finance makes up less than of 5% of Finnvera’s total portfolio. We do acknowledge the (relative) upward trend in RE finance, which we use as a proxy in the absence of a clear definition of ‘climate finance’ and absent granular reporting of it (see also Q1.3 and Q4.3). Of all Finnvera’s new commitments in 2023 (EUR 5.1 billion), 5% went to the energy sector (EUR 264 million). Energy as a sector, however, only accounts for EUR 0.8 billon (4%) of Finnvera’s total portfolio exposure of which 38% are made up of RE (thus roughly EUR 0.3 billion; see further Q4.3). The share of outstanding energy sector commitments of Finnvera’s total exposure remained constant at 2-4% since 2021, i.e. increasing RE support compensated for decreasing shares of fossil fuel exposure in its total portfolio (Finnvera, 2022b, 2023c, 2024e).
    We also acknowledge the circumstance that the structure of Finnish exports does not facilitate scaling up climate finance, together with Nordic integration and cooperation (more than Nordic competition) across different sectors such as RE (see further Schmidt et al., 2024).
    As clarified in an exchange between Finnvera and the authors.
     Considering country and regional circumstances, however, is outside the scope of the assessment methodology that has been developed to be applicable to all ECAs within the OECD. Besides, no higher score could be given since no clear in-house definition of climate finance is in place (yet) that adheres to international standards (see further (Shishlov and Censkowsky, 2022).
    We recommend that Finnvera strengthens its monitoring and reporting modalities so that researchers and the general public can duly evaluate its progress on ramping up RE and broader climate finance (see Q1.3). We further recommend that the ECA seizes the vast opportunities that greening export finance offers (e.g., Klasen et al., 2021; see section 3). Ultimately, aligning Finnvera with the Paris Agreement means allocating far more resources to climate-related activities, all of which can also boost domestic jobs under the right enabling environment.

    Q4.2: How can the quality/appropriateness of climate finance earmarks be assessed?

    This assessment question is scored with ‘Unaligned’. Finnvera does not define climate finance in a sufficient way, e.g., with activity-specific components (see also Q1.3).
    It does, however, define ‘sustainable finance’ and climate criteria for both export and domestic financing (Finnvera, n.d.d).
     The ECA refers to the EU Taxonomy in relation to assessing a project’s sustainability with climate criteria (Finnvera, n.d.a), but does not publish the results of assessments of the activities it supports to verify their consistency with the EU Taxonomy. This reporting gap prevents a higher score since the EU Taxonomy must be considered a best practice approach as it is far more granular and adaptable than the Rio markers or the MDB Joint Approach (MIGA et al., 2022; OECD, 2022a; Shishlov and Censkowsky, 2022). The taxonomy excludes investments in retrofits of existing fossil fuel power plants that could extent their lifetime, but it allows to classify investments in gas
    And nuclear.
     as ‘sustainable’ (European Commission, n.d.), which, however, is not relevant for Finnvera given that it ceased gas support.
    We recommend clearly defining climate finance in the export finance system and providing granular, project-level reporting (see more recommendations in Q1.3). We further recommend the Finnish government to contribute to streamlining efforts towards a common definition of climate finance in the global export finance system.

    Q4.3: What is the share of renewable energy financing over total energy-related financing? (average of new commitments from the last three years where data is available)

    This assessment question is rated as ‘Transformational’ since 100% of all energy-related transactions in 2021, 2022 and 2023 have been for RE and related infrastructure (E3F, 2023b; Finnvera, 2024e). However, the relative upward trend of RE, can be mostly attributed to Finnvera’s fossil fuel exclusion policy (see Figure 5), not a drastic increase in absolute spending on RE, as shown in Q4.1. Compared to other E3F members, Finland has provided only 1% of all support for RE by E3F members since 2015 (Denmark 41%, Sweden 7%) (E3F, 2023b).
    Value Chain 
    Credit value 
    Number of transactions 
    Electric infrastructure 
    4 
    1
    RE 
    230 
    3
    Total 
    234 
    4
    Figure 5: Finnvera’s RE and related infrastructure financing in EUR million, 2015-2022 
    Source: E3F, 2023, p. 7

    Q4.4: To what extent does the pricing structure take into account climate impacts of activities?

