a. Is there any statutory duty to implement net zero business strategies;

The is currently no statutory duty to implement net zero business strategies.

The Corporate Sustainability Reporting Directive (CSRD) addresses corporate sustainability reporting. According to CRSD, companies should report their policies and actions to align their business strategies with the objectives of limiting global warming to 1.5°C in line with the Paris Agreement. This means a reporting obligation on actions to reduce greenhouse gas emissions and contribute to climate neutrality by 2050.

b. Is the use of carbon offsets to meet net zero or carbon neutral commitments regulated;

Apart from the legislation related to the emissions trading system, such as the Emissions Trading Act (1270/2023)), transposing the EU ETS Directive 2003/87/EC, Finnish legislation does not specifically regulate the use of carbon offsets. There is no obligation under Finnish law to offset greenhouse gas emissions, nor is there legislation pertaining to voluntary carbon offsets.

However, the Ministry of the Environment has published a Guide to good practices for voluntary carbon markets (Publications from the Finnish Government 2023:24). This guide aims to consolidate and clarify international best practices within the Finnish context, enhancing the credibility of Finnish carbon markets and fostering transparency and confidence in the quality of climate claims and the credits underpinning them. Voluntary carbon offsetting was previously subject to a money collection license under the Money Collection Act (863/2019), but this requirement was removed in 2021.

c. Have there been any test cases brought against companies for undeliverable net zero strategies;

We are not aware of test cases against companies regarding undeliverable net zero strategies. The sole case explicitly related to this issue was brought by the Finnish Association for Nature Conservation against the State of Finland (case KHO:2023:62). The association argued that the Government of Finland’s statutory annual climate report, as approved, failed to include a necessary assessment of additional measures to meet the climate targets set by the Climate Act (423/2022). This omission was significant, especially since data on the decline of carbon sinks in the land use sector was available before the report’s issuance, indicating the need for such measures. The Supreme Administrative Court did not review the appeal, reasoning that the Government’s decision to submit the annual climate report to Parliament did not constitute an administrative decision subject to appeal. The Court noted that an assessment of the legality of the Government’s decision-making process, which the appellants sought, could be judicially reviewed if the omission of a decision at that stage resulted in non-compliance with the Climate Act, or if the Government’s actions indicated an unwillingness to make necessary decisions promptly to fulfill the Act’s objectives and obligations.

d. Have there been any test cases brought against companies for their proportionate contribution to global levels of greenhouse gases (GHGs)?

We are not aware of any test cases brought against companies for their proportionate contribution to global levels of greenhouse gases (GHGs).

New projects are not required to demonstrate biodiversity net gain to receive development consent. However, operators are required to know the environmental impacts and risks of their operations as well as to reduce adverse impacts. The Nature Conservation Act (9/2023) safeguards certain natural habitats and species, prohibiting their deterioration or destruction. Additionally, the Nature Conservation Act, along with the Decree of the Ministry of the Environment on Voluntary Ecological Offsetting (933/2023), provide guidelines for voluntary ecological offsetting.

The Corporate Sustainability Reporting Directive has been implemented in Finland through an amendments to the Finnish Accounting Act, Auditing Act and other relevant regulation. If the criteria for applying the law are met, the law requires a company to prepare and publish a report, which must include information on the company’s environmental, social, and governance practices.

We are not aware of test cases in Finland against companies for product liability or environmental pollution concerning ‘forever chemicals’ like Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS). According to the Finnish Environment Institute, there is no PFAS manufacturing within the country. PFAS are subject to stringent EU regulations, concerning both product content and industrial usage. Persistent organic pollutants (POPs) are banned across the EU.

Section 8 of the Waste Act (646/2011) includes a general obligation to comply with the order of priority – the so-called “waste hierarchy” – which applies to all activities. First priority shall be given to reducing the quantity and harmfulness of waste generated. If waste is, however, generated, the waste holder shall first and foremost prepare the waste for re-use or, secondarily, recycle it. If recycling is not possible, the waste holder shall recover the waste in other ways, including by means of energy recovery. If recovery is not possible, the waste shall be disposed of.

