The increase in climate and environmental risks globally impacts societies, the economy and business operations.
Green financing can be used to develop a sustainable business. It refers to financial activities, products and services that promote environmentally sustainable projects, development and economy.
The background is the sustainable funding classification scheme, known as the taxonomy, under the European Union’s Green Deal. For example, it defines the requirements for a sustainable business and which activities are considered sustainable.
Worth more than EUR 1 billion
The cleaning of our country’s electrical system, together with sustainable operating models, enables Fingrid to use green financing. In 2017, it was the first Finnish company to issue a green bond. Since then, Fingrid has sourced green financing worth more than one billion euros in the international debt capital, commercial paper and loan markets.
“We use green financing extensively to implement our investment programme,” says Jussi Pohjanpalo, Group Treasurer at Fingrid.
Reporting is important
According to Pohjanpalo, there is a more permanent and broader financier group available for a company using green financing than for regular funding.
“The larger the group of investors a company reaches, for example, at a bond emission, the more it can affect the cost of financing.”
Green financing requires both increased corporate responsibility and more transparent and accurate reporting.
Sustainability targets already have a significant role to play in guiding many actors. Investors, on the other hand, want to understand the company and get accurate information about its progress on the sustainability journey. At the same time, they can reduce their own risks and achieve their sustainability goals.
Do your homework
Pohjanpalo advises green financing applicants to do their homework well and understand the prerequisites for a sustainable business in their operations.
“In the preparation phase, the company should develop its own green financing framework. It presents its activities and justifies the projects for which green financing is sought.”
Pohjanpalo points out that, among other things, the company must explain how it intends to use the funding proceeds, what the measurable impact of green funding is and how it is reported.
