General

Finland participates in the multilateral climate change legal regime, and is a participant in the international legal framework addressing climate change. It is an Annex 1 party to the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and the Paris Agreement. Finland ratified the Kyoto Protocol on 31 May 2002 and the Paris Agreement on 11 November 2016.

Engagement Through the European Union

In multilateral negotiations, Finland engages as part of the European Union (EU), which operates as a unified negotiating bloc. 

Finland’s Position on Key Climate Change Issues

Finland strongly supports ambitious climate action, aiming for climate neutrality by 2035 – one of the most ambitious targets globally. On mitigation, Finland advocates for rapid emissions reductions and supports the EU’s target of a 55% cut in emissions by 2030 compared to 1990 levels. The Climate Act sets binding national greenhouse gas (GHG) emissions reduction targets of 60% by 2030, 80% by 2040 and 90% by 2050 – aiming for 95% compared with 1990.

Regarding adaptation, Finland integrates climate resilience into development co-operation, particularly supporting vulnerable developing countries. In terms of climate finance, Finland contributes to international funds such as the Green Climate Fund, and prioritises transparency and effectiveness in climate-related development aid.

Finland also promotes capacity-building and technology transfer, especially through EU mechanisms and Nordic co-operation. On loss and damage, Finland acknowledges the disproportionate impact of climate change on the Global South and supports international mechanisms to address these effects.

Finland’s climate diplomacy is grounded in principles of equity, gender equality and intergenerational justice, and it recognises the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC), advocating for shared global action while acknowledging differing national circumstances.

Finland’s Participation in Regional Climate Change Legal Regimes

Finland actively participates in regional legal frameworks that address climate change, particularly through the EU’s climate policy and regulatory mechanisms. The EU’s climate legal framework serves as the primary reference point for Finland’s regional climate action, and Finland is committed to the Union’s shared climate goals and obligations.

Finland also actively engages in Nordic co-operation, where best practices are shared and joint solutions are developed for climate change mitigation and adaptation.

In addition, Finland supports regional climate co-operation in the Baltic Sea area, including through HELCOM (the Baltic Marine Environment Protection Commission). In this way, Finland acts consistently within the frameworks of Nordic, EU and broader regional climate co-operation to advance a sustainable and equitable climate policy.

Integration of Climate Science and International Frameworks Into Finland’s Evolving National Climate Policy

Finland’s national climate change policy is strongly grounded in prevailing climate science as well as in multilateral and regional climate agreements, particularly the UNFCCC, the Kyoto Protocol and the Paris Agreement. Finland is committed to the objectives of the Paris Agreement and has submitted a Nationally Determined Contribution (NDC).

Finland’s NDC covers both mitigation and adaptation measures, with its primary objective being to achieve carbon neutrality by 2035 – a more ambitious target than the EU’s common current goal of reaching carbon neutrality by 2050.

Finland has updated its NDC as a part of the EU’s joint contribution, incorporating more stringent emission reduction targets and the latest climate science. These updates have had a significant impact on the development of national climate policy. Finland regularly submits Biennial Transparency Reports, which assess the effects of climate actions and progress made towards the established targets.

Engagement With Climate Science and the IPCC

Finland actively follows the work of the Intergovernmental Panel on Climate Change (IPCC) and utilises its assessment reports in the planning of national climate policy. The Ministry of the Environment appoints a national IPCC working group to co-ordinate Finland’s participation in the Panel’s activities. The group functions as Finland’s national IPCC network, responsible for compiling and presenting Finland’s positions and views in relation to IPCC reports, disseminating information on the Panel’s findings and progress, and promoting the participation of Finnish experts in IPCC work. The Finnish Meteorological Institute serves as the secretariat of the IPCC working group.

Transparency, Loss and Damage, and the Paris Agreement Mechanisms

Finland supports a robust and unified Enhanced Transparency Framework (ETF) that builds trust among parties and ensures reliable reporting and tracking of progress on NDCs. Finland supports enhancing transparency in climate action and reporting by submitting Biennial Transparency Reports. Finland has contributed to the development of the Loss and Damage Fund established in Glasgow, and emphasises the importance of its practical implementation. The EU participates in the Santiago Network, which is a part of the international climate policy framework under the Paris Agreement and which focuses specifically on addressing loss and damage caused by climate change in developing countries. Finland may participate in the network’s activities through its membership in the EU.

Market and Non-Market Co-Operation

Finland supports voluntary co-operation between countries in the transfer of Internationally Transferred Mitigation Outcomes (ITMOs).  With respect to the centralised market mechanism, Finland advocates for its efficient and environmentally sound implementation. It should complement, not replace, domestic mitigation efforts.

