2.10.2024

Sustainable finance is vital for achieving the objectives of the green transition

Sustainable finance has developed rapidly in recent years. Financing has been systematically directed towards investments in line with sustainable development and green transition objectives across the entire financing sector from bank finance to direct lending.

The Action Plan for Sustainable Finance that the European Commission published in 2018 has led the regulatory tsunami in the EU, resulting in a vast body of sustainable finance-related regulation. For example, ESMA’s implementation timeline for sustainable finance includes steps up to 2028, even though its major regulatory packages have been completed. At the same time, the principles of the LMA and ICMA have also gained in popularity and provided a strong basis for self-regulation in the industry that is widely followed.

In the light of these developments, there is a need in sustainable finance for a standardised definition of ‘green’ and a taxonomy of green activities to enable investors and financial institutions to make informed assessments effectively. This is why the future EU Green Bond Standard will be based specifically on the EU taxonomy regulation. The European Banking Authority also published a report in December 2023 where it recommended that the Commission introduce a voluntary standard for European green loans or at least a definition of green loans in the EU. The Commission is currently considering this report and further actions.

The above initiatives and regulatory developments can be seen as a result of the greenwashing debate. Greenwashing is currently being discussed by investors, financiers and other market participants alike. At the same time, the green transition is progressing rapidly, and sustainable finance is needed to meet the objectives. The European Commission estimates that by 2030 an additional EUR 620 billion of investments will be needed every year. Sustainable finance is therefore a vital condition for the realisation of these investments. We are following the progress of the green transition objectives and the regulation of sustainable finance with interest.

Latest references

We advised a financier consortium including OP Corporate Bank plc, Nordea Bank Abp, and Skandinaviska Enskilda Banken AB in a leveraged financing arrangement for Vexve, a company owned by DevCo Partners Oy. The financing included EUR 143 million acquisition, refinancing and other facilities for, among other things, the financing of Vexve’s acquisition of Denmark-based Frese A/S, a leading manufacturer of dynamic balancing valves for hydronic networks. Vexve’s combined turnover after the completion of the transaction will be ca. EUR 200 million. Vexve is the leading European provider of valve solutions for the energy sector and selected energy-intensive industries.
Case published 7.2.2025
Castrén & Snellman is acting as the legal advisor to the City of Pori and Pori Energia Oy in the finance arrangement whereby debt facilities in the total amount of EUR 292 million are secured for the purpose of refinancing the existing liabilities and fuelling the future growth of Pori Energia. Pori Energia and its financiers signed a Finnish law governed facilities agreement for this purpose on 13 January 2025. Pori Energia, a multi-utility company, operates in various sectors including district heating, electricity distribution, and electricity generation through CHP and renewable sources. The company also provides wind power services and industrial energy solutions in the Satakunta region where it has c. 60,000 customers.
Case published 6.2.2025
We advised Origa Care Properties Oy, a real estate investment company focusing on properties in the care sector and managed by Pareto Business Management AB, in a financing arrangement of a real estate portfolio containing 13 properties. The properties are located in growth areas in different parts of Finland and are leased to leading operators in the care sector.
Case published 28.1.2025
We advised Tokmanni Group Corporation, one of Finland’s largest retail trade companies, as the borrower in a EUR 325 million financing arrangement it entered into with a syndicate of Nordic banks. The financing arrangement includes a EUR 250 million bank loan and EUR 75 million revolving credit facility, which will be used for the purposes of refinancing existing debt and general corporate purposes. The financing arrangement has a maturity of three years with two one-year extension options.
Case published 22.1.2025