Producers of tyres of motor vehicles and other vehicles or machinery, passenger cars, vans and other equivalent vehicles, electrical and electronic equipment, batteries and accumulators, including batteries and accumulators incorporated into electrical and electronic equipment, vehicles or other products, newspapers, magazines, office paper and other corresponding paper products, packaging, fishing nets as well as single-used plastic products are subject to the extended producer responsibility. This means that they are required to organise, and to be responsible for the costs arising from, waste management for products that they have placed on the market in Finland. The most common way to take care of extended producer responsibility is to join a relevant producer responsibility organisation.

The Government decree on packaging and packaging waste regulates the separate collection, reuse, recycling, and other waste management of used packaging and disposable plastic drink cups, as well as requirements related to the characteristics and labelling of packaging placed on the Finnish market. Many of the obligations laid down in the Regulation will apply from 2025 onwards. The Government decree requires the minimum content of recycled plastic in beverage bottles to be at least 25 % of disposable plastic bottles with a volume of up to three litres by January 1, 2025, and at least at least 30 % of disposable plastic bottles with a volume of up to three litres by January 1, 2030. The Government decree also requires that at least 90% by weight of used packaging (out of the total quantity of packaging placed on the market and returned for reuse) is either reused or recycled and that by January 1, 2025, a proportionate amount of packaging waste equivalent to the quantity of packaging placed on the market is recycled at a minimum rate of 65% by weight (recycling rate). Similarly, by January 1, 2030, a proportionate amount of packaging waste equivalent to the quantity of packaging placed on the market is recycled at a minimum rate of 70% by weight.

There are also recycling targets for packaging waste by package material that apply to packaging producers and administrators of beverage packaging return systems. They are responsible for ensuring the achievement of the annual goals listed in this section, which are applicable from January 2025. There is also a separate obligation to collect beverage bottles with producers having to organise separate collection and recycling of disposable plastic beverage bottles with a volume of up to three litres, including their caps and lids, so that the annual collection rate is at least 77% by weight from the quantity placed on the market on January 1, 2025, and at least 90% by weight from the quantity placed on the market in the relevant year starting from January 1, 2029.

The Finnish Government adopted a decision-in-principle on the Strategic Agenda for the Circular Economy, also know as the Circular economy programme in the spring of 2021. The aim of the programme is to strengthen Finland’s role as a pioneer in circular economy and create circular economy as a new foundation for the economy for the year by 2035. The Finnish Ministry of the Environment has entered into ‘green deal agreements’ for reducing plastic bags, minimizing plastic in construction, and decreasing plastic single-use packaging. Green deal agreements bring together stakeholders who play a key role in driving de-sired change. The agreements are made between the government and the business sector. Additionally, agreements can also be concluded with public sector entities, such as municipalities and agencies. These green deal agreements and the commitments made therein are part of the societal commitment of Finland’s sustainable development commission.

The Finnish Waste Act (646/2011) regulates the end-of-life waste status, extended producer responsibility, littering and penal provisions for infringements. Producers of packaging as well as single-used plastic products are subject to the extended producer responsibility, and thus required to organise, and to be responsible for the costs arising from, waste management for products that they have placed on the market in Finland. The most common way to take care of extended producer responsibility is to join a relevant producer responsibility organisation.