Support for Technology Transfer and Climate Finance

Finland supports technology transfer to developing countries as part of broader capacity-building and climate resilience. This should be done in partnership with local actors and through support to initiatives such as the Green Climate Fund and the Climate Technology Centre and Network (CTCN), to which Finland contributes, including through EU channels.

Finland is committed to increasing its climate finance and supports the Paris Agreement target of mobilising USD100 billion annually. Finnfund (Finnish Fund for Industrial Cooperation Ltd) is a significant actor in the Finnish impact investing and developing country investment ecosystems. In its recent Climate and Energy Statement, Finnfund commits itself to (for example) making EUR1 billion worth of new climate investments by 2030 and keeping its investment portfolio net carbon negative.

Role of Carbon Markets and Carbon Pricing

Finland views carbon markets as an essential tool for achieving cost-effective emissions reductions. Finland has been promoting carbon pricing globally for many years. Carbon pricing is one of the most important means of reducing emissions globally.

The Climate Act and National Climate Policy

The current Climate Act (423/2022) came into force in July 2022. The preceding Climate Act from 2015 was Finland’s first climate law. The Climate Act sets out national climate targets and a climate policy planning system, as well as related monitoring. The Climate Act imposes obligations on authorities. The measures are set out in plans drawn up by authorities in accordance with the Act. The Act does not set out measures or obligations for companies to reduce emissions or adapt to climate change. 

The Act includes Finland’s carbon neutrality target (which is set for 2035), emission reduction goals based on recommendations from the Finnish Climate Panel, and objectives to enhance carbon sinks. It establishes a planning system for climate policy, and comprises four plans and an annual climate report to monitor emissions, assess progress towards reduction targets and evaluate the need for additional measures.

The Act also sets out the division of responsibilities among authorities for climate policy planning and monitoring. Expert bodies are appointed according to the Act, such as the Finnish Climate Panel and the Sámi Climate Council. Additionally, it addresses the consideration of indigenous Sámi rights and the fairness of climate actions, along with regulations concerning appeals.

International Commitments and Environmental Law Amendments

Finland has committed to limiting the temperature rise to 1.5 degrees Celsius through the Paris Agreement. Furthermore, the Environmental Protection Act (527/2014) is amended to comply with the EU Regulations in relation to emissions, and its related amendments came into force on 1 January 2025.

Constitutional Environmental Framework

Although Finland does not have a separate environmental constitution, Section 20 of the Constitution of Finland provides for environmental responsibility:

“Nature and its biodiversity, the environment and the national heritage are the responsibility of everyone.”

This provision forms the basis for legislation such as the Climate Act and enables its integration into the national legal system.

Scope and Role of the Climate Act

The Climate Act does not prescribe specific emission reduction measures directly; rather, it establishes a climate policy planning system that includes a long-term climate plan, a medium-term climate plan, a national adaptation plan for climate change and a climate plan for the land use sector.

Summary

In summary, climate change policy in Finland is firmly anchored in national legislation through the Climate Act, and its constitutional framework supports the development of regulatory measures. Although the Climate Act is not a constitutional statute, its status is strong and it serves as an effective instrument for the planning and monitoring of climate policy.

Finland is actively engaged in the implementation of the Paris Agreement and supports international co-operation across various mechanisms to advance climate action.

Finland participates in multiple international initiatives, such as the Nordic Initiative for Cooperative Approaches (NICA), which supports practical implementation of Article 6 mechanisms. Through NICA, Finland has been involved in projects such as a waste sector initiative in Peru, and continues developing co-operative approaches that could lead to real emissions reductions and climate finance flows.

However, Finland does not currently have an official position on the use of Article 6 mechanisms to achieve its national climate targets.

Please see also 5.1 Carbon Markets and 8.2 Other Support.

Governance Framework

Finland has established a robust climate governance framework to address the challenges posed by climate change. The framework is designed to ensure that climate policies are effectively developed, implemented and enforced.

Primary Policy Authorities

The Ministry of the Environment is the primary policy authority responsible for climate change in Finland. It oversees the development and implementation of national climate policies and strategies. Under the Ministry of the Environment, the Finnish Environment Institute (SYKE) provides research data and expert services in support of climate policy. SYKE is responsible for monitoring and reporting GHG emissions. In addition, the Regional State Administrative Agencies and the Centres for Economic Development, Transport and the Environment (“ELY Centres”) are responsible for the regional implementation of climate actions.

Other key policy authorities include:

• the Ministry of Agriculture and Forestry, which addresses climate change impacts on agriculture;
• the Ministry of Transport and Communications, which is responsible for reducing emissions from the transport sector; and
• the Ministry of Economic Affairs and Employment, which focuses on the economic aspects of climate change.

