In Finland, environmental issues are regulated by many different national laws, provisions, degrees and policies. In addition, as a European Union member state, a considerable share of the Finnish environmental legislation and policies is based on the EU’s environmental policies and regulations, either as directly applicable EU regulations or through implementation of the EU directives.

The most essential Finnish environmental laws include:

• the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki), which implements the European Union directive on industrial emissions (2010/75/EU, IED) and governs emissions caused by industrial operations;
• the Water Act (No 587/2011, vesilaki), which governs water-related construction projects and the use of water resources and the aquatic environment;
• the Waste Act (No 646/2011, jätelaki), which governs waste management and littering, the prevention of waste generation, and the prevention of danger and harm to human health and the environment caused by waste;
• the Nature Conservation Act (No 9/2023, luonnonsuojelulaki), which governs nature and landscape conservation and management;
• the Land Use and Building Act (No 132/1999, maankäyttö- ja rakennuslaki), which governs planning, building development and the use of land and water areas (as of 1 January 2025, the Act will be divided into the Land Use Planning Act (No 132/1999, alueidenkäyttölaki), governing the planning, construction and use of land, and the Building Act (751/2023, rakentamislaki), governing the planning, construction and use of buildings); and
• the Chemicals Act (No 599/2013, kemikaalilaki), which governs the enforcement of the EU chemicals legislation and certain national obligations regarding chemicals.

The most essential environmental principles implemented by the environmental legislation include the following:

• pollution prevention and minimising harmful impact: harmful environmental impact shall be prevented or, if it cannot be prevented completely, reduced to a minimum; the operator shall reduce any emissions to the environment or sewer network to a minimum; 
• caution and care: proper care and caution shall be taken to prevent pollution, taking into account the nature of the activity and the probability of pollution, risk of accidents, and opportunities to prevent accidents and limit their effects;
• best available technique: the best available technique shall be used in the operations;
• best environmental practice: best practices, fuels and raw materials shall be used in the operations in order to prevent pollution;
• knowledge obligation: operators must have sufficient knowledge of the environmental impacts of their activities, and the risks and mitigation measures;
• obligation to prevent pollution: should the activities cause environmental pollution or a threat thereof, the operator must take the appropriate action without delay in order to prevent pollution or the threat thereof, or, if pollution has already occurred, to reduce it to a minimum; and
• polluter pays principle: the party responsible for the activity producing pollution, shall be responsible for the costs resulting from preventing and minimising environmental damage and restoring the environment.

The main general authority that controls environmental policy, drafts environmental legislation and guides other authorities’ work relating to environmental issues is the Ministry of the Environment (ympäristöministeriö).

The competent permitting authorities for environmental permits are the Regional State Administrative Agencies (aluehallintovirasto) and the municipalities. The Regional State Administrative Agencies are in charge of issuing environmental permits for activities with major environmental impacts, as well as all permits under the Water Act. Other environmental permits are dealt with by the municipal environmental protection authorities (kunnan ympäristönsuojeluviranomainen).

The competent supervisory authorities are the regional Centres for Economic Development, Transport and the Environment, the ELY Centres (elinkeino-, liikenne- ja ympäristökeskus, ELY-keskus), and the municipalities. The ELY Centres also act as contact authorities in environmental impact assessments carried out in accordance with the Act on Environmental Impact Assessment Procedures (No 252/2017, laki ympäristövaikutusten arviointimenettelystä), and issue reasoned conclusions on the significant environmental impacts of the projects as part of the assessment.

The municipalities’ role is central in relation to land use planning, as they have wide discretional power to decide whether to approve or reject a plan. Municipalities also function as permit authorities for construction permits and other permits granted under the Land Use and Building Act (No 132/1999, maankäyttö- ja rakennuslaki).

The requirement for co-operation among various authorities is mandated by legislation and is evident in scenarios such as communication between different permit authorities during simultaneous permit procedures. Additionally, it involves consulting the relevant supervisory authority during the permit procedure to ensure clarity and thoroughness in the matter.

Environmental assets such as air, water and soil are protected by the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki), which governs emissions caused by industrial operations and aims to prevent the pollution of the environment and any risk of that, prevent and reduce emissions, eliminate adverse impacts caused by pollution and prevent environmental damage.

In addition, other environmental assets such as flora, fauna, natural habitats, landscapes and the aquatic environment are mainly protected by the Nature Conservation Act (No 9/2023, luonnonsuojelulaki), as well as the Water Act (No 587/2011, vesilaki) and the Forest Act (No 1093/1996, metsälaki). The protection provisions can directly concern species, for example, by prohibiting the deliberate disturbance of the protected animals or by prohibiting the picking and destruction of a protected plant species. In addition, the protection provision can also concern the habitats of the protected species by prohibiting, for example, the deterioration and destruction of a habitat important for the survival of a species under strict protection or of breeding sites and resting places used by specimens of certain animal species.

Besides the abovementioned protection provisions for species, certain areas (national parks, nature reserves, landscape management areas, certain natural habitats, areas included to the EU Natura 2000 network) are subject to protection. The content of the protection provisions differs based on the legal basis of the protection and also on a case-by-case basis.