The Government decree on certain plastic products regulates the requirements for certain plastic products supplementing the Waste Act, in particular the provisions regarding extended producer responsibility, necessary for the implementation of Directive (EU) 2019/904 of the European Parliament and of the Council on the reduction of the impact of certain plastic products on the environment. The Government decree on packaging and packaging waste regulates the requirements for the separate collection, reuse, recycling and other waste management of used packaging and single-use plastic beverage cups, as well as the characteristics and labelling of packaging placed on the Finnish market. The Government decree on compensation paid by producers of certain plastic products to municipalities lays down provisions on compensation payable to municipalities by producers of products referred to in the Waste Act for measures related to the prevention and cleaning up of litter caused by these products.  Many of the obligations laid down in the Regulation will apply from 2025 onwards. Similarly, the Act on the Excise Duty of Certain Beverage Packaging regulates the taxation of certain beverage products. However, there is no national tax scheme for plastics like in some other European countries.

The Criminal Code and Act on Compensation for Environmental Damage regulate environmental offences and compensation for environmental damage.

According to the Employment Contracts Act employers must treat all employees equally, unless deviating from this is justified in view of the duties and position of the employee. Similarly, the Non-discrimination Act requires employers to promote equality. Employers must assess the realisation of equality in the workplace and, considering the needs of the workplace, develop the working conditions as well as the methods complied with in the selection of personnel and in making decisions concerning the personnel. These measures shall be effective, expedient and proportionate, taking into account the operating environment, resources and other circumstances. Companies with at least 30 employees must have a plan for the necessary measures for the promotion of equality. Similarly, employers must make appropriate adjustments necessary in each situation for a person with disabilities to be able, equally with others, to deal with the authorities and gain access to education, work and generally available goods and services, as well as to manage their work tasks and to advance their career.

The objective of the Act on Equality between Women and Men is to prevent discrimination based on gender, to promote equality between women and men, and thus to improve the status of women, particularly in working life, and to prevent discrimination based on gender identity or gender expression. Employers must promote equality between women and men within working life in a purposeful and systematic manner. This obligation includes, for example, the following requirements:

• to act in such a way that job vacancies attract applications from both women and men;
• to promote the equitable recruitment of women and men in the various jobs and create for them equal opportunities for career advancement;
• to promote equality between women and men in the terms of employment, especially in pay;
• to develop working conditions to ensure they are suitable for both women and men;
• to facilitate the reconciliation of working life and family life for women and men by paying
• attention especially to working arrangements; and
• to act to prevent the occurrence of discrimination based on gender.

Similarly, employers who regularly employ at least 30 people must draw up a gender equality plan dealing particularly with pay and other terms of employment, according to which the gender equality measures are implemented. The gender equality plan may be incorporated into a personnel and training plan or an occupational safety and health action plan. The gender equality plan must include an assessment of the gender equality situation in the workplace, including details of the employment of women and men in different jobs, and a pay survey on the whole personnel presenting the classifications of jobs performed by women and men, the pay for those jobs and the differences in pay; necessary measures planned for introduction or implementation with the purpose of promoting gender equality and achieving equality in pay; and a review of the extent to which measures previously taken have been effective. The pay survey is used to ensure that there are no unjustified pay differences between women and men who are working for the same employer and engaged in either the same work or work of equal value. If there is no justification for the pay differences, the employer must take appropriate measures to rectify the situation. Employers are obliged to take pre-emptive action in a purposeful and systematic manner against all discrimination based on gender identity or gender expression.

Employers in Finland are bound by several legal provisions that emphasize the importance of treating employees fairly and ethically. Finnish law prohibits discrimination based on factors such as gender, age, ethnicity, religion, disability, sexual orientation, and family status. Employers must treat all employees equally and without prejudice. Employers should maintain open and respectful communication with employees. Bullying, harassment, or any form of mistreatment is unacceptable.

Finnish law does not explicitly specify a minimum wage. Instead, the determination of minimum wages is primarily governed by collective agreements – negotiated between employers’ organizations and trade unions in various sectors. Employers must pay employees fair wages that align with industry standards and collective agreements.

a. Are there any statutory duties to perform due diligence;

Separate mandatory legal human rights due diligence or environmental due diligence requirements for corporations are not currently in force. Other due diligence and duty of care obligations exists, but they do not specifically mandate the consideration of human rights or environmental impacts.

b. Have there been any test cases brought against companies?