Regulatory Authorities

Regulatory responsibilities are carried out by (among others) the Finnish Safety and Chemicals Agency (Tukes) and Statistics Finland, which is responsible for GHG emissions reporting. The Energy Authority oversees the implementation of energy efficiency measures and renewable energy policies. These regulatory authorities ensure compliance with national and international climate commitments.

Appropriateness and Capacity of Authorities

The effectiveness of Finland’s climate governance framework depends on the appropriateness and capacity of its institutions. The Ministry of the Environment has a strong mandate and expertise in climate policy, making it well suited to leading national efforts. However, co-ordination among different ministries and agencies is essential to address the multifaceted nature of climate change. Governance bodies and regulatory authorities must have adequate resources and knowledge to fulfil their roles effectively.

Summary

Finland’s climate governance framework is comprehensive and well structured, with clear roles and responsibilities for policy, governance and regulatory authorities. The country’s commitment to addressing climate change is evident in its proactive approach to policy development and enforcement.

Emergence and Evolution of Climate Litigation

Climate litigation has emerged as a significant and evolving feature of Finland’s legal landscape, reflecting both domestic and international legal developments. While historically limited in scope, recent years have witnessed a marked increase in climate-related legal actions, particularly those challenging governmental inaction or insufficient policy implementation. These cases are not only reshaping administrative and constitutional jurisprudence but are also testing the boundaries of procedural admissibility and substantive environmental rights.

Until recently, climate litigation in Finland was largely theoretical, constrained by procedural doctrines and a traditionally cautious judiciary.

Key Cases and Judicial Reasoning

In November 2022, Greenpeace and the Finnish League for Nature Conservation appealed to the Supreme Administrative Court against the government’s inadequate climate action in its annual climate report. This is sometimes referred to as Finnish Climate Case I.

The Supreme Administrative Court ruled by a vote that the procedural requirements were not met and dismissed the appeal as inadmissible. The Supreme Administrative Court held that the decision to issue the annual climate report is not an administrative decision that can be appealed. The court’s decision was also influenced by the principle that there is no right of appeal against the lack of action or an omission of public authorities. 

In August 2024, six Finnish environmental and human rights organisations – including the Finnish Nature Conservation Union, Greenpeace, Amnesty International Finland, Climate Parents, the Nature Association, and Finnish Sámi Youth – filed a lawsuit against the Finnish government in the Supreme Administrative Court. The organisations argued that climate change is significantly affecting the traditional ways of life of the indigenous Sámi people, threatening their culture. They claimed that the government’s inadequate climate policies not only violate Finland’s own laws but also infringe human rights. The plaintiffs assert that the government’s insufficient climate actions, along with the failure to consider the unique position of the Sámi people in the development of land-use policies, breach the rights guaranteed to the Sámi under the Finnish Constitution and the 2022 Climate Act, which aims for carbon neutrality by 2035. This is referred to as Finnish Climate Case II.

The Supreme Administrative Court of Finland rendered its decision on 8 January 2025. The court deemed the claim admissible; however, it dismissed the appeal.

The Supreme Administrative Court considered the provisions of the Finnish Constitution on legal protection and the protection of human and fundamental rights, as well as environmental fundamental rights. It also took into account the provisions of the European Convention on Human Rights on the right to a fair trial and the protection of private and family life, as interpreted by the Grand Chamber of the European Court of Human Rights on 9 April 2024, in the case of Verein KlimaSeniorinnen v Swizerland. The Court found that the appellant associations had the right, in connection with the government’s decision to issue the annual climate report required by the Climate Act, to submit the government’s position on the need for additional measures in accordance with the Climate Act to the Supreme Administrative Court for evaluation.

The Supreme Administrative Court concluded that the statements contained in the government’s annual climate report regarding the assessment of the need for additional measures could not be in violation of the Climate Act. The appeal was rejected.

Drivers and Purposes of Climate Litigation

The primary drivers of climate litigation in Finland have been civil society organisations, particularly environmental and human rights NGOs. These actors have adopted increasingly sophisticated legal strategies, combining administrative law, constitutional rights, and international human rights norms to challenge governmental inaction.

Their objectives are multifaceted:

• to compel more ambitious climate policies;
• to ensure compliance with statutory targets (such as the 2035 carbon neutrality goal under the 2022 Climate Act); and
• to protect vulnerable communities, including the Sámi, from the disproportionate impacts of climate change.