Breaching the protection provisions under the Nature Conservation Act might lead to a prohibition on continuing or repeating the offence or instance of negligence. One can also be required to correct the unlawful situation or redress the negligence under threat of penalty or suspension. In addition, the penalty for causing damage to the environment, or for any other nature conservation offence, is laid down in the Criminal Code (No 39/1889, rikoslaki). Please also see 5.1 Key Types of Liability and 13.4 Proceedings Against Polluters.

Pursuant to the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki), relevant authorities have the power to obtain information from, for example, authorities and operators of a site suspected of engaging in contaminating activities, even if such disclosure may conflict with confidentiality obligations. The authority may also gain access to the site where the suspected contaminating activities have occurred and take measurements and soil samples.

The right of access is not subject to challenge, and consent of the involved parties is not required. However, according to the Administrative Procedure Act (No 434/2003, hallintolaki), as a general rule the authorities are obligated to give prior notification of an upcoming inspection on a site or property. Any investigations involving criminal liability are carried out by the police.

Pursuant to the Environmental Protection Act, an environmental permit is required for activities that involve a risk of environmental pollution. The operations requiring an environmental permit are listed in Annex 1 of the Environmental Protection Act, which covers both the installations covered by the European Union Industrial Emissions Directive (2010/75/EU) and installations subject to permits under the national legislation. In addition, an environmental permit is required for activities that may cause pollution of a water body, for conveying wastewater that may lead to the pollution of a ditch, spring or streamlet, and for activities that may place an unreasonable burden on the surroundings.

A lighter registration or notification procedure is applicable with respect to some minor operations listed in Annexes 2 and 4 of the Environmental Protection Act.

An environmental permit shall be applied for in accordance with the Environmental Protection Act. The permit consideration is based solely on judicial discretion, meaning that the environmental permit must be granted to the operator if the requirements set out in the Environmental Protection Act are fulfilled.

Rejection of a permit application or a permit decision and individual permit regulations may be appealed against. Further, the parties affected by the activity (permit applicants, neighbours and other concerned persons), environmental NGOs and those who may be affected by the operations, also have a right to appeal.

The first appellate instance is the Administrative Court of Vaasa, and the second and final instance is the Supreme Administrative Court. However, it should be noted that the right to appeal to the Supreme Administrative Court in environmental cases is subject to a requirement of leave to appeal, which is granted under the Administrative Judicial Procedure Act (No 808/2019, laki oikeudenkäynnistä hallintoasioissa) if the matter involves a need for a precedent or an obvious error, or if there are some other serious grounds for granting the leave to appeal.

Authorities supervise polluting activities through surveillance visits and requests for information, monitoring reports provided by the operators and possible further clarifications that the authorities may request from the operators. In accordance with the Environmental Protection Act, a supervisory authority may issue an administrative order placing obligations on the operator in order to rectify a violation or negligence. A supervisory authority may prohibit an operator who violates the Environmental Protection Act or the permit regulations from continuing or repeating a malpractice or may order a violating operator to fulfil its obligations in some other way (eg, it may order the operator to apply for an environmental permit in respect of an action that is conducted without a permit).

It may also order the operator to terminate its operations. Unless it is deemed unnecessary, the competent authority shall issue the administrative orders with a threat of interruption, penalty payment, and/or remediation or other measures at the expense of the operator. The competent supervisory authority shall ensure that the order or prohibition provided in the administrative order is complied with.

It is also in the supervisory authority’s power to order the operator to restore the environment to the state in which it was before the violation, or to eliminate the harm to the environment caused by the violation. The supervisory authority can also order the operator to investigate the environmental impacts of the operations, if there is a justified cause to suspect that they are causing pollution.

Before issuing an administrative order, the authority shall give the operator an opportunity to be heard in the matter, as provided in the Administrative Procedure Act (No 434/2003, hallintolaki). If necessary, other concerned parties, supervisory authorities and authorities protecting public interest shall also be heard.

Pursuant to the Environmental Protection Act, the supervisory authorities are obliged to report a matter to the police for preliminary investigation if they suspect that a criminal violation of a rule of environmental law, government decree or permit regulation has been committed. No notification needs to be made if the act can be considered minor in view of the circumstances and the public interest does not require charges to be brought. However, the recent tendency has generally been that supervisory authorities are more likely to report the matter to the police for preliminary investigation.

Environmental permits can be transferred to another operator without reassessment or the consent of the environmental authorities. Pursuant to the Environmental Protection Act, the new operator must notify the relevant supervisory authority of the change.

If the operator does not comply with the permit conditions, the competent authority can intervene by urging compliance and issuing administrative orders with threat of interruption of operations, penalty payment and/or carrying out of the required tasks by the authority at the cost of the operator.

The operator may also be prosecuted under the Criminal Code (No 39/1889, rikoslaki) for a breach of an environmental permit or regulations of the Environmental Protection Act as a criminal offence punishable by a fine and/or imprisonment. Criminal sanctions may be imposed for acts in breach of permits or legislation that have been carried out through negligence, gross negligence or intentionally. Depending on the gravity of the punishable offence, criminal sanctions for environmental offences include:

• fines imposed on natural persons (corporation officers responsible for the offence);
• fines imposed on the corporation; and
• imprisonment ranging from four months to six years. 

Further, the property and the value of savings derived from an offence can be confiscated by the state.

Please also see 7.1 Liability for Environmental Damage or Breaches of Environmental Law.

