Portfolio-level outlook on sustainability in state-owned companies: climate action is progressing, but there is still room for improvement when it comes to impacts on nature[...]

Portfolio-level outlook on sustainability in state-owned companies: climate action is progressing, but there is still room for improvement when it comes to impacts on nature and sustainability incentives in remuneration

Ownership steering received a new portfolio-level overview of progress on the State's sustainability targets in spring 2025, when companies submitted their first reports in line with the sustainability programme.

In its Resolution on Ownership Policy, the State has traditionally communicated its expectations to companies with regard to sustainable business activities. The new sustainability programme launched in summer 2024 is a tool for monitoring these expectations and putting them into practice.

The sustainability programme is based on the guidelines set in the Government Resolution on Ownership Policy and has six main priorities:

• Climate friendliness and the green transition
• Biodiversity
• Sustainability of value chains and fulfilment of the due diligence obligation
• Respect for human rights throughout the value chain
• Sustainability as an employer and diversity
• Sustainability in remuneration

"These six priorities have a wide-ranging impact on companies' competitiveness and shareholder value. They also represent significant opportunities and risks for the company portfolio. As such, the State has decided to focus especially on monitoring and promoting the priorities of the programme," says Maija Strandberg, Director General of the Ownership Steering Department at the Prime Minister's Office.

Assessment of impacts on nature still in its early stages

One of the State's objectives is to reduce the total emissions of its company portfolio. The State's company portfolio is strongly focused on the energy sector, so it is important that companies have ambitious targets for reducing emissions and indicators for monitoring how emissions develop. In 2024, the total absolute emissions of state-owned companies saw a slight decline.

"Many of our companies have made significant strides in their climate action. More and more companies have set science-based emission reduction targets and are developing solutions to promote the green transition," says Ministerial Adviser Katariina Sillander, who is in charge of developing sustainability at the Ownership Steering Department of the Prime Minister's Office.

"On the other hand, there is still room for improvement when it comes to the effects of business on nature. One third of companies have yet to look into the impacts and dependencies of their business on nature, and only a few have put in place nature-related targets or measures."

The State's own portfolio-level assessment of nature-related impacts identified companies whose activities can be assumed to have significant and extensive impacts on nature due to their sector. The owner assesses the nature-related work of these companies especially carefully and, if necessary, engages in dialogue on the matter with the company's management.

Climate incentives in place for management at nearly all emission-intensive companies

As an owner, the State requires companies to include sustainability targets in their management remuneration schemes. In spring 2025, 83 per cent of the companies reported on sustainability targets for management. There are qualitative differences in companies' sustainability incentives.

"Remuneration plays an important role in guiding companies' sustainability work. Boards of directors should make sure that incentives for management include sustainability targets that are central, measurable and ambitious in relation to the company's business activities," says Katariina Sillander.

It is also important for the State that emission-intensive companies set climate impact targets as part of their remuneration schemes. In 2024, 90 per cent of state-owned companies with the highest emissions had management incentives linked to climate targets.

Sustainability targets accounted for an average of 20 per cent of short-term incentive plans and 26 per cent of long-term incentive plans.

State engages in dialogue with company management

In addition to the portfolio-level overview, the State analyses the sustainability performance of each company individually to determine how sustainability affects the company's business activities and shareholder value. The conclusions of the analysis are discussed when officials from the Ownership Steering Department meet with the companies' management.

Inquiries: Maija Strandberg, Director General, Ownership Steering Department, Prime Minister's Office, tel. +358 50 407 8423; Katariina Sillander, Ministerial Adviser, Prime Minister's Office, tel. +358 50 569 0902.

Email addresses at the Government are in the format firstname.lastname(at)gov.fi