FI would like the financial market to shift its sustainability work into the next gear

The financial sector fills an important function in the transition to a sustainable economy. FI's assignment includes a responsibility to ensure that financial corporations contribute to sustainable development. As part of this work, we adopted at the end of 2022 a roadmap for sustainable finance up to 2025. Our follow-up of the firms' work in this area indicates that more needs to be done. Therefore, the firms must shift their sustainability work into the next gear.

"Coasting is not an option. The area of sustainability is developing rapidly, and it is now time for all firms to take action and ensure that they are fully compliant with the new rules and manage relevant sustainability risks," says Tove Husell, acting head of sustainability at FI.

Firms need to be better at identifying risks linked to, for example, climate change and risks that the operations will be used for criminal purposes. We also see that firms need to improve their integration of sustainability into relevant parts of their operations. The competence at the Board level, in central functions, and in other relevant parts of the operations also needs to develop as the knowledge situation changes. FI would also like to emphasise that the signals the board sends are important for how well sustainability aspects – both risks and opportunities – are integrated into the organisation.

We do understand that there are many new complex rules being introduced into the area of sustainability. However, this should not prevent firms from transitioning away from the analysis and preparation stages and starting to take action based on the current regulations. As new regulations enter into force, we will focus on risk-based and forward-looking supervision.

Going forward, we highlight three focus areas in particular that firms need to continue to work with:

• Time to take action based on the current rules
  Many sustainability rules have entered into force, and firms have been working to prepare for the implementation of these rules. It is now time for firms to start to take action based on the current regulatory framework.
• Counteract illegal financial flows
  Firms are responsible for preventing their operations from being used for criminal purposes, for example by criminal actors trying to hide illicit gains or finance terrorism.
• Continue integrating sustainability
  The integration of sustainability is a necessity for firms to successfully comply with the regulatory framework governing sustainable finance – where corporate governance is the natural starting point. Because climate and environmental risks are expected to increase going forward, there is a need for forward-looking tools, for example transition plans and scenario analyses. It is important that tools like these are integrated operationally as soon as possible. Firms also need to ensure that they meet the need for increased knowledge and competence at the board level, among senior management and in other relevant functions in the organisation.