Finnish legal environmental liability consists of public liability, civil liability and criminal liability. The key Finnish environmental legislation regarding environmental liability is:

• the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki);
• the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta);
• the Act on the Remediation of Certain Environmental Damages (No 383/2009, laki eräiden ympäristövahinkojen korjaamisesta); and
• the Criminal Code (No 39/1889, rikoslaki).

The polluter may be ordered to restore polluted soil, groundwater or surface water, and/or to compensate the damage caused to the injured party. Environmental liability is strict liability – ie, damages are to be compensated and restoration obligations may be ordered even if the pollution is not caused negligently or intentionally. In addition, criminal liability (through a fine and/or imprisonment) serves as a deterrent. All three types of liability can be concurrently applied in the same case.

According to the Environmental Protection Act, the operator shall notify the state supervisory authority without delay of any substantial pollution of a water body and damage to protected species and natural habitats and imminent risks. Failure to comply with this notification requirement, whether intentionally or through negligence, is punishable by a fine under the Environmental Protection Act, unless a more severe punishment is provided elsewhere by law.

Please see also 17 Environmental Information and Disclosure and 18.2 Disclosure of Environmental Information.

In general, based on the fundamental polluter pays principle, anyone who is operating or has operated an activity, or taken a measure that has caused a nuisance or damage to the environment, is liable for the environmental damage and shall restore the contaminated area to a condition that will not cause harm to health or the environment, nor present a hazard to the environment. The principle is contained, for example, in the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki), according to which any party whose operations have caused contamination of soil or groundwater is required to restore the soil or groundwater (contaminated site) to a state where it does not pose a risk or cause harm to health or the environment.

The liability to compensate for environmental damage caused by activities carried out in certain areas and resulting from i) pollution of the water, air or soil; ii) noise, vibration, radiation, light, heat or smell; or iii) other similar nuisance, shall lie with the operator to whom the activity that has caused the environmental damage has been assigned, if the assignee knew or should have known, at the time of the assignment, about such environmental damage or nuisance, or the threat of the same.

In cases where historical environmental incidents or damage have led to soil contamination, please see 13 Contaminated Land.

Please see 17.1 Self-Reporting Requirements.

As explained in 5.1 Key Types of Liability, Finnish legal environmental liability consists of public liability, civil liability and criminal liability.

Pursuant to the Environmental Protection Act, any party whose activities have caused the contamination of soil or groundwater is required to restore said soil or groundwater to a condition that will not cause harm to health or the environment, nor represent a hazard to the environment. The supervisory authority has the power to order the operator to restore the environment to the state in which it was before the incident, or to eliminate the harm to the environment caused by the incident. Environmental liability is strict liability, which means that restoration obligations may be ordered even if the pollution is not caused negligently or intentionally.

According to the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta), compensation shall be paid for a loss defined as environmental damage that is caused by activities carried out in a certain area and resulting from pollution of the water, air or soil, noise, vibration, radiation, light, heat or smell, or another similar nuisance. Compensation shall be paid if it can be shown that there is a probable causal link between the activities and the loss referred to above.

In assessing the probability of causality, consideration shall be given, among other things, to the type of activity and loss, and to the other possible causes of loss. Even when the loss has not been caused deliberately or negligently, liability for compensation shall lie with the person whose activity has caused the environmental damage or a person who is comparable to the person carrying out the activity. In addition, liability for compensation shall lie with the person to whom the activity that caused the environmental damage has been assigned, if the assignee knew or should have known, at the time of the assignment, about the loss or nuisance, or the threat of such.   

Finally, according to the Criminal Code (No 39/1889, rikoslaki), criminal liability shall lie with the person within whose sphere of responsibility the act or negligence, which has caused the incident or damage, belongs. In the allocation of liability, due consideration shall be given to the position of said person, the nature and extent of the person’s duties and competence, and the person’s involvement in both the initiation and the perpetuation of the unlawful situation. 

Please see also 8 Personal Liability, 9.1 Environmental Insurance and 13 Contaminated Land.

The Finnish legal system makes no explicit distinction between corporate entities and natural persons. In Finland, as in many other countries, the “polluter pays” principle is the main rule, which means that a corporate entity can also be liable for environmental damages and breaches of environmental law.

Moreover, Finland recognises the criminal liability of a legal person involved in an environmental crime. The corporate criminal liability applies irrespective of the liability of natural persons, and a corporate fine may be imposed even if a natural person offender cannot be identified or shall not be punished. The amount of a corporate fine ranges from EUR850 to EUR850,000, and the court has wide discretion as to how to calculate the amount of the fine. The fine shall be imposed in proportion to the harmfulness and dangerousness of the offence and the size/financial standing of the liable corporation. In recent case law, the imposition of forfeiture orders, which require the surrender of proceeds derived from criminal activity, has grown in significance, potentially surpassing the impact of corporate fines as a deterrent.

Furthermore, the obligations of the Environmental Act regarding environmental permits and the sanctions relating to possible non-compliance apply especially to corporate entities (please see 4.5 Consequences of Breaching Permits/Approvals).

The most relevant environmental taxes in Finland are:

• excise duty on liquid fuels;
• excise duty on electricity and certain fuels;
• excise duty on beverage containers;
• waste tax;
• car registration tax;
• annual vehicle tax; and
• environmental liability contribution (from 1 January 2025).

