Corporate responsibility Promoting sustainable development The Finnish financial sector operates responsibly and enjoys customer trust that is high in European comparison. For us, responsibility means adhering to the principles of sustainable development and good business practice. In addition to rules and regulations, we also carefully consider our social, economic and environmental effects.The financial sector promotes loss prevention, responsible investing and lending, online services, and well-being at work. Many financial sector organisations take part in active responsibility reporting.Because climate change affects financial stability, the Finnish financial sector supports actions that aim to restrict global warming to below 2°C as per the Paris Climate Agreement. The financial sector also has an important role in steering investments towards sustainable targets.Responsibility also includes promoting financial literacy and education to ensure that Finns have the skills and knowledge to manage their own finances and understand how markets work.Finance Finland (FFI) has made four commitments to sustainable development. The aim of these commitments is to increase the sector’s resource efficiency and reduce our carbon footprint.Commitments to sustainable developmentThe financial sector plays an important role in combatting climate change. Insurers shoulder climate risks, and the sector as a whole acts as a major investor, asset manager and lender. These activities are transformed not only by climate change, but also by the resulting changes in energy production and natural resources, for example.The Society's Commitment to Sustainable Development is Finland's way to implement the UN's 2030 Agenda for Sustainable Development. This global action plan sets objectives for all UN member countries for a period of fifteen years, including taking urgent action against climate change and its effects.FFI has made four commitments to sustainable development in cooperation with its members, Finnish ministries, government agencies and other parties.Climate: supporting actions that restrict global warming to below 2°C. FFI has created a reporting framework and climate indicators for financial sector companies to use.Automation of structured data processing: improving the efficiency of accounting and other processes through digitalisation, thereby reducing unnecessary workload and carbon footprint.Electronic vehicle registry: enabling the registration and insurance of a vehicle in one electronic service, thereby substantially cutting down on the emissions and bureaucracy involved in more than two million annual registrations.Digitalisation of health records: much like the other commitments, reducing environmental load and improving efficiency through better processes and reduced redundancy – but also helping to improve patient equality.Detailed information about the sustainability commitments is available in FFI's full report: Financial sector increases transparency in its climate work. Fighting against shadow economyMany agreements in the financial sector concern non-physical assets, and payments can be agreed far into the future. To operate smoothly, the sector therefore requires strong mutual trust. Although the financial sector is occasionally accused of enabling tax evasion and shadow economy, it is in fact in the sector’s best interests to prevent these to preserve the vital trust.The Finnish financial sector participates in several projects that aim to prevent shadow economy and tax evasion. Shadow economy here refers to business transactions that avoid paying taxes or other legally obligated payments, such as social security or pension payments.Shadow economy is more common in labour-intensive sectors such as construction, accommodation, catering and transportation, and most often takes the form of undisclosed income, dealing in receipts, and operating short-term companies to evade taxes. Shadow economy also exists in international trade and investing, where money laundering is sometimes used in attempts to mask the origins of illegal income. Finnish financial institutions are legally obligated to report any transactions that raise suspicion of money laundering.Estimates of the extent of shadow economy vary considerably. A 2010 Parliament tax audit study reported an estimate of 10–14 billion euros, which corresponded to 5.5–7.5% of Finland’s GDP – or several million euros of tax income lost to shadow economy each year.FFI actively takes part in the Finnish campaign against shadow economy. It aims to make consumers aware of the significance of their everyday choices in preventing shadow economy and other economic crime, and covers themes such as employment contracts, tax card, receipts, undisclosed work, and food safety.Shadow economy mainly operates in cash. The financial sector thus promotes the use of cards and other payment methods as the responsible choice. At the moment, companies are not obligated to accept card payments, but we are currently investigating whether customers should be allowed to pay even the smallest transactions by card. Other Finnish projects to combat shadow economy include an improved construction site register that reduces administrative burden from honest construction companies, and an electronic invoicing system that makes automatic reporting and identification easier, invoice scams more difficult, and receipts more robust.TaxationIt is crucial that taxes are paid in the correct amount, at the right time and to the right country. However, it is also important to separate tax evasion, aggressive tax planning, and tax competition.Tax evasion is unambiguously illegal, and while Finland can take some measures against it alone, only international collaboration can reach truly efficient results. FFI encourages the EU to work actively and enforce the same rules for everyone to minimise tax evasion. The OECD and other such forums can be used for this purpose. FFI also supports expanding the Savings Directive (2003/48) to cover the prevention of tax evasion and the Directive on Administrative Cooperation in the Field of Taxation (2011/16) to allow for more extensive automatic data exchange, and using FATCA regulations to prevent tax evasion through foreign financial companies.Aggressive tax planning borders on illegal and has no clear definition. It usually means that companies abuse the technicalities of different countries' tax systems, or the differences between them, to evade taxes. Aggressive tax planning should, however, be distinguished from tax competition between countries, which is a perfectly acceptable and even necessary practice for the sector.Financial literacyThe financial sector wants to help Finns better understand their personal finances. To that end, the sector aims to improve financial literacy and increase knowledge about risks, such as running into too much debt. We work on multiple fronts in education:We seek to improve curricula and study materials. The optimal scenario would be for schools to offer everyone the basic knowledge required to manage their personal finances well.We co-produced Zaldo.fi, a gamified learning environment for comprehensive schools that also includes a national competition. Zaldo.fi is Finland's contribution to the European Money Week.The national Economic Guru competition is meant for students in Finnish upper secondary schools. The competition has two parts: the first part seeks to draw focus on the importance of economics in schools, and the second part seeks to find young talent at the final event.Talous tutuksi ("getting to know the economy") is a series of seminars aimed at social studies teachers, consisting of topical talks on various areas of the economy.FFI also collaborates with many other organisations to make financial literacy a basic skill for everyone. Our partners include, for example, the OECD, the EBF, the EBTN and Finnish ministries.