10.11.2022

Green transition through agreements

Combatting climate change requires effort from everyone, and law firms are no exception. At Castrén & Snellman, our client is always at the heart of our operations, and we strive to be a reliable and skilled partner also when it comes to promoting sustainability. 

In business law, a significant part of our work involves advising our clients on agreements in one way or another. As agreements are a shared tool for us and our clients, it only follows that we assist our clients in achieving their sustainability goals by accounting for these goals in their agreements as well as possible. While there is no one-size-fits-all solution and each agreement is always individually tailored to meet our clients’ needs and wishes, we have nevertheless started drafting standard sustainability clauses in order to promote sustainability. These clauses will be used in the types of agreement often used by our clients.

Many of the clauses are aligned with the Paris climate agreement and the goal of limiting global warming to 1.5 °C. For example, the requirements related to environmental classification certificates in transaction documentation are aligned with the goals of the Paris climate agreement, as are the requirements included in lease agreements on the sustainable use of the object of lease when it comes to green electricity, reduced water usage and smart temperature monitoring and adjustment.

In the construction industry, we strive for zero emissions already during construction by increasingly leveraging circular economy, for example. In financing, financiers look for sustainable financing solutions that finance sustainable projects or the sustainable business of companies.

The current legislation does not steer towards reducing the carbon footprint of the whole life cycle of buildings, which is why financing agreements can give a welcome nudge towards cutting emissions. What’s more, the European Union and the Loan Market Association as well as other industry operators have issued multiple guidelines on green financing in recent years. These guidelines are reflected in financing agreements and their clauses that govern, among other things, the use, monitoring, management and reporting of borrowed funds in project-specific financing.

Sustainability-linked loans, for their part, monitor and measure the borrower’s sustainability performance against key performance indicators (KPIs) and pre-defined sustainability performance targets (SPTs).

Finland aims to be carbon neutral by 2035, while EU aims for the same by 2050. As the built environment is a major source of emissions, it is undisputed that sustainability clauses will become more common in real estate and financing agreements, and we will certainly see a strong increase in sustainability regulation going forward. The current energy crisis plays its part in accelerating the trend of sustainability, and it is easy to see that sustainability clauses in the real estate and financing industries are here to stay.

Latest references

We assisted Nrep in the development of a residential building that will be built adjacent to the Arabia Shopping Centre in north-eastern Helsinki. Our assignment included assisting in a financing arrangement for the residential building, together with corporate and real estate arrangements related to the project. This involved restructuring through share transactions and a demerger, a zoning change, a change of plot division, a joint arrangement, and a management division agreement. The new 16-storey residential building will consist of 188 Juli Living rental apartments and additional business premises on the street level. Once completed, the building will be one of the most energy-efficient residential buildings in Finland. The financing arrangement complies with Nrep’s sustainability targets. LEED Platinum certification will be applied for the project, while the previous two LEED Platinum certificates for residential buildings have been awarded to Nrep’s Herttoniemi and Friisilä sites.
Case published 28.10.2024
We are acting as the lead counsel to Fortum in a cross-border transaction in which Fortum is selling its recycling and waste business. The business is sold to thematic impact investing firm Summa Equity through its portfolio company NG Group. The debt-free purchase price is approximately EUR 800 million. The transaction is subject to authority approval and customary closing conditions. Fortum’s recycling and waste business to be sold comprises municipal and industrial waste management and end-to-end plastics, metals, ash, slag and hazardous waste treatment and recycling services. These businesses are located in Finland, Sweden, Denmark and Norway and currently employ approximately 900 employees.
Case published 18.7.2024
We assisted eQ Community Properties Fund in the sale of three healthcare and hospital properties to Niam. The properties have a total floor area of approximately 18,000 square meters. Two of the properties are located in Helsinki and one in Pori. Saukonpaadenranta 2 is a property in the maritime district of Jätkäsaari, with the private cancer hospital Docrates as its main tenant. Bulevardi 22 is a historical property where Mehiläinen, one of Finland’s largest private healthcare service providers, operates as the main tenant. The property in Pori, located in the heart of the city, has a lettable area of approximately 5,800 square metres and it is BREEAM Very Good certified. The property is fully leased to Terveystalo. 
Case published 5.7.2024
We advised funds managed by OP in a transaction whereby they sold two modern logistics properties to Logian. Logian is a joint venture between Keva and Mrec Investment Management Oy. The properties are located in Tuusula close to the Helsinki Airport, and their area is approximately 32,300 square metres in total. The properties hold the LEED Gold certificate with energy class A and feature solar panels that generate a significant share of the electricity used by the properties annually. 
Case published 3.7.2024