Further information is provided in 19.1 Green Taxes.

There are no specific incentives or exemptions for good environmental citizenship in Finnish legislation. With respect to environmental taxes that can to some extent be considered as incentives, see 19.1. Green Taxes. Penalties for breaches against environmental laws are covered in 3.2 Breaching Protections, 4.5 Consequences of Breaching Permits/Approvals and 7.1 Liability for Environmental Damage or Breaches of Environmental Law.

According to the Finnish Limited Liability Companies Act (No 624/2006, osakeyhtiölaki), a limited liability company is a legal entity separate from its shareholders and, therefore, the shareholders are not liable for the company’s debts, obligations or liabilities (including, but not limited to, environmental damage or breaches). The same applies to parent companies. Thus, shareholders and parent companies are not liable for environmental damages or breaches of environmental law.

However, Finnish jurisprudence has shared the view that, in certain exceptional circumstances, a shareholder could be liable for the company’s obligations without the explicit support of the law. This kind of limited liability without the legal support refers to the principle of piercing the corporate veil. Although piercing the corporate veil has been considered possible in Finnish jurisprudence, the Supreme Court has expressly applied it only once (KKO 2015:17).

In Finland, environmental, social and governmental requirements are regulated by several different laws. There is therefore no specific CSR law in Finland, which further means that the reporting, monitoring and enforcement of obligations vary depending on the subject matter and the specific legislation applicable. For example, laws safeguarding the social component of CSR especially address the rights of a company’s employees and its customers – ie, consumers. These laws create obligations and responsibilities for companies to actively ensure the safety of employees and consumers and are monitored by specific authorities.

Finland, as part of the European Union, has also implemented EU regulation on ESG requirements. For example, the Corporate Sustainable Reporting Directive has been implemented in Finland through an amendment to the Finnish Accounting Act. If the criteria for applying the law are met, the law requires a company to prepare a report, which must include information on the company’s environmental, social and governmental practices.

There are no binding requirements regarding environmental audits in Finland. However, the Act on Voluntary Participation in an Environmental Management and Auditing System (No 121/11.2.2011, laki vapaaehtoisesta osallistumisesta ympäristöasioiden hallinta- ja auditointijärjestelmään) implements the elements necessary for the corresponding regulation of the European Parliament and Council. The Act defines the terms related to voluntary auditing by the EMAS scheme and regulates the authorities responsible for supervising the auditing.

In Finland, it is possible for directors and other officers to be held personally liable for environmental damage or breaches of environmental legislation committed by the company.

In legal practice, liability is primarily imposed on the person or persons within a company who are responsible for ensuring compliance with the relevant provisions, such as the CEO, board member, director or another employee of the company. Secondly, the liability is imposed on the company, and the company may be issued with a corporate fine. The Supreme Court has in its recent precedent (case KKO:2023:71) given weight to the facts related to the employee’s actual position in the association/company and whether the employee had been in a position to ensure that the permit regulations were fulfilled and whether the employee had used all means available to avoid the breaching of the permit regulations. Please also see 6.3 Types of Liability and Key Defences.

Insurance companies provide cover against directors’ and officers’ indemnification liability, pursuant to the Limited Liability Companies Act (No 624/2006, osakeyhtiölaki), according to which, members of management may become personally liable for loss or damage caused wilfully or through gross negligence or by breaching said Act or the company’s articles of association. However, such an insurance does not usually cover environmental damages referred to in the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta) and does not cover criminal penalties.

Statutory environmental damage insurance is required by law if the company’s operations involve a material risk of environmental damage or cause harm to the environment such as those that require a chemical permit, water permit or environmental permit. The insurance covers so-called secondary environmental liability, namely environmental damage where the responsible entity is either unknown or unable to provide compensation. The statutory insurance does not protect the operator.

The statutory environmental insurance system will, as of 1 January 2025, be replaced by the Environmental Damages Fund, which is a specific fund maintained by the government. The funds to the Environmental Damages Fund are collected as tax-like environmental liability contributions from operators whose activities may pose a risk of environmental pollution. Please also see 19.1 Green Taxes.

It is possible for the operator to take out voluntary environmental insurance. A regular liability insurance may cover compensation for environmental damage caused by sudden and unexpected events to another party. However, there are also specific environmental insurance products available which may also cover long-term damage or damages caused to the insured party itself (eg, property damage or remediation costs) and interruption of business caused by environmental damage.

In practice, lender liability is theoretically possible under the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta), which concerns tort law liability. In addition to the party causing environmental damage, liability for compensation also lies with a party who is comparable to the person carrying out the activity. In establishing whether a lender is comparable to the person/entity carrying out the activity, consideration is given to the following factors:

• the competence of the lender and control over the person/entity carrying out the activity;
• the lender’s financial relationship with the person/entity carrying out the activity; and
• the profit the lender seeks from the activity.

There are no precedents on the aforementioned question; in some cases, the court would make a case-by-case assessment of the role and actions of the lender before establishing potential liability.

In practice, liability for environmental damages resulting from breaches of environmental law does not extend to lenders. Under normal circumstances, the likelihood of financial institutions or lenders being held liable is considered low. In order to protect themselves from the liability risk, lenders should not be involved in the running of the operations or using their control over the actual operations in a way that would make their role comparable to that of the actual operator.