Role of Legal Scholarship and Strategic Litigation

Legal scholars and practitioners have also played a key role in shaping the discourse around climate litigation. Commentaries on Finnish Climate Case II, such as those published by the 2035Legitimacy project, have provided critical analysis of the Court’s reasoning and its implications for future litigation. These are contributing to building a more robust doctrinal foundation for climate-related legal claims in Finland.

Climate litigation in Finland serves not only legal but also strategic and symbolic purposes. It raises public awareness, pressures policymakers, and contributes to the development of legal norms. Even unsuccessful cases can have significant impact by clarifying procedural rules, expanding access to justice, and prompting legislative or policy changes. Strategic litigation has also evolved, from simply taking environmental issues to courtroom to also funding environmental activists and law firms focusing on climate change. One Finnish example is the Kone Foundation, which grants funds to various environmental causes.

Prospects

Moreover, litigation provides a forum for marginalised voices – such as the Sámi – to assert their rights and demand accountability. The Sámi people are an indigenous minority living in Finnish Lapland, Sweden, Norway and Russia. Their traditional sources of livelihood include reindeer herding, fishing and hunting. The changing climate and weather conditions have various negative impacts on the Sámi livelihoods and culture – eg, through later arrival of snow, thus impeding the availability of the winter food of reindeer and weakening the reindeer populations, which causes financial problems to the reindeer-herding Sámi.

Litigation also aligns Finland with broader European trends, where courts are increasingly scrutinising governmental climate policies and enforce legal obligations. Climate litigation is becoming an integral part of Finland’s climate governance landscape. While doctrinal and procedural hurdles remain, recent cases have demonstrated the potential of litigation to challenge governmental inaction, protect fundamental rights and shape the trajectory of climate policy. As climate impacts intensify and legal norms evolve, it is likely that such litigation will continue to grow in scope, sophistication and significance.

National Framework for Climate Change Mitigation

Finland’s climate change mitigation framework is anchored in the Climate Act, which sets legally binding targets, including achieving carbon neutrality by 2035 and net negative emissions thereafter. The Act mandates the development of long-term, medium-term and land-use sector climate plans, ensuring that mitigation is embedded in national and regional governance. These plans guide sector-specific strategies and operational decisions across government and industry.

In addition, other instruments exist that steer the national climate policy, such as the National Energy and Climate Strategy, which has been prepared for each parliamentary term. It comprehensively includes all sources of GHG emissions as well as the removals generated by carbon sinks. The strategy is based on a holistic approach to energy and climate policy in different sectors from the perspective of emissions reduction, energy policy, growth and jobs. It also addresses adaptation to climate change alongside emission reduction. Furthermore, Finnish municipalities and regions have taken the initiative of voluntarily making plans and taking action to both mitigate and adapt to climate change.

Emissions Regulation and Sectoral Targets

GHG emissions are regulated through both EU-wide and national mechanisms. Finland participates in the EU Emissions Trading System (EU ETS), which sets emissions caps for high-emission sectors such as industry, energy production and aviation – covering about 40% of national emissions. For sectors outside the ETS – such as transport, buildings and agriculture – Finland follows binding national targets under the EU Effort Sharing Regulation, aiming to cut non-ETS emissions by 50% from 2005 levels, by 2030. These targets are implemented through domestic policy tools, such as subsidies, standards and regulatory reforms.

Carbon Pricing Mechanisms

A key national tool is Finland’s carbon tax (one of the world’s oldest), which applies to fossil fuels used in heating, transportation and machinery. The tax rate is based on the carbon content of the fuel and complements the EU ETS by covering sectors outside the trading scheme. Alongside this, mandatory GHG reporting is required under both Finnish and EU law, especially for ETS-regulated companies and those subject to environmental permits.

Sectoral Impacts and Operational Consequences

The mitigation mechanisms impact nearly all sectors of the economy – energy, industry, agriculture, transportation, buildings and municipalities – all of which must implement emissions reduction strategies, adjust operational practices and enhance climate-related planning. Finland’s mitigation framework is aligned with its NDCs under the Paris Agreement, ensuring that international climate obligations are reflected in national law, policy and implementation.

Climate Mitigation in Environmental Permitting

Climate mitigation mainly indirectly influences environmental permitting and environmental impact assessment (EIA) processes. For example, in environmental permitting, there is no clear demand or condition to take into account climate mitigation, but the emission reduction targets and possible limit values set for air emissions in the permit obviously have an indirect impact.

National Policy Framework for Climate Change Adaptation

In Finland, climate change adaptation is primarily governed through the National Climate Change Adaptation Plan 2030 (KISS2030), mandated by the Climate Act. While not a statute itself, the plan is a strategic policy tool outlining Finland’s goals and measures for adapting to climate impacts across all sectors between 2023 and 2030. It supports Finland’s NDCs under the Paris Agreement by integrating adaptation into national planning and ensuring that public and private actors are prepared for climate risks.

