Government report tells Finnish firms to set up ‘internal taskforces’ for EU sustainability regs

More guidance is needed but companies feel ‘displeasure’ about delays and changes, says paper

The Finnish Government has released a paper advising companies on dealing with Europe’s sustainability laws, including telling them to set up internal taskforces.

The country’s ministry for foreign affairs commissioned academics to conduct in-depth interviews with firms covered by EU rules on deforestation (EUDR), due diligence (CD3D), carbon tariffs (CBAM), forced labour (FLR) and sustainable products (ESPR).

The focus was on agri-food, forestry, mining and textiles/apparel.

“We interviewed representatives of Finnish lead firms in each of the four sectors, which were identified from the TE500 list based on turnover,” the authors explained.

“In order to take supply chains into account, we also interviewed several suppliers.”

The report observed “a perception that the EU itself is not prepared” for the regulations, and that companies were confused and frustrated about delays to guidance and conflicting obligations.

“Delayed guidelines have resulted in varying interpretations between companies, and lead to demands for overcompliance,” it noted. “Firms feel uncertain about what is required and what disclosures will be ‘enough’.”

All of the most advanced companies said it was too early to assess the impact of rules on their business activities, and most were unhappy about the potential postponement and amendment of rules, because they’ve already invested resources in complying with them.

“There is a tension between the companies calling for more detailed regulations to reduce negotiability and minimise varying interpretations (to ‘even’ the market) and those advocating for less detailed regulation,” observed the report.

“Sometimes in these interviews, both these viewpoints were evident in the same firm.”

Recommendations

The authors recommend that firms establish dedicated internal taskforces including members from their legal, compliance, supply chain and sustainability teams to help monitor sustainability developments and understand their implications across the business.

Finnish authorities should respond to demand from companies for official guidance, case studies and examples of best practice to help them comply with the rules, they suggest.

Guidance could include sector-specific expectations and clarification about how companies can work together without breaching antitrust laws.

“This could involve issuing safe harbour regulations that specify conditions under which competitors can collaborate on sustainability goals,” said the report.

Other jurisdictions have already made such moves.

Finland’s regulators should also identify and assess the credibility of auditors, consultants and certification bodies in the sustainability space, to ensure they are supporting companies appropriately.

Continued fragmentation

The report concluded that Finnish firms are focused on the reporting obligations of the various regulations, rather than how they can change their behaviour, and they do not see how “everything fits together”.

Most interviewees don’t think it will be possible to create a single corporate responsibility management system for the various mechanisms, it noted.