top of page
  • UCL Diplomacy Society

Leading the World to a Way Out of Crisis by Anouska Jha

The Extraordinary Character of Nordic Sustainable Financial Policy.

'The shift to Green'. The rise of green bonds’. ‘Net-Zero’. All somewhat fantastical terms that seem to have no place in our machine-bound, corporate-dominated societies. The American withdrawal from the Paris Agreement only last November, whilst being another administrative decision in Trump’s domestic policy, marked a symbolic insight into the seemingly true priorities of western leaders in the field of sustainability and climate change. However, where on the one hand, our world has become a laboratory of sorts to test new technologies, economic systems, and political utility methods, the Nordic region stands apart. Their commitment and execution of sustainable finance and ESG (Environmental, Social and Governmental policies within a company) has given the Nordic region a strong winning footing on the podium of sustainability and climate change-driven economic policy. The Paris Agreement and UN Sustainable Development goals in 2015, whilst legally a globally unified goal towards climate-resilient development, also exposed the disparities of financial sustainability behaviour between countries and how the Nordic region exercised a breakthrough momentum in this sector. This article will explore four key questions vital to our understanding of Nordic success; Firstly, why is sustainable finance and business significant on both a company and national level? Secondly, what evidence is there of Nordic advances in sustainable finance? Thirdly, to what do researchers and economists owe such devotion to Nordic environmental policy? And finally, what can other nations learn from the Nordics?


Contrary to what the name suggests, sustainable finance is not purely based on environmental sustainability and climate change. Rather, it encompasses the environment, human and stakeholder capital, social governance, and other ESG policy areas. It aims, through investment policies such as the 2020 European Green Deal, to mobilize a resilient economy that recovers from the COVID-19 pandemic. Sustainable finance merit is measured by the transparency of company disclosure to investors, who are increasingly looking to fund financial institutions. This is not, however, some side-lined second-priority initiative. Larry Fink, CEO of BlackRock, stated in his annual chief executive letter, that “Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance/The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.”

Regarding the Nordic region, it is pertinent to look at the EU Commission’s progress in the field of sustainable finance to grasp the true latitude of Nordic policy. In addition to the aforementioned European Green Deal, which targets a climate-neutral Europe by 2050, there is also the European Funds for Strategic Investments Plan and the Renewed Sustainable Finance Strategy, due to be published at the beginning of 2021, along with several other key initiatives. Hence, the EU has clearly set a precedent for responsible sustainable investing, hoping to lead the world in a low-carbon economy. Through such progressive provisions, the Nordic region has exceeded global expectations in the sector. Already a vicinity where the protection of nature, human rights, and just governance is valued, the last few years, along with the pandemic, has shone an ovation-worthy light on the Nordic’s system of sustainable finance.


The Nordic performance in sustainability finance is somewhat unparalleled, with its countries placing in the top 10 for many global indexes. Companies such as the Finnish Neste (which funds Nordic renewable assets), Ørsted (a danish renewable energy company), and Chr. Hansen (a bioscience company based in Denmark) has gained the top three positions in the global 100 sustainable companies list. Moreover, the Helsinki Stock Exchange, as of January 2020, has become the world financial leader for sustainability disclosure for the second year in a row. Transparency has become a key turning point in the decision-making of investors, particularly after the pandemic. J. Hecker, co-head of ESG and Sustainability for J.P.Morgan EMEA and Equity Research, believes that COVID-19 has highlighted ‘the limits of most financial forecasting models’ which deal less confidently with ‘complex systemic risks’. Investors now view the environmental and human crises as ‘ a wake-up call’ for more responsible investing, to which the Helsinki SE has responded conscientiously. More closely linked to the role of climate -change, ⅓ of Nordic sustainable bonds are issued in Swedish Kroner, the third-largest global currency for green bonds, only falling behind the Euro and US Dollar. Markedly, there is a strong recognition of the business case for renewable power, and the Nordic countries have leaned into this new mission with a unique degree of innovation, education, and foresight that shapes its financial models.


It is no coincidence that the image one visualizes when one thinks of the vast Nordic lands are ones of expenses of untouched greenery and panoramas of mountainous surfaces. In fact, researchers from various disciplines have attempted to decode the behaviours of the Nordic political economy in relation to its unique coupling with nature. However, to grasp the full compass of its achievements, we must also disperse our attention to why the Nordics excel in the social and government sector and that of the environment. B.Preuss’ research on Nordic management and sustainable business uses machine-learning algorithms to detect the use of language within the business sector and its contributions to its investment portfolio. This fascinating technological research method discovered that whilst most other companies employ ‘masculine’ discourse of salary, profit, and competitiveness, the Nordics’ success is partly owed to its ‘feminine’ (although it must be emphasized that this is not equated to less rigorous) values of employee nurturing, knowledge-building, and consulting. Kjeller Roper, in response to Preuss, agreed in stating that “There is a more, perhaps, feminine aspect to public life in the Nordics. Politics and business have a more consultative and collaborative approach – it’s less competitive and confrontational’. Even when one literally considers the role of gender, the Nordic countries yet again surpass their EU and global neighbours. The World Economic Forum 2020 Global Gender Gap Report ranked Iceland, Norway, Finland, and Sweden in the top four positions, with other nations, most notably the USA, in 53rd place. Evidently, an equal income and gender distribution within the workplace have, as Preuss conveys, a paramount effect on a company’s performance and the values it engages with.

