It is a well-known fact that Europe’s Nordic countries are global leaders in sustainable development. Finland sits in the lead, with a progress score of 85.90% towards reaching the 17 Sustainable Development Goals (SDGs). With Sweden and Denmark following closely behind at 85.61% and 84.86% respectively, it shows a clear pattern of commitment in the region. What are the factors influencing their progress, and what lessons can other countries across Europe and the world learn?
A common theme across Northern Europe is a strong respect for the environment. This attitude runs across all levels of society. Many theorize that Nordic communities are strongly influenced by a closeness and reliance on nature that has been ingrained throughout history. The traditional Nordic ways of life not only rely on nature but recognize its impact and brutality, resulting in an innate respect.
This leads to a conscious Nordic business culture, based on the same ideals. Of the world’s most sustainable companies, the top two call Finland home. Key to Finland’s success is the country’s multi-stakeholder approach, with high engagement across the entire community including public and private enterprise as well as at an individual citizen level.
In countries such as Sweden, sourcing renewable energy is a high priority, having invested in hydro power since the 1950s, when the main aim was to reduce energy costs. Wind power, which now provides 20% of the nation’s electricity is on a growth trajectory thanks to significant investment in onshore and offshore wind farms, along with other green energy projects such as solar farming.
Net Zero Export Credit
Export Credit agencies in Scandinavia are some of the greenest in the world, acknowledging climate change as an increasing risk not only to the environment but also to business. With a focus on financing renewable energy projects, they support companies to transition their’ activities to reduce climate impact while maintaining competitiveness. ECAs are offering green loans with preferential terms for projects which benefit the environment and reduce climate impact.
Denmark’s Export Credit Agency EKF counts 70% of its existing projects as climate-related exports. Through their climate policy, EKF is committed to reaching a net-zero emission target by 2045 and phasing out funding for projects that are not compatible with a green transition.
For energy-intensive Danish companies and industries with a strong carbon footprint, EKF is planning to actively co-operate and contribute to their green transition. Using technology to grow and innovate with sustainable finance offerings, EKF is supporting companies to phase out fossil fuels in favor of greener options. For other ECAs, this represents a possible blueprint for supporting their own countries in implementing support for green transitions.
Swedish Export Credit Corporation SEK follows similar priorities, financing climate transition for sectors such as energy, transportation, shipping, and smart cities. Among their recent projects is the joint financing of one of Europe’s largest onshore wind farms, Björnberget. With commercial operation planned for early 2023, the project will have a capacity of 372MW which will meet the energy needs of around 300,000 households.
As a state-owned company, SEK is bound by Sweden’s State Ownership Policy to set a positive example for business, and also follows the owner instruction to promote compliance with international guidelines for sustainable business. As such, SEK adheres to various international frameworks from the OECD, the UN, and the Equator Principles, to ensure their operations align with sustainability guidelines. Other ECAs could move towards this best practice approach, applying international guidelines and their own sustainability-led governance to support a green transition.
An Orthodox Approach
Nordic countries take a straightforward stance when it comes to funding green energy projects, with very little support for ‘brown’ energy from conventional fossil fuels. Can this orthodox view be adopted by other European countries?
For many nations, it isn’t as straightforward. With larger, more diverse populations and business activities such as those in France, Spain, and Italy, there are other elements to contemplate. How do these browner energy projects positively impact the community? Employment, well-being, and other societal benefits must all be considered.
A less orthodox option is for lenders to impose significantly higher interest rates if environmental commitments are not adhered to. If they don’t finance these projects and apply some form of control, the alternative is that they might be accepted by others with little or no regard for sustainable development.
Technology to Drive Change
The use of technology to reduce energy, improve agility and accelerate processes is bringing rewards. Early adoption of technology is common in Northern Europe, creating new opportunities to support innovative projects that align with SDGs. Through digital transformation, ECAs can support SDGs at both a risk underwriting and a solution delivery level.
However, some Nordic ECAs are using manual internal process flows for sustainability practices. For example, putting in place manual governance structures to implement Equator Principles; determining, assessing, and managing social and environmental risks for major projects. As the need for sustainable finance grows, ECAs can scale their capacity by digitizing some or all of this process, using technology for a smarter, faster, and more cost-efficient operation.
Models for the Future
When it comes to meeting SDGs, Northern European countries continue to pave the way for the rest of the world thanks to a range of factors, some of which are unique to the region. Supported by sustainability-led governance and reporting, they set the example for the rest of the world, with guiding principles that can be adopted and applied by others, and the opportunity for knowledge sharing on best practices.
However, while sustainability guidelines and practices should be adopted globally, it isn’t always as simple as taking the Nordic models and placing them into another country where the economic activity, population, and environmental influences are different. ECAs must look at their own countries and economies and plan for a long-term transition, ensuring their existing industries have the support they need to eventually move away from non-sustainable operations and remain competitive.
In a time of accelerating change, embedding technology will support the move towards sustainability, with new thinking for faster, smarter, and scalable ways of operating for a more sustainable world.
Most recent articles
Most viewed articles
An overview of Tinubu Credit Insurance, a credit insurance software dedicated to credit insurers and export credit agencies (ECA) to manage both short term & medium term credit insurance activities.See more