Under the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta), compensation shall be paid for a loss defined as environmental damage that is caused by activities carried out in a certain area and resulting from:

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

The Act does not apply to contractual liability for compensation. Please also see 20.1 Resolving Disputes.

Finnish law does not recognise any exemplary or punitive damages. Therefore, it is not possible to award compensation beyond the damage actually caused.

Class or group actions are not possible for environmental-related civil claims in Finland.

In Supreme Court case KKO 2015:21, the claimant claimed compensation according to the Act on Compensation for Environmental Damage based on a neighbouring restaurant’s noise that caused the claimant, who was a hotel owner, to lose profit from two hotel rooms.

When considering if the Act on Compensation for Environmental Damage was applicable, it was crucial to determine whether the damage was caused by a loss defined in the Act as environmental damage, or by activities carried out in a certain area and resulting from noise or similar nuisance. The Supreme Court decided that, even though the Act on Compensation for Environmental Damage is applied as a general law, in some cases the preceding Neighbouring Act (No 26/1920, laki eräistä naapuruussuhteista) could be applicable. The compensation was therefore considered according to Sections 17, 18 and 19 of the Neighbouring Act. The claimant has the obligation to tolerate nuisance, if not deemed unreasonable, with consideration being given, for example, to local circumstances, the situation resulting in the occurrence of the nuisance, and the regularity of the nuisance elsewhere in similar circumstances.

The nuisance caused was undisputable; however, the question was whether such actions were unreasonable. The Supreme Court decided that the noise was unreasonable as intended in the legislation but decided to mediate the compensation amount due to the hotel owner’s own contribution to the damages.

Indemnities and other contractual agreements can be used to transfer or apportion liability for incidental damage or breaches of law; however, such contractual agreements are only binding inter partes. Indemnities and other contractual agreements are not binding on regulators or other authorities or the parties suffering damage (if not contracting parties themselves).

Please see 9.1 Environmental Insurance.

The provisions governing remediation of contaminated land depend on when the contamination was caused:

• The Environmental Protection Act (No 527/2014, ympäristönsuojelulaki and its predecessor) applies to soil pollution caused after 1994.
• The repealed Waste Management Act (No 673/1978, jätehuoltolaki) applies to soil pollution caused by an activity that took place on or after 1 April 1979 but before 1994.
• Soil pollution caused by an activity that has completely ceased operating before 1 April 1979 is governed by inconclusive case law.

Under the Environmental Protection Act, the operator has a general obligation to prevent pollution and a specific prohibition not to cause any pollution of soil. If the activities cause or may directly result in environmental pollution, the operator must take the appropriate action without delay in order to prevent pollution, or, if pollution has already resulted, to reduce it to a minimum.

The operator whose operations have caused the pollution of soil has an obligation to restore the polluted soil. Indicative concentration thresholds for several hazardous substances in soil and guidance for the risk assessment regarding remediation are established in the Government Decree on Contaminated Soil (No 214/2007, valtioneuvoston asetus maaperän pilaantuneisuuden ja puhdistustarpeen arvioinnista).

Party Responsible for Contaminated Land

The Finnish regulation regarding liability for contaminated land is based on the overriding polluter pays principle, according to which the operator carrying out polluting activity shall restore the contaminated land to a condition that will not cause harm to health or the environment, nor present a hazard to the environment.

However, if the polluter cannot be established or reached, or cannot be forced to fulfil its remediation duty, and if the contamination occurred with the consent of the occupier (owner or tenant, as applicable) or the occupier knew, or should have known, the state of the area when it was acquired, the occupier must restore the soil insofar as this is not clearly unreasonable. Where the polluter or the occupier of the polluted area cannot be required to remedy the contaminated soil, the municipality must establish the need for, and conduct, soil remediation.

Possibility to Transfer Liability to a Purchaser

Public liability for the remediation of contaminated soil enforced by the authorities under the Environmental Protection Act (or earlier legislation) cannot be transferred to a purchaser. Therefore, the authority may direct its orders towards whoever has contributed to the contamination, under the aforementioned legislation.

However, the parties may transfer the liability inter partes, from a seller to a purchaser by an agreement, and a liable party may attempt to secure recourse from another party through contractual indemnity. Nevertheless, these civil agreements are valid only between the parties and do not bind the authorities or third parties.

The Finnish environmental liability legislation rests upon the polluter pays principle. The Environmental Protection Act does not include any specific provisions on the division of the liability if more than one party has contributed to the contamination. However, pursuant to the Supreme Administrative Court’s precedent on the issue (KHO 2005:11), if several operators are suspected to have caused soil contamination, the parties are considered jointly and equally responsible for conducting the contamination studies and bearing the related costs if the parties cannot clearly verify their contribution to the contamination.

Furthermore, if the soil is considered contaminated and several operators have been operating in the area, in case law, the parties have been responsible for only their share of the contamination. If the parties’ share of the contamination cannot be separated from one another, the parties are considered jointly and severally liable.