    This assessment question is rated as ‘Transformational’. In 2023, Finnvera developed climate criteria to identify export projects that have climate-positive features and defined incentives for projects meeting these climate criteria (Finnvera, 2024e). For projects that meet Finnvera’s sector-specific climate criteria, the maximum export credit amount can be up to EUR 40 million (instead of Finnvera’s usual limit of EUR 20 million) if other export credit preconditions are met (Finnvera, n.d. c). A project is considered to include climate-positive features and is thus eligible for ‘green’ export credits following climate criteria that are guided by international frameworks (see Table 2). Those sectors that are subject to the EU Taxonomy (shipping, energy) have to be compliant to it; for energy, projects are also eligible that include “[energy] production with fossil gaseous fuels” (i.e., fossil gas; Finnvera, n.d.b), though this is strongly restricted (see section 4.2).
    Besides project that include RE production, such as wind, solar, and ocean energy, energy storage and energy production with biofuels. 
     Finnvera further highlights longer repayment periods for green credits (Finnvera, n.d.b; see further Q5.1;), but as this has been an OECD-wide agreement, it is not a pricing structure exclusive to Finnvera.
    Table 2: Finnvera’s sector-specific climate criteria
    Sector
    Climate criteria
    International framework
    Cruise shipping
    • A vessel uses 100% zero-emission fuel OR
    • Its emissions reduction target is in line with the Paris Agreement or the revised IMO GHG emissions reduction strategy
    • IMO strategy on the reduction of GHG emissions from ships
    • EU Taxonomy’s criteria for marine protection and measures to mitigate climate change in passenger water transport
    • SBTi guidelines for the maritime transport sector
    • Climate Bonds Initiative’s (CBI) criteria for shipping companies
    • Poseidon Principles’ framework for responsible ship financing
    Pulp and paper
    • All forest-based virgin raw materials are FSC and/or PEFC certified
    • At least 50% of the energy used in the production is produced from RE
    • Meet the climate change mitigation criteria set for bioenergy in the EU Taxonomy
    • CBI forestry criteria
    • EU Taxonomy’s criteria for the mitigation of climate change in energy production
    Tele-communications
    • Does the telecommunications network operate on RE or other low-carbon energy?
    • Has the project estimated the carbon footprint of its telecommunications network or calculated the carbon intensity coefficient of the electricity it uses?
    • Does the project have a positive climate handprint? 
    • Has the project estimated its positive effects with the quantity of reduced CO2 emissions? 
    • Will the project introduce new technologies to replace older, more energy-intensive technologies?
    Currently, the telecommunications sector is not covered by any international frameworks
    Mining and metals
    • Comply with the international frameworks adopted
    • OECD Export Credit Agreement's Climate Change Sector Understanding (CCSU) on clean energy minerals and ores standard
    • EU Taxonomy’s criteria for mitigating climate change in energy production (mine power plants)
    Energy
    • Comply with the international frameworks adopted
    • EU Taxonomy’s criteria for mitigating climate change in energy production
    Source: Finnvera, n.d.b
    We recommend Finnvera to continue exploring if they have explored all options they have under the OECD Arrangement on Officially Supported Export Credits and within their mandates to incentivise ‘green’ exports, including on national content requirements, minimum premium rates, fee waivers for green projects (see further Q3.2).

    Q4.5: In how far does the institution ensure sustainable development contributions from its activities?

