Sustainable finance as a whole is a prominent element in the Green Deal, the aim being to involve the financial markets deeper in sustainability efforts and to launch sustainable investments. The forest sector offers solutions for proceeding towards the important and bold environmental goals of sustainable finance. They include climate change mitigation and adaptation.

Sustainable finance regulation applies to the forest industry in many ways, because the aim is to steer more private capital towards sustainable projects. In order to ensure that the Finnish forest sector is recognised as a sustainable and attractive investment target even from the perspective of the EU’s sustainable finance regulation, the sector wants to participate actively in the development of regulation.

The purpose of the EU’s unified classification system (‘taxonomy’) is to specify what type of economic activity can be considered environmentally sustainable. That is why the taxonomy is in many ways fundamental to sustainable finance. More detailed sustainability criteria for it will be prepared in 2020 and 2021.

EU regulations must develop predictably even with regard to the taxonomy, which must also work meaningfully in practice. In order to ensure these preconditions, preparation completed within a rapid timetable should be open and inclusive. A balanced classification system can help in reaching the goal set for it, that is, to mobilise sustainable investments by providing more information for investors about the impact of investments on the climate and environment. The forest industry’s aim is that the sustainability classification system should be consistent with other EU regulations.

The aim of the updated green finance strategy, based on the Green Deal, is to encourage companies to longer-term and more sustainable operations. Enhancing transparency plays a key role in this. The Non-Financial Reporting Directive (NFRD) is due for review in 2020 and 2021. According to the Commission, the need for information relating to the Directive has not been met as regards climate and the environment, which is why transparency must be strengthened. However, this may result in a heavier reporting burden for businesses. In the forest industry’s opinion, overly detailed new instructions and requirements should be avoided.

The EU’s recovery package also aims at expediting the green transition. Projects must be open for forest industry companies as well. In order to implement the recovery package effectively, technological neutrality, concrete action and business-orientation are required.