Implementation and Sectoral Coverage

Co-ordinated by the Ministry of Agriculture and Forestry, KISS2030 is implemented across sectors including infrastructure, health, biodiversity, food systems and regional governance. It is based on a national risk and vulnerability assessment, updated every second electoral term, and forms the basis for sectoral and regional strategies. Municipalities and regions are expected to align their adaptation efforts with national objectives.

Legislative and Regulatory Integration

Adaptation is also embedded in legislation and regulatory processes. Laws such as the Land Use and Building Act, the Environmental Protection Act and the Water Act require climate risks to be considered in spatial planning, water management, and permitting. EIAs and permits increasingly demand evaluation of climate resilience, especially in vulnerable sectors such as energy, construction and water infrastructure.

Sectoral Impacts and Operational Consequences

As a result of the foregoing, various sectors must factor climate risks into planning and operations, enhance infrastructure standards and improve emergency preparedness. Finland emphasises proactive risk management, nature-based solutions and cross-sectoral co-operation to strengthen national climate resilience.

Finland’s Engagement With Article 6 Mechanisms

Finland is committed to ensuring environmental integrity and transparency in the use of Internationally Transferred Mitigation Outcomes (ITMOs) and supports the development of the Article 6.4 mechanism, also known as the Paris Agreement Crediting Mechanism (PACM).

While Finland has not yet formally established a Designated National Authority (DNA) specifically for Article 6.4, relevant responsibilities are expected to be co-ordinated through the Ministry of the Environment. This body already plays a central role in implementing the EU ETS and is likely to be involved in the governance of Article 6-related activities.

Governance and Administrative Structures

Finland’s existing carbon market governance is largely embedded within the EU framework. The Energy Authority oversees emissions trading in Finland and is responsible for the national registry and monitoring, reporting and verification (MRV) systems. These structures are expected to be adapted to accommodate Article 6.4 activities as the international rulebook evolves.

Finland also supports the Article 6.4 Supervisory Body’s work and follows its developments closely through EU co-ordination. The country emphasises the importance of robust methodologies, avoidance of double counting, and alignment with national climate targets.

Voluntary Carbon Market Participation and Regulation

Finland permits participation in the voluntary carbon market, and Finnish companies are active in purchasing and developing voluntary carbon credits, particularly in forestry and clean energy projects abroad. However, there is currently no comprehensive domestic regulation specifically governing the voluntary carbon market. That said, discussions are ongoing within the EU and nationally about the need for greater oversight and quality assurance, especially in light of concerns about the credibility and environmental integrity of some voluntary offset projects.

There are no current levies or restrictions on the exportation of emission reductions from Finland, but future regulation may address this as part of broader EU-level developments on Article 6 implementation and voluntary market integrity.

Transparency and Public Information

While Finland does not yet have a centralised public portal dedicated to Article 6 or voluntary carbon market activities, relevant information can be found through the following sources:

• the Ministry of the Environment – climate policy;
• the Energy Authority – emissions trading; and
• the Finnish Environment Institute (SYKE).

Impact of the CBAM on Finland

Finland is directly impacted by the EU’s Carbon Border Adjustment Mechanism (CBAM). The CBAM is an EU regulation, and as such it is directly applicable in all EU member states. The CBAM aims to prevent carbon leakage by placing a carbon price on imports of certain carbon-intensive goods from outside the EU. These include iron and steel, aluminium, cement, fertilizers, hydrogen and electricity. Finnish companies importing such goods must comply with CBAM regulations, which currently involve emissions reporting during the transitional phase (2023–2025).

Initially the CBAM stipulated the transitional phase ending in 2025, and starting in 2026 importers were to purchase CBAM certificates to cover the embedded emissions of these products. The CBAM, however, is part of the EU Commission’s simplification agenda “Omnibus I”, initially proposed on 28 February 2025, and aimed at streamlining sustainability reporting and regulations. The CBAM’s scope and thresholds have been proposed to be amended to cover only large importers of the carbon-intensive goods in scope. From 1January 2026, companies importing more than 50 tonnes (mass) of the goods in scope fall under the reporting rules. The final formal adoption of the proposal is expected by September 2025.

National Implementation and Authorities

The Finnish Customs Authority (Tulli) is responsible for the CBAM at the national level. It provides guidance to businesses on registration, emissions reporting, and applying for authorised CBAM declarant status. Finnish authorities are also working to ensure that companies are prepared for the full implementation of the mechanism in 2026.