In accordance with the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta), compensation shall be paid for damage resulting from pollution or other similar nuisance to those affected by the pollution. However, this compensation shall be paid only if toleration of the nuisance is deemed unreasonable. While considering the nature of the nuisance, consideration shall be given, for example, to local circumstances, the situation resulting in the occurrence of the nuisance, and the regularity of the nuisance elsewhere in similar circumstances. The obligation to tolerate the nuisance shall not, however, apply to loss inflicted deliberately or criminally, nor to bodily injury or material loss of greater than minor significance.

In criminal cases involving an infringement of public interest, the ELY Centre is the claimant. In connection with proceedings of criminal cases subject to public prosecution, private persons may also file claims for compensation.

Please also see 20 Disputes.

Waste operators must comply with the obligations regulated by the Waste Act (No 646/2011, jätelaki). One fundamental principle is the order of priority, according to which the following priority order shall be complied with when handling waste: reuse, recycling, and other ways of recovery and disposal.

A waste holder shall know the properties of the waste relevant to organising waste management. The waste holder shall, if necessary, disclose this information to other waste management operators. Waste may not be abandoned or treated in an uncontrolled manner. Waste management may not endanger or harm health, the environment, general safety or public or private interests.

All professional waste collectors are obligated to register in the waste management register or apply for an environmental permit. A waste operator shall monitor and control its waste management to ensure that the activity fulfils the applicable legal requirements and that the information necessary for the supervision of the activity may be submitted to the supervisory authority.

If a waste operator does not comply with the aforementioned obligations, the supervisory authority may prohibit it from continuing or repeating the conduct, order it to fulfil its obligations, order it to restore the environment or to eliminate the harm, or order temporary measures concerning the waste. The party that acted in violation of regulations is responsible for any costs incurred due to the temporary measures. The supervisory authority shall, unless it is clearly unnecessary, reinforce an order it has issued by a notice of a conditional fine.

Administrative fines may be imposed on a party that fails to submit a notification for registration in the waste management register or neglects other reporting duties. Several different types of breaches against the waste legislation are punishable as criminal offences either under the Waste Act or the Criminal Code (No 39/1889, rikoslaki).

The general rule is that when there is a suspicion that the soil has been contaminated, the polluter is responsible for inspecting the state of the soil and the need for remediation. Regardless of the outcome of the inspection, the findings shall be reported to the supervisory authority (ELY Centre). If the polluter has not conducted the necessary inspection, the ELY Centre can order the polluter to conduct the required studies and investigations. Based on the conducted study, the ELY Centre shall render its decision regarding the need for remediation.

In addition, under the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki) and Waste Act, the supervisory authorities are obliged to report a matter to the police for preliminary investigation if they suspect that a crime has been committed. However, notification is not required if the act is considered minor under the circumstances and it is determined that public interest does not necessitate pressing charges. However, supervisory authorities are increasingly likely to report matters to the police for preliminary investigation.

The key legislation in connection with climate change and emissions trading is:

• the Climate Act (No 423/2022, ilmastolaki); and
• the Emissions Trading Act (No 311/2011, päästökauppalaki).

Carbon Neutrality

The Climate Act’s primary goal is to ensure a significant reduction in greenhouse gas emissions and an increase in the removals by greenhouse gas sinks, with the target of achieving carbon neutrality by 2035. This means that Finland aims to reach a point where its greenhouse gas emissions are equal to the removals. The Act also aims to ensure that greenhouse gas emissions from the effort sharing and emissions trading sectors decrease by at least 60% by 2030 and by at least 80% by 2040 compared to 1990 levels. The Act applies to the government authorities in the preparation of climate policies and in ensuring their implementation. It does not impose direct obligations on operators.

Coal Ban

The Act Banning the Use of Coal for Energy (No 416/2019, laki hiilen energiakäytön kieltämisestä) prohibits the use of coal as fuel for the production of electricity or heat from 1 May 2029. The Act is supported by the Government Decree on Investment Aid for Projects Replacing Coal for Energy Use in 2020-2025 (No 129/2020, valtioneuvoston asetus hiilen energiakäyttöä korvaavien hankkeiden investointituesta vuosina 2020–2025), which aims to promote the voluntary, accelerated phasing out of coal. The aim of the legislation is to ensure that power plants or heating investments or replacement investments that rely on coal energy are no longer viable.

Emissions Trading Act

Finland has its own emission trading system, which is based on the Emission Trading Act. The purpose of the Act is to promote the reduction of greenhouse gas emissions cost-effectively and economically.

In Finland, the use of asbestos became licensed in 1988 and was banned in 1993 (in the EU in 2005). The use of crocidolite was banned in 1976.

In general, if it does not cause health or environmental hazards, there is no direct obligation to remove asbestos that is lawfully contained in products or structures.

Asbestos removal work can only be carried out by private persons or legal persons such as limited companies, co-operatives and public entities that have been authorised to do so. The licensing authority, the occupational safety and health authority of the Regional State Administrative Agency, is responsible for handling permits, promoting occupational safety and the proper supervision of the register of licensed asbestos removal workers.

Finland’s waste legislation follows primarily the development of the EU’s waste legislation and policy.

