19.12.2022

Latest news in climate law: Climate Act amended and Finland’s first climate litigation case filed

Two topics have recently been at the centre of discussion in the Finnish climate law sphere: the newly approved amendment to the Climate Act and the appeal on the Annual Climate Report.

On 9 December 2022 Parliament approved the government proposal HE 239/2022 to amend the Climate Act (423/2022) that entered into force in July 2022. The amended Climate Act enters into force on 1 January 2023 and will include new provisions on the climate plans of municipalities and on appeals concerning decisions made under the Climate Act.

As for the appeal, the Finnish Association for Nature Conservation and Greenpeace Norden filed it to the Supreme Administrative Court on 28 November 2022, requesting that the Finnish Government’s decision with respect to the Annual Climate Report 2022 be revoked and sent back to preparation.

Amended Climate Act obliges municipalities to plan climate actions

The Climate Act in force applies to the tasks of central government authorities (see our blog from spring 2022). The approved amendment to the Climate Act extends the scope to municipalities, obliging them to draw up climate plans going forward. The purpose of the amendment is to make the climate work of municipalities more efficient and systematic. Among other things, the climate plans must set out the municipality’s emission reduction targets and specify the measures by which the emissions will be reduced. Municipalities can draw up plans either alone or together with other municipalities in the region. The plans must be updated at least once during each council term, and their realisation must also be monitored.

Legal practice regarding climate actions to develop in the coming years

The current Climate Act does not regulate the appeals process. Instead, general legislation concerning appeals has applied to the decisions made under the Climate Act. The new Act, however, includes a specific provision on the appeals process with respect to government decisions concerning climate policy plans. The new section provides for in detail which parties have the right to appeal these decisions, for example.

Around the world, judicial proceedings related to climate actions have become increasingly common in recent years. The Urgenda case, for example, has been in the spotlight. However, the appeal by the Finnish Association for Nature Conservation and Greenpeace is the first time the sufficiency of the state’s climate actions is challenged in court in Finland.

According to the organisations, the Government has failed in its duty to take the necessary additional actions in terms of carbon sinks to ensure the realisation of the targets set out in the Finnish Climate Act. In their appeal, the organisations also refer to the obligations under the Paris Agreement. The next step is for the Supreme Administrative Court to assess the procedural requirements and decide whether it will consider the organisations’ appeal.

The Climate Act concerns the planning of climate policy and the monitoring of its implementation, i.e. the tasks of the authorities, and does not lay down any direct obligations for companies. The outcome of the appeal pending in the Supreme Administrative Court and the future interpretation practice of the provision concerning appeals will nevertheless indicate how the sufficiency of climate actions will be challenged in Finnish courts going forward.

Latest references

We advised A. Ahlström in establishing a corporate sustainability due diligence process plan which incorporates best practices and tailored solutions based on our expertise within relevant business sectors. Our comprehensive ESG offering also included tailored training for members of the investment team and management team and the board of directors of several portfolio companies. ‘The ESG team at Castrén & Snellman provided us with legal and practical advice around the ESG regulatory tsunami that we need to incorporate in our ESG work,’ comments Camilla Sågbom. A. Ahlström is a family-owned industrial company, developing leading global specialist positions in Forest & Fiber and Environmental technology sectors.
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We successfully acted for the City of Rovaniemi in a matter concerning offence in public office and damages claims in relation to a significant investment decision made by the city. The defendants were the city’s former municipal corporate officer, who was in an employment relationship, and a city treasurer, who was in a public-service employment relationship and acted as the supervisor of the municipal corporate officer. The criminal matter related to the City Board’s decision to invest EUR 2 million of the city’s funds in bonds offered by a newly established investment company in accordance with a decision prepared by the defendants. A significant part of the company’s operations involved quick loan business. The main legal question in the matter was whether the investment of public funds constitutes an exercise of public authority and whether regulation on offences in public office therefore becomes applicable even to a person in an employment relationship. The municipal corporate officer in an employment relationship was charged with aggravated abuse of public office based on her negligence in the preparation and presentation of the investment decision as well as based on a conflict of interest due to the fact that she had invested her own money in a company that received funding from the investment target presented to the City Board. The charges of an offence in public office against the city treasurer concerned his position as the supervisor and reporter of the city’s investment activities. He was also involved in the preparation and presentation of the City Board’s decision. The processing of the matter started in the District Court of Lapland in June 2022. In its judgment given in August 2022, the District Court stated, based among other things on our argumentation, that the investment of public funds constitutes an exercise of public authority and that regulation on offences in public office can therefore be applied to the municipal corporate officer. The District Court deemed that the conduct of the former municipal corporate officer fulfils the characteristics of abuse of public office and that the conduct of the former city treasurer fulfils the characteristics of violation of official duty with respect to the preparation of the investment decision, but the right to bring charges had become time-barred. Punishments could therefore not be imposed on the defendants, but the defendants were ordered to jointly and severally pay the city approximately EUR 114,000 in damages plus interest for late payment. The city treasurer’s share of the amount was 10%. The prosecutor accepted the judgment but the other parties appealed it to the Court of Appeal. Acting for the city, we pursued claims for both punishment and damages in the Court of Appeal. The Rovaniemi Court of Appeal processed the matter in November and December 2023. In its judgment given in June 2024, the Court of Appeal upheld the District Court’s judgment with respect to the abuse of public office and violation of official duty. The Court of Appeal deemed that the municipal corporate officer had failed in her duty to declare the conflict of interest. In addition, she had failed in her duty to ensure that the prepared decision was in compliance with the city’s investment guidelines and that it had been properly put out to tender. The Court of Appeal also found that the text of the investment proposal was insufficient and misleading and that the municipal corporate officer’s conduct was intentional. As regards the city treasurer, the Court of Appeal held that he had failed in his duty to ensure that the investment proposal to the City Board complied with the investment guidelines, that the presentation was not misleading and that risks were taken into account as required by the investment guidelines. With the judgement, the Court of Appeal took a clear position that abuse in public offices and when exercising public authority is not acceptable. The judgment is also significant as it declares that investing public funds constitutes an exercise of public authority and that the liability for acts in office therefore becomes applicable even to persons in employment relationships. In addition, a key question for the Court of Appeal to assess was defining the amount of economic damage in a matter related to investment activities. The Court of Appeal held based on our arguments that the conduct of the municipal corporate officer and the city treasurer had caused damage to the city. The Court of Appeal increased the amount of damages to EUR 210,000 with the city treasurer’s share limited to 10%. The amount was increased because the Court of Appeal deemed that the city had suffered damage not only in terms of the loss of capital but also in terms of the loss of estimated return on investment. The judgement is not final.
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