Trade Considerations

From a trade perspective, the CBAM introduces new compliance costs and may influence Finnish companies to shift supply chains towards lower-emission or EU-based producers. It also has broader implications for international trade, potentially affecting relations with countries that lack carbon-pricing mechanisms. At the same time, the CBAM is expected to incentivise cleaner production methods globally, as exporters seek to maintain access to the EU market.

Influence of the TCFD on National Policy and Regulatory Positions

The work of the Task Force on Climate-related Financial Disclosures (TCFD) has influenced Finland’s approach to climate-related financial reporting.  For example, the Finnish financial sector has committed to a reporting framework to be used by companies for planning and monitoring their climate measures and for making them more transparent. This framework is based on the guidance of TFCD recommendations. Although the TCFD has officially concluded its work, its recommendations have been integrated into the IFRS Sustainability Disclosure Standards, particularly IFRS S2 Climate-related Disclosures. These standards, developed by the International Sustainability Standards Board (ISSB), form the baseline for climate-related reporting and are aligned with the TCFD’s four pillars: governance, strategy, risk management, and metrics and targets.

Use of IFRS S1 and S2 and National Reporting Frameworks

In Finland, while IFRS S1 and S2 are not mandatory by national law, they are used by companies – especially those with international operations or investor exposure – to align with global best practices. These standards are expected to gain more formal recognition as the EU and national regulators harmonise reporting frameworks. However, the EU’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) remain the primary mandatory frameworks in Finland. These also reflect TCFD principles and go further in requiring detailed disclosures on climate risks, information on transition plans, and value chain emissions. The CSRD is also subject to an amending proposal under the EU Commission simplification agenda, or “Omnibus I”.

Influence of Civil Society

Civil society in Finland plays a role in shaping climate accountability, mainly through public campaigns. NGOs, environmental groups and academic institutions regularly scrutinise corporate climate disclosures and may sometimes challenge greenwashing or insufficient action. Their influence is visible mainly in public campaigns, particularly in sectors such as energy, forestry and infrastructure. This pressure has made climate-related transparency and risk management a growing consideration in investment decisions and industrial operations.

Other Sustainability Reporting Mechanisms

In addition to the IFRS and ESRS, Finnish companies may also use other frameworks such as the Science Based Targets initiative (SBTi) for emissions reduction targets and the CDP (formerly the Carbon Disclosure Project) for voluntary climate reporting. These mechanisms complement regulatory requirements and are often used to meet investor expectations or qualify for sustainable finance.

Liability of Directors for Climate-Related Impacts

In Finland, company directors can in theory be held liable for climate-related impacts if they fail to fulfil their legal duties under corporate and environmental law. Directors have a fiduciary duty to act in the best interest of the company, which increasingly includes managing material climate-related risks. If directors neglect these responsibilities – such as by ignoring foreseeable regulatory changes or failing to assess climate risks in strategic decisions – they could face civil liability, especially if shareholders or creditors suffer financial harm as a result. However, no case law regarding this yet exists. More importantly, there is no explicit legislation regulating liability for climate-related impacts. 

Moreover, under the Environmental Protection Act and the Act on Compensation for Environmental Damage, directors may be personally liable if they are directly involved in decisions that lead to environmental harm, including emissions or other damage covered by the Act on Compensation for Environmental Damage. This liability does not require intent or negligence but can arise from the director’s actual control over harmful activities.

Scrutiny of Infrastructure Investments and Financing Arrangements

In parallel, infrastructure investments and financing arrangements with negative climate impacts are under growing scrutiny in Finland. Regulatory oversight is tightening through EU frameworks such as the Taxonomy Regulation, the CSRD and the forthcoming Corporate Sustainability Due Diligence Directive (CSDDD), which require companies and financial institutions to assess and disclose climate-related risks and impacts. Environmental permitting processes now routinely include climate impact assessments, particularly for large-scale energy, transport and industrial projects.

Civil society organisations in Finland are also active in monitoring and challenging climate-harmful investments. NGOs may use legal appeals and public campaigns to oppose projects with high emissions or biodiversity risks, such as fossil fuel infrastructure or unsustainable land use.

Liability of Shareholders and Parent Companies for Climate Change Damage

In Finland, shareholders and parent companies are generally protected by the principle of limited liability, meaning they are not personally responsible for the obligations or environmental damages caused by the company. However, Finnish law provides exceptions to this rule, particularly under the Act on Compensation for Environmental Damage. If a shareholder or parent company has exercised significant control over the operations that caused environmental or climate-related harm, they may be held liable. Environmental damage is defined in the Act as damage resulting from:

• pollution of the water, air or soil;
• noise, vibration, radiation, light, heat or smell; or
• other similar nuisance.