    This assessment question is rated as ‘Transformational’. First, Finnvera adheres to the requirements of the OECD’s Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (OECD, 2022b). As part of the OECD’s requirements, Finnvera reports on all transactions where a credit period of more than two years has been agreed and the contract value amounts to at least EUR 10 million, as well as on pending applications and approved Category A and Category B transactions (ibid.; see section 2 and see further Finnvera, n.d.a).
    Besides the Common Approaches, Finnvera also follows other international guidelines, including: the World Bank Group’s Environmental, Health, and Safety Guidelines, the International Finance Corporation’s IFC Environmental and Social Performance Standards, the UN Guiding Principles on Business and Human Rights and the Global Reporting Initiative’s GRI Standards for its sustainability reporting (e.g., Finnvera, 2024d).
    Finnvera’s increasing focus on sustainable development is also reflected in the change of title of its annual reports – from ‘Annual Review and Corporate Responsibility’ to now ‘Annual Review and Sustainability Report’ (Finnvera, 2022b, 2023c, 2024e).
     Consequently, Finnvera reports transparenly and extensively not only on environmental but also social sustainability issues, including human rights. Additionally, Finnvera has been one of the few (ship-supporting) ECAs to ratify the Poseidon Principles,
    Besides France, Germany, Italy and Norway.
     which not only has emission reduction targets (see Q3.3) but also encourages players in the cruise industry to promote the greenest technologies for future ships (Poseidon Principles, 2024b).
    In contrast to many other ECAs (e.g., Klasen, 2023), since 2021 Finnvera has been going beyond these international standards and additionally screened all applications for its export financing for environmental and social risks, recently summarised in its ‘Environmental and social risk management policy for Finnvera’s financing operations’ (Finnvera, 2024g), as discussed in section 3 and Q3.1. In 2023, Finnvera started to use ESG reports as part of its company assessments (Finnvera, 2024a; see Figure 6) that include climate risks (transition and physical), conduct comprehensive emission measurement, reporting, and setting future goals (Finnvera, 2023e).
    Finnvera also introduced an ESG traffic light model and report (Finnvera, n.d.g).
     The ECA has also transparently defined key corporate responsibility themes,
    Climate change, biodiversity and ecosystems, pollution and water consumption, Finnvera’s employees, conduct of business, workers in the value chain, affected communities (ibid.).
     will integrate climate risk stress test as part of an internal capital adequacy assessment process in 2024 (Finnvera, n.d.g) and has a project ongoing for reporting according to the European Union’s new Corporate Sustainability Reporting Directive.
    As clarified in an exchange between Finnvera and the authors
    For domestic projects, Finnvera introduced a ‘Climate and Environmental Loan’
    EUR 36 million in total together with Finnvera’s new Digitalisation and Innovation Loans (Finnvera, 2024e).
     in cooperation with the European Investment Fund in June 2023.
    Finnvera also introduced a ‘Digitalisation and Innovation Loan’ (ibid.) as well as, domestically, loans and guarantees for early-stage investments (Finnvera, n.d. d).
     For this type of loan, the InvestEU guarantee facility was tapped, for which no collateral is required from companies. Finnvera has not publicly reported the total value of these loans granted by the end of 2023 but will do so in the next Annual Report.
    As clarified in an exchange between Finnvera and the authors.
     Additionally, since the 1990s Finnvera has been offering a Raw Material Guarantee for imports to Finland – including of rare earth minerals that are particularly important for clean energy industries – which can be granted as collateral for a loan provided to a foreign company in connection with a long-term raw material supply agreement.
    As clarified in an exchange between Finnvera and the authors.
    Screening
    ES risk classification
    Assessment
    Financing decision & terms and conditions
    Monitoring
    • Screening is based on the information procided in the application.
    →
    • Risk category (A/B/C) is based on the information provided in the application and other related sources.
    →
    • An external ESDD consultant in large projects.
    • Finnvera's assessment in small projects.
    →
    • ES risk assessment as part of the financing decision.
    • The agreement may include ES conditions and an action plan.
    →
    • An external monitoring consultant in large projects.
    • Finnvera's monitoring in small projects if necessary.
    Figure 6: Finnvera’s environmental and social risk management process
    Source: Finnvera, 2024e, p. 31
    Overall, the level to which Finnvera is committed to sustainable development and its degree of transparency – including via its dedicated webpage – must be considered best-practice among all ECAs assessed so far (Finnvera, n.d.g). We do, however, recommend that Finnvera reports more transparently on the alignment of all its operations with the United Nations’ Sustainable Development Goals (SDGs) for 2030, placing concerns regarding a just climate transition at the heart of its institutional identity.