The key legislation governing waste and waste management in Finland is the Waste Act (No 646/2011, jätelaki) and the Environment Protection Act (No 527/2014, ympäristönsuojelulaki), which implement EU’s Waste Framework Directive (2008/98/EC). In addition, there are several lower-level national provisions, such as the Government Decree on Waste (No 978/2021, valtioneuvoston asetus jätteistä), Government Decree on Waste Incineration (No 151/2013, valtioneuvoston asetus jätteen polttamisesta) and Government Decree on Landfills (No 331/2013, valtioneuvoston asetus kaatopaikoista).

Waste legislation provides regulations for all waste, excluding certain special types of waste, such as nuclear and radioactive waste. Under Finnish law, an environmental permit is required for the institutional or commercial treatment of waste (including storing or disposing of waste).

According to the Waste Act, the waste holder’s liability for the organisation of waste management ceases and is transferred to the new holder when the waste is handed over to a person who has the right to receive such waste based on the registration in the waste management register or to a person who has received such waste based on an environmental permit in accordance with the Environmental Protection Act or based on the registration in the environmental protection database under the same Act.

Waste may also be delivered to a recipient who does not require approval, an environmental permit or registration as referred to above, if they have sufficient expertise and economic and technical capacity to handle waste management.

The waste holder’s liability for the organisation of waste management ceases and is transferred to the new holder when the waste is handed over to the recipient referred to above. The responsibility is not transferred to the driver who carries the waste.

The waste driver must dispose of the waste at the location indicated by the waste holder or the authority. If the waste is not accepted, the driver must return the waste to the holder, who must collect the waste.

Finland has implemented an extended producer responsibility scheme for certain types of waste. Duties to collect and recycle or dispose of waste apply to producers of:

• electronic and electrical appliances;
• batteries and accumulators;
• tires from motor vehicles,
• other vehicles and equipment;
• cars, vans and comparable vehicles;
• printing paper and paper for manufacturing other paper products;
• packaging;
• cups for beverages made of single-use plastics, including their covers and lids;
• air balloons made of single-use plastics;
• tobacco products with filters made of single-use plastics; and
• fishing gear made of single-use plastics.

Under the Environmental Protection Act, if an exceptional situation causes emissions or generates waste, or if there is an immediate threat of such an event, an operator or a holder of the waste must notify the relevant authority immediately. Further, permit holders, registered operators or related holders of waste have an obligation to notify the relevant authority if they are not able to comply with the permit or relevant governmental decrees due to an exceptional situation. If waste or some other substance that may cause contamination has entered the soil or groundwater, the polluter shall notify the supervisory authority immediately. If there is reason to suspect that the soil or groundwater has been contaminated, the party responsible for treatment (whose operations have caused the contamination) shall establish the level of contamination of the area and the need for treatment. The report shall be delivered to the state supervisory authority.

Documents prepared by or delivered to an authority are publicly available under the Act on the Openness of Government Activities (No 621/1999, julkisuuslaki), and everyone has a right of access to a publicly available document. Public authorities keep registers of environmental information regarding, for example, environmental permits, so information may be requested from the relevant authorities such as the Regional State Administrative Agencies and the ELY Centres. To some extent, environmental permits and the relevant application materials are also available through a public web service. However, there are some limitations to the publicity of documents/information – eg, corporate secrets, such as the amount of waste of a recycling company, are considered classified.

Furthermore, the Finnish environmental administration maintains a public soil condition database for the management of site-specific data related to land contamination, called MATTI. Property-specific reports from the database may be requested from the regional ELY Centres.

Pursuant to the Accounting Act (No 1336/1997, kirjanpitolaki), large and public companies as well as public-interest entities have an obligation to include information on environmental impacts in their annual management report. Public-interest entities must also prepare an annual statement of non-financial information, which must include information on how the company manages environmental matters. Please also see 17.4 Green Finance.

Moreover, environmental permit holders have an obligation to prepare regular reports to the supervisory authority. The details for reporting are included in the permit. Registered operators may have an obligation to prepare regular reports in accordance with the relevant governmental decree.

Green finance-related regulation applicable in Finland mainly derives from EU legislation and comprises, inter alia, the Taxonomy Regulation, the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD).

While the Taxonomy Regulation and SFDR are directly applicable regulations in Finland, the European Commission mandates that Member States implement the CSRD into national legislation by 6 July 2024. According to the Finnish government’s proposal, national implementation of the CSRD primarily results in amendments to the Finnish Accounting Act (1336/1997) and the Finnish Auditing Act (1141/2015). While the Finnish Financial Supervisory Authority is responsible for supervising the Finnish financial markets, insights from the government’s proposal and stakeholder feedback suggest the Finnish Audit Board will adopt a supervisory role in relation to amendments made to the Accounting Act and the Auditing Act. This is not yet finally determined. Currently, the Finnish Financial Supervisory Authority monitors that entities supervised by it take into consideration in their operations sustainability risks as well as other risks. Information given to customers and investors on sustainability factors must be appropriate.

Generally, green finance plays a fundamental role in the achievement of Finland’s energy and climate targets. In 2021, the Finnish government introduced its Sustainable Growth Programme for Finland, highlighting a green transition as a core pillar. This pillar seeks to support the economy’s structural adjustment and establish a foundation for a carbon-neutral welfare society. This naturally has increased and will continue to increase the interest, appetite and need for sustainable investments and green finance arrangements in Finland.