It is important to note that the Act does not apply to general progression of climate change.

Nature and Extent of Liability

The aforementioned liability is strict, meaning it does not require proof of negligence or intent. It can apply even if the shareholder or parent company did not directly carry out the harmful activity, as long as they had a decisive influence over it. There is no fixed ownership threshold – liability depends on the degree of operational control, not the size of the shareholding.

Practical Implications

This legal approach allows Finnish authorities to hold not only the operating company but also those in control – such as a parent company or a dominant shareholder – accountable for breaches of environmental law. This is particularly relevant in complex corporate structures or multinational groups where environmental decisions are made at the group level.

ESG Reporting Requirements and Climate Change Component

In Finland, ESG reporting is currently a legal requirement for large companies and all firms listed on regulated markets, due to the EU’s CSRD. The CSRD has been implemented into Finnish legislation by amendments to the Accounting Act, the Limited Liability Companies Act and ten other acts.

It should be noted, however, that the simplification package proposed by the European Commission under Omnibus I on 28 February 2025 has introduced changes to the reporting requirements – eg, through the size thresholds. According to the Commission’s proposal and the current negotiating status, the employee count threshold and possibly also the turnover threshold will be amended, with significantly higher thresholds for both. The Omnibus I package has not yet been finally adopted but is expected to take place during 2025–2026. All options are open until the co-legislators reach an agreement on the amendments.

The Omnibus I package also includes the so-called stop-the-clock amendment, which amends the dates from which the reporting rules are applied in the member states. This proposal delays the start of the reporting obligations for two years, until 2027. The stop-the-clock proposal was formally adopted on 16 April 2025 and entered into force on 17 April 2025. Member states have until 31 December 2025 to transpose it into national law. These recent unprecedented amendments in EU law mean that only large, listed companies with their securities admitted for trading in regulated markets are to continue reporting under the CSRD and according to the ESRS.

Until the Omnibus I amendments were introduced, companies in Finland that met the size thresholds – having over 250 employees, EUR50 million in turnover, or EUR25 million in total assets – must report on a wide range of sustainability topics, with climate change being a central focus. This includes mandatory disclosures on GHG emissions, climate-related risks and opportunities, and information on transition plans aligned with EU climate goals. These reports must follow the ESRS, which provide detailed and standardised guidance.

ESG Reporting and Stock Exchange Listing

While ESG or climate reporting is not a formal requirement for stock exchange listing on Nasdaq Helsinki, listed companies that fall within the scope of the CSRD must comply with these legal obligations.

Relevance of International Frameworks

International frameworks also influence ESG practices in Finland. The ISSB has developed global standards such as IFRS S1 and S2 for climate disclosures. In Finland, while IFRS S1 and S2 are not mandatory by national law, they are increasingly used by companies – especially those with international operations or investor exposure – to align with global best practices. Companies whose shares or bonds are publicly traded are required to prepare their financial statements in accordance with the IFRS accounting standards. For other companies, compliance with IFRS standards is voluntary.

Additionally, the SBTi is commonly used by Finnish firms to set credible, science-aligned emissions reduction targets, especially among companies with international operations or sustainability-driven investors.

Climate Change Due Diligence in M&A, Finance and Property Transactions

In Finland, climate change due diligence is becoming an increasingly standard part of mergers and acquisitions (M&A), financing and real estate transactions, especially in larger or cross-border deals. While not yet legally mandated in all cases, it is driven by EU regulations such as the CSRD and the newly adopted CSDDD. The CSDDD, which entered into force in July 2024 and must be transposed into Finnish law by July 2027 with its application beginning in 2028, will require large companies to identify, prevent and mitigate environmental and human rights risks throughout their operations and supply chains. It also mandates the adoption of climate transition plans aligned with the 1.5 degrees Celsius target and EU climate law. It should be noted that the entire CSDDD is subject to the European Commission simplification proposal Omnibus I, and the negotiations on the content and scope of the obligations under the CSDDD are currently ongoing in the EU. The Omnibus I package has not yet been finally adopted, and the obligations under the CSDDD remain open until the co-legislators have reached an agreement on the amendments.

Typical Scope of Climate Change Due Diligence by Purchasers

With climate change part of due diligence, purchasers are increasingly examining both physical climate risks (eg, flooding, extreme weather, sea level rise) and transition risks (eg, regulatory changes, carbon pricing, technological shifts) during due diligence. This includes evaluating:

• environmental permits;
• GHG emissions across all scopes (1, 2 and, where relevant, 3);
• compliance with EU taxonomy requirements; and
• preparedness for CSRD and CSDDD obligations.