    4.5 Dimension 5: Engagement – Outreach and ‘pro-activeness’ of ECAs and their governments

    The fifth assessment dimension is underpinned by three key questions aimed at capturing the engagement and ambition of climate and sustainability policies of the government and its ECA in international fora as well as with national exporters and banks. This dimension is weighted with 10%.
    In this assessment dimension, Finnvera is rated as ‘Some progress’ with an assessment dimension sub-score of 2.33/3.00. 
    Q Nr.
    Dimension 5 – key questions
    Rating
    5.1
    To what extent does the institution itself or its government actively engage in relevant international fora (e.g., E3F, OECD, the Berne Union, WTO or the World Economic Forum) to liaise with like-minded for ambitious climate policies in the export finance system?
    Transformational
    5.2
    To what extent does the institution itself or its government actively engage in relevant national fora with view to implementing ambitious climate policies in the (national) export finance system?
    Paris aligned
    5.3
    To what extent does the institution or its government actively engage with national companies to transform fossil fuel-related value chains and incentivise low GHG exports?
    Paris aligned

    Q5.1: To what extent does the institution itself or its government actively engage in relevant international fora (e.g., E3F, OECD, the Berne Union, WTO or the World Economic Forum) to liaise with like-minded for ambitious climate policies in the export finance system?

    This assessment question was scored with ‘Transformational’. Finnvera sees active engagement to improve international climate rules as one of its core climate policies (Finnvera, 2023a). Most importantly, Finnvera chaired the 2023 OECD Arrangement negotiations which successfully broadened the possibilities of using financing for green and climate-positive projects (Finnvera, 2024e).
    This includes an extended maximum repayment period for climate and environmental loans from 18 to 22 years (but also for most other projects, from 8.5 and 10 years to 15 years); the minimum guarantee payments will be reduced in the lower risk categories and more flexible repayment terms will also be introduced (Finnvera, 2024e).
     Finland is a member of the E3F coalition and a signatory of the CETP. Finnvera is a member of the the Berne Union Climate Working Group
    As clarified in an exchange between Finnvera and the authors since Finnvera was not listed as a member as of mid-2024 (Berne Union, n.d.).
     and plans to join NZECA soon,
    Subject to decision by Finnvera’s Board of Directors, as clarified in an exchange between Finnvera and the authors.
     thus leading by example regarding the phase-out of export finance for fossil fuels (see section 4.2). Recently, Finnvera also signed a co-financing agreement with the Export-Import Bank of the United States – its biggest import market (see Table 1) – to strengthen the competitiveness of both agencies and create a one-stop shop facility that will provide joint support for their exports, particularly in the support for climate-friendly technologies (US EXIM, 2023).
    Compared to other Nordic ECAs, it was only in 2023 that Finnvera participated in a COP for the first time while for example Denmark’s and Sweden’s ECAs have been doing so for years (e.g. Both ENDS, 2021; Finnvera, 2024e; Business Sweden, 2021; EKN, 2022a, 2023a, 2024b; SEK, 2023b). However, in the Nordic region, ECAs closely collaborate by engaging in discussion and sharing information regularly, both at an Annual Meeting and rather technical sub-group discussions (e.g. EKN, n.d.).
    We recommend that Finland expands taking more diplomatic action on a global scale to establish restrictions of public support for fossil fuels. Only then can scenarios be avoided in which Finnish or European-only ECA support for fossil fuels ends, whilst those from other (generally less climate-concerned) countries continue their business-as-usual. This includes:
      1. Strategising with like-minded OECD Arrangement participants about how to achieve a transformative climate-related policy reform of the Arrangement, e.g., through adopting full exclusions/​restrictions for oil and gas export finance;
      2. Further deepening and publicly reporting on negotiations at the OECD and its international Infrastructure Working Group (IWG), especially with China, Japan and the US;
      3. Deliberating with like-minded countries about forming a new ‘level playing field’ outside the OECD Arrangement and E3F to accelerate progress and typify the design of a Paris-aligned and sustainable international export finance regulation;
      4. Enhancing and publicly reporting on the Finnish position in international climate-related negotiations involving policies in the export finance system;
      5. Enhancing and publicly reporting on progress on climate- and environmental diplomacy between the OECD and non-OECD members of the export finance system, through the IWG with China, the G7 and G12 Heads of ECA meetings as well as through the Berne Union;
      6. Joining NZECA as a member and encouraging Norway to do so as well;
      7. Elevating Finland’s commitment to the Beyond Oil & Gas Alliance (BOGA) co-launched by Denmark (BOGA, n.d.), from being only a ‘Friend’ of it
        ‘Friends‘ of BOGA “[support] a socially just and equitable global transition to align oil and gas production with the objectives of the Paris Agreement […]”, but are less committed than Associate Members that have to take at least one of five concrete steps to reduce O&G production (BOGA, n.d.).
         to becoming an Associate if not Core Member.
      8. Encouraging Norway to join the Berne Union’s Climate Working Group, become a full member of the E3F as well as of BOGA.