We are not aware of any test cases brought against companies for human rights questions in supply chains.

a. Are there any statutory duties to perform due diligence;

Finland has two indigenous peoples the Sámi and the Skolt, which have their homeland areas in northern Lapland. The Sámi inhabit Northern Finland, as well as parts of Northern Sweden, Norway, and Russia, and are constitutionally recognized as an indigenous group. The Sámi indigenous homeland area, which is laid down in Decree on the Sámi Parliament (1727/1995), is located in the northern part of Lapland. According to the Act on the Sámi Parliament (974/1995) the Sámi, as an indigenous people, have linguistic and cultural autonomy in the Sámi homeland. According to the Skolt Act (253/1995) the Skolt homeland is located in the northeast of Lapland close to the borders to Norway and Russia. The Skolt do not have the same kind of autonomy as the Sámi. The purpose of the Skolt Act is to maintain and promote the living conditions, livelihoods and culture of the Skolt population and region. While reindeer husbandry remains a traditional livelihood for the Sámi and the Skolt, the practice is not exclusive to them; it is also permissible for others to own and manage reindeer.

Projects, plans, and legislative proposals are typically subject to due diligence processes to assess potential impacts on the Sámi people or their cultural practices where relevant. For example, granting an environmental permit requires that the project does not cause substantial deterioration in the conditions under which the Sámi people practise their traditional livelihoods in the Sámi homeland or otherwise maintain and develop their culture, that it does not cause substantial deterioration in the living conditions of the Skolt or that it does not reduce the opportunities to engage in nature-based livelihoods in the Skolt homeland. The operator applying for an environmental permit is required to assess the impacts of the planned project on the Sámi or on the Skolt, where relevant, and demonstrate that the above-mentioned condition for granting a permit is met. Also the Water Act (587/2011) requires that water management projects are carried out in a way that does not cause deterioration in the conditions under which the Sámi people practise their traditional livelihoods in the Sámi homeland or otherwise maintain and develop their culture (the Skolt are not specifically mentioned in the Water Act). If the project may have an impact on the Sámi people, they must be consulted during the permitting process and they are also entitled to appeal against the permit decision. The Mining Act (621/2011) also includes requirements to secure rights of the Sámi and the Skolt when applying for an exploration permit, a mining permit or a gold panning permit.

The Act on the Sámi Parliament is currently being revised, which may also impact to the statutory duties to perform due diligence. A reform of the Act on the Sámi Parliament (974/1995) has been in the works since 2012. Proposals for a reform have been given to three previous Governments but all have failed. The reform is proposed to enter into force on 1 July 2024, but as the handling in Parliament is ongoing this should be conserved as an estimate.

b. Have there been any test cases brought against companies?

There are several Supreme Court and Supreme Administrative Court decisions concerning the rights of the Sámi people, most of them are related to granted permits, to applicability of legislation or to the right of self-determination of the Sámi people.  For example, the Supreme Court ruled in KKO:2022:25 and KKO:2022:26 that the Sámi people do not have to comply with the Finnish legislation concerning fishing. Further, in the yearbook decision of the Supreme Administrative Court KHO:2020:124 the Supreme Administrative Court amended the environmental permit for mechanical gold panning to ensure the free movement of reindeer and the transport of reindeer carcasses between the different summer grazing areas of the parish, reindeer husbandry being a traditional source of livelihood for the Sámi people.

The Finnish Consumer Ombudsman has in recent years focused increasingly on environmental marketing. In 2021, the Consumer Ombudsman examined claims made by Arla and Atria on their environmentally friendly packaging. The Consumer Ombudsman noted then that overall marketing must not provide false or misleading information, and all essential information must be disclosed. Therefore, the same applies to environmental claims and thus environmental claims must be clear, precise and understandable, and not misleading. Similarly, all claims must have evidence to support the claims.