The question of nature and its link to Nordic sustainable finance has a somewhat metaphysical and logical explanation. A historical approach by John Elkington, who is often called the 'godfather of the sustainability movement’, and is a visiting professor at University College London, attributes Nordic affiliation to nature with the religious wars in medieval Europe, from which the Nordics were largely isolated from the conflict and famines that thinned the Central European soils. Consequently, their perception of nature was bound by both its beauty and a necessity for survival and honour.

“There is something in the connection to nature, but it’s not quite that simple. I’m talking about looking at the deep history of the Nordics, and what forms that sense of responsibility for the environment.” - J.Elkington

Environmental historians of the Aalborg Universitet in Denmark have contributed to this discussion by investigating the significance of Swedish forests in the 19th century, which became national sites of commerce after the introduction of industrial legislation. However, the ‘environmental Sonderweg’ of the Swedish citizens meant that forests were, and continue to be, sites of national treasure that refuse to become entangled in the webs of western capitalist endeavour. This culture of the embracement of man and nature inherent within Nordic societies has permeated its economic policies sector in such a way that amongst the fierce torrents of businesses in the EU hoping to achieve its 2030 goals of zero-carbon transmission, the Nordic region acts more as refreshing waves of dignity and knowledge. As A.D.Messelt claims, this experience with nature has given a ‘Nordic capacity for innovation’ that is evident in its universities and financial institutions. The necessity for the Nordic countries to transfer hydro-electric energy to southern European nations, for example, has bred a seed of ‘innovation to survive’, indeed credited by the fact that Sweden, Finland, and Denmark compose part of the top 10 of the Global Innovation Index. Subsequently, the foundations of the policies of Nordic financial institutions and businesses have their cultivation in a rich, humbling narrative of humans and nature, and their social values in intellectual movement rather than competitive hierarchy.


Whilst it would be difficult to name all of the innovations undertaken by Nordic institutions in the wake of sustainability, there are some key points that distinguish them from their global counterparts. A.Jamholt, Senior Adviser for Communication at the Nordic Council of Ministers, emphasizes how the Nordic countries had realized early on that there ‘really is no alternative’ to development than sustainable investing. Alongside the EU and UN targets of 2015, Denmark Prime Minister Mette Fredriksen produced a new target in September 2019 to reduce CO2 emissions by 70% by 2030. As a result of this political instinct, the Danish Pension Fund has promised to invest 350 billion Danish Kroner into green investments by 2030. This is the first point of reference for Nordic success; rather than waiting for a push for sustainability from an extra-national institution, they use the momentum of their own values and communities to drive forward innovation, making sustainable financing a genuine purpose for the future, rather than for political posturing.

Along with larger investment banks such as the NIB, the Nordic effort for sustainable financing is also fuelled by smaller, but just as powerful institutions such as the Nordic Environment Finance Corporation (NEFCO) and the Nordic Development Fund (NDF). The NDF, in particular, acts as a model for other nations, as it focuses its projects on the nexus between climate change and human development, which they see as intrinsically linked by the ultimate goal of progress and justice. Through this mandate, the NDF now offers 375 million Euros in climate change financing, having grown by over 370 million Euros only since 1980. Thus, they picked up the ESG model far earlier than other countries, implementing it gradually and effectively to build up its investor trust and transparency and build relations with other countries and sectors to further their projects. The NDF also goes one step further in its journey, tackling development and environmental issues on a transnational scale. For example, they launched the 2017 Energy and Environment Partnership Trust Fund for Southern and East Africa, which has a two-fold trajectory; It engages native African women with designing and marketing biogas stoves, allowing them to gain an education in the field of energy and resource-safety, as well as targeting the threat of the 600,000 women and children who die each year from poisonous gas fumes. The NDF has also taken on other global projects in areas such as Asia and Latin America, making it, as Jamholt states, an ‘agile’ financial institution that recognizes its role in healing our natural mechanisms. This is yet another lesson to learn from the Nordics. The work of companies such as NEFCO, NIB, and NDF highlights the need for sustainability to be a global effort, not a national display of merely reaching EU Commission targets.

Ultimately, sustainable finance and ESG require various interlockings of expertise, initiatives, and leadership. The voyage to 0% carbon emission by 2050, as stated by the European Green Deal, is inevitably one that will experience cascades of challenges and opposition, demanding both resilience and unmatched technological proficiency for countries and their businesses. Despite this, the Nordic regions have shown us that these new policies are not just mantras of manifestation scribbled in the diaries of political leaders, but that they must be put into action to effect a worldwide change in the views of our nature, societies, and its future.


bottom of page