      Q5.2: To what extent does the institution itself or its government actively engage in relevant national fora with view to implementing ambitious climate policies in the export finance system?

      This assessment question was scored with ‘Paris aligned’. The Government of Finland did successfully implement (almost) exclusive restrictions of all support to fossil fuels, in line with the CETP (see further section 4.2). For that reason, there is less of a need for engaging with national fora, on the one hand. On the other, there is limited evidence of engagement in national fora to implement ambitious climate policies in the export finance system.
      Beyond Finnvera’s second role as a domestic financer (e.g., Finnvera, 2024f).
       In fact, as comprehensively compiled by Klasen (2023), the Finnish Ministry of Economic Affairs and Employment (MEAE) – responsible for ownership, industrial policy steering and setting medium-term goals for Finnvera –, has been found to be more conservative than peer agencies with regards to impacting the ECA’s activities, despite the ecosystem approach of ‘Team Finland’.
      In contrast, “[for] Denmark and Sweden, the ECAs play a key role for the just transition to net-zero though innovation-driven exports.” (Klasen, 2023, p. 3)
      This ‘one-stop shop’ for exporters does promote Finland’s climate ambitions on its English website, though not as much as it could compared to the ‘Team Sweden’, for instance (e.g., Ministry for Foreign Affairs, n.d.; Business Sweden, n.d.; Team Finland, n.d.a). However, since 2023 Team Finland has organised some exchanges about ‘green’ export opportunities and offerings and recently set up a Sustainability Group to share information about latest sustainability issues and best practices.
      As clarified in an exchange between Finnvera and the authors.
      However, no higher score can be given due to the lack of demonstrated achievements by the Finnish government in transforming domestic export sectors, and since Finland still does not have a dedicated climate policy action plan for export finance in place as, e.g., France or Sweden have (Schmidt et al., 2023; Schmidt et al., 2024).  
      We recommend that Finnvera and the Finnish government closely collaborate with other relevant national actors within (and beyond) Team Finland to align their approaches and work on a common set of climate targets. Finnvera should also promote mainstreaming the inclusion of export aspects across all of Finland’s key climate policy documents and continue to encourage the Finnish government to uphold climate targets. We further recommend Finnvera to set Paris-aligned climate targets for all its sectors and the MEAE, together with other relevant ministries, to follow the lead of the E3F-founder France to develop and publish a climate policy action plan for export finance.

      Q5.3: To what extent does the institution or its government actively engage with national companies to transform fossil fuel-related value chains and incentivize low GHG exports?

      This assessment question was scored with ‘Paris aligned. As mentioned above (see sections 2 and 4.2), the Finnish government has made several announcements over the last years to restrict fossil fuel exports. Energy support,
      Including both fossil fuels and RE.
       however, only made up 3% (2021), 2% (2022) and 4% (2023) of Finnvera’s total exposure in previous years. Considering its large dependence on supporting cruise shipping (see section 4.3), Finnvera is thus still in the early phase of truly transforming fossil fuel-related value chains and incentivising low GHG exports (Finnvera, n.d.a). In fact, as demonstrated in Q4.3, Finnvera has not yet reported a continued increase in export finance for RE. However, many early-stage green transition projects in Finland with export potential have recently been supported by Finnvera in the field of battery production, green steel and alternative fuels, among others.
      As clarified in an exchange between Finnvera and the authors.
       Nevertheless, no higher score can be given since a clear proactive role specifically of Finnvera with regards to Finland’s 2035 net-zero target is still missing for enabling innovation and the marketisation of goods and services in low GHG sectors in export markets.
      We recommend Finnvera to work even more closely with those (new) exporters that specialise in low-carbon technologies and climate-friendly exports, including low-carbon shipping. We further recommend Finnvera to actively engage with national companies with a view of phasing out all forms of ‘brown’ export finance as soon as possible.
      Nordic Council of Ministers I www.norden.org/publications I pub@norden.org