The Consumer Ombudsman has published guidelines, which were updated in 2022, that are based on section 2 of the Consumer Protection Act, and on past rulings of the Market Court and the Consumer Ombudsman. These guidelines together with the Commission Communication – Guidelines on the interpretation and application of Council Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market give clear guidelines for unlawful environmental marketing. The main rules are that claims must be clear, precise and understandable, and the overall message cannot not misleading. Also, all claims must have evidence to support the claims. Images, texts and other forms of presentation must not exaggerate the environmental benefits but must give an accurate and truthful picture.

In 2022, The Consumer Ombudsman assessed energy company Fortum’s television advertisement, which according to the Consumer Ombudsman created an image of the company’s environmental friendliness. The television advertisement uses the expressions “towards a cleaner world” and “clean energy and recycling”. According to the Consumer Ombudsman, marketing must not provide false or misleading information, and essential information must be disclosed, which also applies to environmental claims. Claims must be clear, precise and understandable and must not mislead consumers and there must be evidence to support the claims mad. In this case, Fortum’s advertisement gave too general and vague promise of a better future as they do not describe Fortum’s operating methods in more detail, changes in them, or different ways of reducing environmental impacts.

Fortum has committed to marketing not using vague, future-oriented claims related to environmental impacts that are not substantiated. Similarly, Fortum committed to avoiding environmental marketing that relates an image of the company’s environmental friendliness without indicating concrete elements on which the impression is based on. The marketing campaign in question has ended and the advertisement has been removed from YouTube.

Later in 2022, the Consumer Ombudsman examined energy company’s Vattenfall’s television advertisement, which used the phrase ‘fossil-free life in one generation’s lifetime’. The Consumer Ombudsman noted that the message of environmental friendliness and a better future cannot be based on conjured-up images and the claim itself must be verifiable in reliable manner. As in the other case, the Consumer Ombudsman required that Vattenfall commit to marketing not using generalised claims or illustration to create an image of environmental friendliness without clearly indicating the concrete elements it is based on. It was also noted that the energy sector itself is subject to changes and fluctuations, which must be considered when considering whether the overall image created for consumers is truthful and realistic.

In 2023, the Finnish Consumer Ombudsman investigated Froneri Finland’s claims concerning the sustainability of the packaging of Aino ice cream. The Consumer Ombudsman stated that sustainability is an ambiguous concept and often too vague for use in marketing. In addition, Froneri Finland had presented a number of claims concerning specific environmental impacts that the Consumer Ombudsman found misleading in light of the additional information provided.

Please see above.

Apart from the above cases investigated by the Consumer Ombudsman, there have been no other test cases against companies for unsubstantiated enterprise-wide sustainability comments.

The duty of care according to the Limited Liability
Companies Act requires the company’s management to act with duty of care. The duty of care is solely towards the company and its shareholders and thus not towards other stakeholder groups. The duty of care in the requirement specifically requires management to act in the best interest of the company in question and thus liability only applies in the scope of the company in question. Effective regulation does not currently specifically mention human rights, environmental, climate change or sustainability matters in relation to human rights. The duty of care in the Limited Liabilities Act does specifically concern governance matters.

In the Supreme Court Decision KKO 2016:58 the liability of the members of the management of a limited liability company for the environmental damage was in question. The Supreme Court held that the negligence of two members of a three-member Board of Directors was gross considering that they had not familiarized themselves with the content of the environmental permit. Similarly, the court ruled that they had deliberately neglected their duty to arrange and supervise matters related to the permit.

Under the non-financial information reporting requirements, Finnish companies are legally obliged to publish a sustainability report if they are considered entities of public interest. The requirement for non-financial reporting has been applicable in Finland since 2016. It stems from the European Union Directive 2014/95/EU, which focuses on the disclosure of non-financial and diversity information by certain large undertakings and groups. The EU directive has been implemented into Finnish national legislation with amendments to the Accounting Act, Auditing Act and other relevant legislation. The transitional provisions of the Accounting Act include a provision relating to application of the (repealed) chapter 3a concerning NFI during 2024: ‘The provisions of Chapter 3a apply to the issuer referred to in chapter 7, Section 7a of the Securities Market Act until December 31, 2024.’

