Export Credit Guarantee operations
Export Credit Guarantees
Finnvera seeks to safeguard the competitiveness of Finnish enterprises in export markets by offering them export and project financing at rates comparable to those offered by our main commercial rivals to their export companies. Our clientele comprises not only companies but also domestic and international banks and financial institutions.
We follow the principle of sustainable development in compliance with the Act on the State’s Export Credit Guarantees and comply with internationally accepted principles and procedures for assessing environmental and social impacts. By managing environmental, social and governance risks, we ensure the accountability and risk management of our financing operations.
Country classification as the framework for risks to be covered
Our country policy and country categories create the framework for covering export risks. We classify countries into eight categories depending on their ability to manage their external liabilities, their political stability and legislative framework, and their economic outlook. The classification is based on methods widely used by export credit agencies and on country risk assessments. The country categories affect the level of guarantee premiums and the required countersecurity or payment terms.
Finnvera’s risk-taking is based on our country-specific guarantee policy, as considerable differences may exist between countries even if they are classified in the same category. We monitor the countries’ economic and political situations, and review the category of each country is at least once a year.
Political risks are related either to the home country of the foreign buyer or borrower or to a third country, where the political situation can cause the exporter, investor or provider of financing to incur a credit loss.
Commercial risks arise from foreign banks, companies or project companies, usually those located outside the OECD. These risks are covered by Finnvera's export credit guarantees for commercial risks.
Restrictions of export credit guarantees
As a public export credit agency, under the EU competition law Finnvera cannot guarantee so-called marketable risks, or risks that private insurance companies are prepared to cover. Consequently, in a normal market situation Finnvera cannot grant guarantees with a short-term risk period of less than 2 years (manufacturing period + repayment period) for exports to many Western industrial countries or EU countries. Exceptions to this restriction have been made, however, for example due to the Covid-19 pandemic.
The EU regulation on transactions with a risk period of less than two years in so-called market risk countries only applies to traditional credit insurance covering buyer risks but not to insuring bank risks. This means that Finnvera may consider granting a guarantee to these countries following the risk sharing principle.
In public export credit guarantee and export financing operations, the degree to which the export transaction benefits Finland’s national economy, or serves domestic interest, is one of the factors taken into account. Domestic interest is directly realised if the Finnish content (costs and purchases from Finland and the profit margin) of the export project is significant. The Finnish content is considered significant if it accounts for more than 27% of the export project’s value (including local costs) or 33% of the export credit amount. This applies when the repayment term of the export credit is more than 2 years.
Principles guiding export credit guarantee operations and corporate responsibility
We follow international rules on export financing and are actively involved in international development and cooperation. The purpose of international regulations and agreements on export credit guarantees is to curb countries’ attempts to compete with their export credit terms.
- Intergovernmental cooperation takes place within the framework of the OECD and European Union. The aim is to create a level playing field for exporters in the member states.
- The OECD Arrangement on Officially Supported Export Credits is the key international agreement governing export credit operations.
We comply with international principles and recommendations related to corporate responsibility, and Finnvera has its own Environmental and social risk management policy.
- Environmental and social risk management policy for Finnvera’s financing operations
- OECD Common Approaches
- UN Guiding Principles for Business and Human Rights
- IFC Performance Standards and IFC Environmental, Health and Safety Guidelines
- Finnvera is committed to complying with the Poseidon Principles on assessing the climate alignment of their ship financing
- We also ask that guarantee holders take into consideration the OECD Guidelines for Multinational Enterprises
Environmental and social risk management in Finnvera’s export financing operations
The environmental and social risk management system guides the processing of export credit guarantee applications and provides input to the finance decision at Finnvera.
We assess all export guarantee applications to determine the level of environmental and social risks associated with the project. The scope of the risk assessment depends on the value of the transaction, the size of the project, project risks and on the type of the financing. As a rule, the risks associated with the entire project are assessed, even if Finnvera’s export financing is granted only to a small component of the project, or to a delivery of individual equipment.
The main steps of the process are:
- ES risk classification
- Financing decision and monitoring.
Finnvera publishes an Environmental and Social Impact Assessment (ESIA) report on all category A projects at least 30 days before making its decision to participate in the project.
In addition, in line with the OECD agreement, Finnvera publishes at least annually information on the A and B category projects to which it has committed during the year. The information to be published for Class A projects is the same as in the pre-publication case mentioned above, supplemented by more detailed information on export financing. In addition to projects subject to OECD publication requirements, Finnvera also strives to publish information on other projects, regardless of the ES risk category. A brief summary of the key environmental and social aspects of the projects is provided. The publication also covers information on the background material of the assessment and the international standards used, as well as the name of the Export Credit Agency’s contact person. Publications are made with the consent of the parties.
When a financing decision on a project has been made and published, the project is listed on our Guaranteed transactions page.
- Should you have any questions about projects, please contact Finnvera’s ES team at [email protected]
Offers regarding projects in category A to report:
Name of project: Araguaia Nickel Project
Description of project: Greenfield open pit nickel laterite mining and processing project
Location and country of project: Approximately 40 km northwest of the town of Conceição do Araguaia in the Pará State, northeast Brazil, and approximately 25 km west of the Araguaia River
Environmental and social classification: A
Information published: 3 June 2021
Source of environmental and/or social impact information: Araguaia Project Environmental and Social Impact Assessments
Name of project: Eti Bakir Adiyaman Copper Mine project
Description of project: Deliveries to the copper flotation plant
Location and country of project: Adiyaman, Turkey
Environmental and social classification: A
Information published: 28 March 2018
Source of environmental and/or social impact information: Environmental Impact Assessment Report (PDF, 230 Mb)
Buyer's country: Australia
Exported goods/Project: Container handling equipment
Project classification: A
Information published: 19 August 2015
Environmental and/or social impact information on Project in category A: