Being responsible is part of our clients’ success – Finnvera reforms the environmental and social risk management of the financing operations
Finnvera’s policy on the environmental and social risk management of the financing operations is reformed, and in future, the assessment of transactions to be financed will be guided by a risk-based approach, not only by the size or the repayment period of a transaction. The evaluation of human rights risks will also play a more prominent role in the policy. The reformed policy has been confirmed by Finnvera’s Board of Directors, and the updated policy will be introduced gradually during 2020.
Finnvera is committed to the UN Guiding Principles on Business and Human Rights and, like other export credit agencies, adheres in its export credit guarantee and export credit operations to the OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”). The novelty in the policy is the risk-based approach. Currently, transactions are divided according to size and repayment period, and in the environmental and social risk assessment, the focus is on transactions related to projects and exceeding EUR 10 million and having a repayment period of over two years. In future, the assessment will be guided by where the largest environmental and social risks most probably are. According to Finnvera’s assessment, the most serious environmental and social risks especially relate to projects in such countries where the government does not ensure the implementation of principles presented in the policy, and that directs the risk management resources. Along with the reform, the assessment and management of impacts and risks exceeds the minimum level set by the OECD Recommendation on Common Approaches.
Human rights risks are given a higher profile in the reformed policy, and the UN Guiding Principles are included more systematically in Finnvera’s due diligence obligation in the assessment of transactions to be financed. Shift Project has prepared an analysis on Finnvera’s management of human rights risks, and its results are taken into account in the reformed policy.
Significance of the interest group collaboration grows
As part of the collaboration, Finnvera organised a public discussion event on the policy reform. The policy was also discussed in the advisory board composed of Finnvera’s clients.
“We are happy that so many interest groups showed their interest on us and that they are willing to collaborate in the development of Finnvera’s operations. Themes that arose were competitive export financing system and taking account the climate change and human rights in the financed transaction. We continue our work and will develop and implement new methods based on the new policy during the year 2020. We will take interest groups into account. Our aim is a comprehensive, predictable, transparent and efficient way to operate”, says Executive Vice President Jussi Haarasilta.
The reformed policy has been confirmed by Finnvera’s Board of Directors, and processes and guidelines based on the new policy will be introduced gradually during 2020.
“One factor behind the reform is our wish to increase openness and predictability of our operations. We act as a financier and enabler on the background of companies’ growth, internationalisation and export, but our role is not necessarily well-known. As an export credit agency, our task is to promote export, and our financing operations are guided by responsibility. Being responsible is also a part of our clients’ success. Through cooperation, we also try to understand the significance of impacts and risks as well as the expectations of interest groups, and we aim at increasing Finnvera’s leverage in financing transactions so that risks can be more effectively addressed.”