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Executive Vice President’s review: Climate theme takes on a large role in export financing

Jussi Haarasilta, Executive Vice President, Large Corporates.
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Year 2021 marked a period of strong economic growth both globally and in Finland, which was seen in many export sectors as increased orders. The prolonged coronavirus pandemic added to the uncertainty, however. The climate theme played a large role in international discussions on export financing and Finnvera’s strategy.

What was 2021 like from the perspective of export financing?

The number of export credit guarantees and special guarantees granted by Finnvera clearly exceeded the previous year’s figures. Enterprises carried out large investment projects in many export sectors, and Finnvera made financing decisions related to them.

The annual volume of export financing is always influenced by the timing of individual major export transactions. Extremely large individual financing decisions, such as ship financing, were not made in 2021. A EUR 500 million export credit guarantee for Metsä Group’s bioproduct mill in Kemi, which was one of the largest projects during the year, will produce significant new jobs, growth and exports in Finland as its multiplier effects in the years to come.

In addition to export credit guarantees, we provided more financing for the operation of large corporates in Finland. The European Investment Bank’s EGF facility expands Finnvera’s possibilities of complementing the financial market. The separate result of Finnvera’s n Large Corporates business in 2021 was EUR 73 million (EUR -848 million), whereas the previous year’s result showed a considerable loss.

The negative effects of the pandemic continued in the cruise shipping sector, which is important in terms of Finnvera’s export credit guarantee exposure. While cruise shipping companies were able to relaunch their operations, the Omicron variant hampered their business again in late 2021.

What were the biggest successes and challenges of the year?

We improved the client orientation of our activities by expanding our e-services and clarifying our product range to make it easier for companies to access export financing.

The prolongation of the pandemic increased economic uncertainty. Finnvera’s mission as a provider of financing is to create stability. Large export projects are often lengthy processes; consequently, long-term financing is a key factor enabling Finnish export companies and foreign buyers to commit to large export transactions.

What is the outlook for 2022 like?

Uncertainty in the world economy typically emphasises the role of export credit agencies. We strive to respond to this situation by ensuring that Finnvera’s export financing is competitive and by introducing new instruments, for example for financing small export transactions.

Uncertainty in the world economy typically emphasises the role of export credit agencies. We strive to respond to this situation by ensuring that Finnvera’s export financing is competitive and by introducing new instruments, for example for financing small export transactions.

How is corporate responsibility visible in Finnvera’s business?

Our climate actions started to take a very concrete shape in 2021. We reviewed the sectoral policies of our financing, and we will no longer participate in financing new coal-fired power plants or the infrastructure related to them. The backdrop to this is the OECD countries’ decision to stop offering export credits for new coal-fired power plants.

We will also not finance peat power plant projects abroad. The coordination of export financing and the climate theme is also supported by intergovernmental initiatives to which Finland is committed. As a State-owned export credit agency Finnvera has good opportunities to promote climate change mitigation: we finance new investments in developing better technologies. Regarding the climate impact of our ship financing, we calculated the CO2 emissions from our ship financing as a member of the Poseidon Principles. The result was encouraging, as our emissions were below the international target level according to our goals. The measuring method does not take into account the vessels’ methane emissions.

We believe that through financing we will promote the transition to lower-emission solutions. In the future, we will encourage companies to seize the opportunities of the green transition more systematically, develop the measurement of emissions related to our exposure, and participate in international cooperation on the rules of export financing.

The carbon intensity level of ship financing was 7% below the target level of the Poseidon Principles, which is based on 
maritime emission targets of the International Maritime Organization IMO.

Jussi Haarasilta,
Executive Vice President, Large Corporates.