CSRD brings forth new reporting requirements in comparison to the previous non-financial information requirements in Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (‘NFI’). The first companies will have to apply the new CSRD rules for the first time in the 2024 financial year and for reports published in 2025. According to the transitional provisions of the Accounting Act (1997/1336) (21.12.2023/1249), which includes the CSRD requirements, the Act applies to companies with over 500 employees for the fiscal year from 1st of January 2024.

However, there is no legislation that would require listed companies to disclose ESG-related information as part of their ongoing disclosure obligation unless such information is material to the share price. There are a few precedents where an internal audit or an external investigation has revealed breaches or ambiguities in ESG-related information that have been significant enough to trigger the disclosure obligation.

Financial institutions and large and listed corporates in Finland are required to report against sustainable investment criteria. This obligation is in line with the EU Taxonomy Regulation (EU/2020/852), Article 8, which mandates that financial market participants and financial advisers disclose information about their sustainability policies and how they integrate environmental, social, and governance (ESG) factors into their investment decisions. The goal is to promote sustainable finance practices and transparency within the financial sector. The Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector came into force on march 10, 2021 and applies to financial market participants and financial advisers within the European Union (EU). These entities are required to comply with the regulation’s provisions related to sustainability disclosures and transparency.

The Corporate Sustainability Reporting Directive has been implemented in Finland through an amendments to the Finnish Accounting Act, Auditing Act and other relevant regulation. According to the transitional provisions of the Accounting Act (1997/1336) (21.12.2023/1249), which includes the CSRD requirements the Act applies to companies with over 500 employees for the fiscal year from 1st of January 2024.  If the criteria for applying the law are met, the law requires a company to prepare and publish a report, which must include information on the company’s environmental, social, and governance practices. The Auditing Act (2015/1141) notes in chapter 3 section 3a that sustainability reporting standards must comply with the sustainability reporting standards approved by the Commission in accordance with Article 26(3) of the Audit directive. A Similarly, under the Sustainable Finance Disclosure Regulation (SFDR), companies are required to report on managing climate-related financial risks. The SFDR requires financial market participants and financial advisers to disclose the information on their websites.

The Corporate Sustainability Reporting Directive has been implemented in Finland through an amendments to the Finnish Accounting Act, Auditing Act and other relevant regulation. According to the transitional provisions of the Accounting Act (1997/1336) (21.12.2023/1249), which includes the CSRD requirements the Act applies to companies with over 500 employees for the fiscal year from 1st of January 2024.  If the criteria for applying the law are met, the law requires a company to prepare and publish a report, which must include information on the company’s environmental, social, and governmental governance practices. The Auditing Act (2015/1141) notes in chapter 3 section 3a that sustainability reporting standards must comply with the sustainability reporting standards approved by the Commission in accordance with Article 26(3) of the Audit directive

In Finland, there are statutory requirements related to both gender pay gap reporting and equality planning. The Equality Act in Finland mandates that all employers who regularly employ at least 30 people must draw up a gender equality plan. As part of this plan, an equal pay audit (pay survey) is an obligatory component. The pay audit must be conducted every two years. The audit includes details about the employment of women and men in different jobs, job classifications, pay differences by gender, and corrective actions if unjustifiable pay disparities are identified. Employers are required to share the results of the equal pay audit with their employees. If an employer neglects the equality plan and pay survey, the Ombudsman for Equality ensures compliance through instructions, advice, and potential fines.

In Finland, there is no specific statutory requirement for businesses to report on managing modern slavery risks in the same way as some other countries, such as the UK or Australia.