Environmental due diligence is an established part of due diligence in M&A, finance and property transactions. The need and scope of environmental due diligence are dependent on the target – ie, the anticipated environmental risks associated with the target – and are, therefore, assessed on a case-by-case basis. Environmental due diligence is typically conducted in transactions involving the amendment or termination of business with potential impacts on the environment or natural resources, such as transactions concerning industrial companies, mines, power plants or old industrial sites. Furthermore, environmental due diligence is typically conducted as part of a property transaction to determine the possible history of the site, contamination or other environmental damages related to the property in question, and the need and liability for environmental remediation.

In recent years, there has been a constant rise in demand for environmental due diligence, resulting from growing awareness of the risk of high costs related to environmental liability and possible need for remediation.

The seller of real estate is obliged to provide the new owner or tenant with information on the activity carried out on the property, and on any waste or substances that may cause contamination in the soil or groundwater. Furthermore, the seller must provide the purchaser with the conducted surveys and information regarding possible remediation action on the property. Failure to do so may result in the annulment of the real estate deed of sale, a reduction in price or compensation for damages. The seller may be held liable for the prior contamination of real estate if they fail to disclose the information at the point of sale.

As warranties are used to secure the purchaser, it is in the seller’s interest to disclose the relevant environmental information in a regular due diligence process and thereby avoid contractual liability for breaching a warranty.

Energy taxes, taxes on road transport and so-called special environmental taxes and fiscal levies are considered as green or environmental taxes. Green taxes and environmental taxes are collected for fiscal reasons, but they also have environmental objectives. The accrual of environmental taxes and environmental charges constitutes approximately 6% (in 2021) of cumulative total revenue in Finland. There has been a slight decline in accrual in recent years caused mainly by the decrease in road transport taxes. Households paid ca 52%, transport and service sector ca 27%, industry ca 5%, and the energy supply sector ca 7% of environmental taxes in 2021.   

Most significant environmental taxes (73% accrual of all environmental taxes) are EU-harmonised energy taxes, predominantly consisting of excise taxes on liquid fuels and electricity and certain other fuels. The focus has been shifted to carbon dioxide tax, with the aim of taking the average emissions resulting from the fuel during its lifecycle into consideration.

Both registration-based car tax and annual vehicle tax take environmental factors into consideration, with CO₂ emissions affecting the level of tax. The accrual of car tax has fallen mainly because of lower CO₂ emissions and electrification of vehicles. 

Waste tax has encouraged waste recovery and decreased the amount of waste ending up in landfills. There is a possibility that the government will expand the waste tax base further.

The excise duty on beverage containers has encouraged the use of recyclable containers.

The Environmental Damage Fund will take effect on 1 January 2025. The funds are part of the secondary environmental liability systems, and they are collected as tax-like environmental liability contributions from operators whose activities may posed a risk of environmental pollution.

According to the Environmental Protection Act (No 527/2014, ympäristönsuojelulaki), the permit authority shall, when granting an environmental permit, order compensation for any damage from water pollution caused by the activity. One can also submit an application to the permit authority to claim compensation for damage not foreseen when the permit was granted. When an application is submitted to a permit authority, the matter cannot be simultaneously handled in a district court as an action.

Other environmental damages are resolved in district courts as civil cases. According to the Act on Compensation for Environmental Damage (No 737/1994, laki ympäristövahinkojen korvaamisesta) compensation shall be paid if it is shown that there is a probable causal link between the activities and the loss. Compensation shall be paid only if tolerating the nuisance is considered unreasonable.

Within the Finnish environmental legal framework, the development over the past few years that has been most alarming to operators has been the lack of predictability of the environmental permit process and strong emphasis given to the so-called precautionary principle in the administrative courts’ recent case law. As a result, during appeal proceedings, several new investment projects’ environmental permits have been revoked by administrative courts. The basis for these revocations was the uncertainty surrounding the long-term water impacts of the projects, which were deemed too ambiguous to satisfy the conditions necessary for permit approval (eg, the Supreme Administrative Court’s decisions KHO 2019:166, KHO 2022:38 and KHO nr 19/22.4.2022).

Understandably, this has caused some concern among industrial operators and investors concerning the predictability of the Finnish investment environment. In its government programme, the newly elected Finnish Government addressed these concerns by stating that the government is planning legislative amendments that will reduce the number of uncertainties in the permit process and interpretation practices of the environmental permitting authorities. The Finnish government has announced its plans to review the precautionary principle and the impacts of its interpretation on permit conditions and the approval of permits. The outcome of this review, including any potential amendments or concrete proposals, is yet to be determined.

In addition, the Supreme Administrative Court of Finland has recently acknowledged a distinction in the environmental permit process and the application of the precautionary principle between existing operations and new projects. In its recent precedent ruling (KHO 2023:97), the Supreme Administrative Court ruled that as far as the precautionary principle is concerned, industrial operation, in this case a gold mine, with an over 15-year operation period, should not be assessed in the same way as a greenfield operation with respect to the uncertainties related to the long-term impacts of the operation.

To restore predictability and stability in the environmental permitting process, and ensure the investments required for Finland and the EU’s green transition, it is important that the role of the precautionary principle is clarified in relation to the permit process for industrial operations. Hopefully, the aforementioned precedent of the Supreme Administrative Court will have a positive impact on the predictability of the environmental permit process, both by the competent environmental permit authorities and in administrative court appeal proceedings.