Additionally, real estate transactions typically assess energy efficiency, environmental liabilities and exposure to climate-related risks.

Policy and Regulatory Support for Renewable Energy Technologies

Finland provides robust policy and regulatory support for renewable energy technologies as part of its goal of carbon neutrality by 2035. Investment aid is available for large-scale projects in wind, solar, bioenergy and hydrogen, administered by Business Finland and the Ministry of Economic Affairs and Employment. Competitive, technology-neutral auctions allocate support, with onshore wind being the most cost-effective technology. Older feed-in tariffs have been phased out in favour of market-based mechanisms such as premium support schemes, which compensate producers based on electricity market prices.

Regulatory Measures and Incentives

Regulatory measures complement financial incentives, including priority grid access and guarantees of origin to certify and monetise green electricity. Net metering schemes support household solar production, and tax incentives as well as property tax reforms are under consideration to further encourage investments, particularly in rural areas.

Amendments to the Renewable Energy Directive (RED III) (EU) 2023/2413 entered into force in November 2023 and provide stronger measures to ensure the full utilisation and development of renewables.

A distinctive feature in Finnish legislation regarding renewable energy is the so-called flexibility mechanism provided in the Act on the Promotion of the Use of Biofuels in Transport (the “Distribution Obligation Act”). The distribution obligation set out in the Act provides that 34% of all transport fuels must be biofuels by 2030. However, the flexibility mechanism allows fuel distributors to fulfil the obligation by financing other alternative emission reduction measures implemented in Finland, such as carbon assimilation procedures in the land use sector.

Strategic Priorities and Technology Differentiation

Offshore wind and green hydrogen are strategic priorities for Finland. The government promotes offshore wind development through spatial planning, permitting reforms, and sea area tenders. Hydrogen infrastructure is being advanced via national roadmaps and EU co-financing, focusing on pipelines, storage and industrial integration.

Technologies are supported based on their maturity and strategic value:

• onshore wind is well established and cost-effective;
• solar photovoltage technology use is rapidly expanding, especially at the distributed level;
• bioenergy remains important in combined heat and power production; and
• hydrogen is emerging as a crucial enabler of industrial decarbonisation.

Policy and Regulatory Support for Climate-Friendly Investments

Finland provides political and regulatory support for climate-friendly investments through national legislation, strategic targets and financial incentives. Tools include the Climate Act, which mandates long-term planning, and various subsidies for renewable energy and energy efficiency. Finland aims to become carbon neutral by 2035 and climate negative shortly thereafter. To support this goal, the government promotes clean energy, low-carbon technologies and sustainable infrastructure investments. There is currently an ongoing legislation process regarding the amendment of the Act on the authorisation procedure for renewable energy production facilities, to implement the regulation provided by amendment of the Renewable Energy Directive (RED III) (government proposal HE 42/2025), which was passed by parliament on 18 June 2025.

Financial Instruments

One financial instrument is the Clean Transition Investment Aid. This programme targets large-scale clean transition projects – each costing at least EUR30 million – that aim to reduce emissions, improve energy efficiency or electrify industrial processes. Aid from the scheme may be granted for investment projects carried out in Finland, with the exception of the region of Åland, where the impacts are estimated to be significant in terms of Finland’s climate objectives and industrial policy objectives based on overall consideration. Aid may be granted if the eligible costs of the investment are at least EUR30 million. The support can cover up to 50% of costs for emission reduction projects and up to 30% for electrification and energy-saving initiatives. Strategic projects may receive up to EUR200 million in aid. Business Finland oversees the application and distribution process.

Article 6.8 of the Paris Agreement

Article 6.8 of the Paris Agreement focuses on non-market approaches to enhance climate action, promoting co-operation among countries to achieve their NDCs. These approaches include technology transfer, capacity building and climate finance, especially in collaboration with developing countries.

Finland’s engagement in Article 6.8 measures is part of its broader climate policy framework, which emphasises co-operation and sustainable development. Finland participates in various international initiatives and collaborations that align with the principles of Article 6.8. However, Finland does not currently have an official position on the use of Article 6 mechanisms to achieve its national climate targets.

Finland channels international climate finance through multilateral funds such as the Green Climate Fund and the Nordic Development Fund, as well as through bilateral development co-operation. These efforts are designed to support sustainable development, adaptation and mitigation without relying on emissions trading or carbon offset markets.

Co-Ordination and Implementation

The Ministry of the Environment and the Ministry for Foreign Affairs co-ordinate the implementation of climate policy and international co-operation.