As environmental pressures mount, Nordic materials companies are transforming challenges into opportunities for sustainable growth. With the region’s clean power grids and extensive recycling expertise, these companies are uniquely positioned to pioneer fossil-free and circular industry standards, scale technological innovations and adapt to an evolving regulatory landscape.
The Nordic materials sector enjoys access to clean electricity, extensive experience with recycling and material efficiency as well as innovation in fossil-free production. However, the sector also faces high energy costs and the CAPEX burden from investing in fossil-free and recycling assets and processes. Moreover, strong global competition from regions with lower costs and weaker climate ambitions, combined with dependence on political framework conditions, raises the risk of production capacity shifting outside Europe. Such a shift could have implications for regional job markets and tax revenues.
In response to the growing emphasis on environmental, social and governance (ESG) criteria, Nordic materials companies are intensifying efforts to address regulation, cut emissions, improve circularity and mitigate physical climate risks.
Nordic materials companies are intensifying efforts to address regulation, cut emissions, improve circularity and mitigate physical climate risks.
The Nordic materials sector is facing a wave of regulations and policies that will reshape costs, risks, competitiveness and transparency:
These regulatory changes are some of the key drivers supporting sustainability efforts in the Nordic materials sector.
Emerging technologies are paving the way for sector decarbonisation and securing its role in the EU’s green transition. Key areas include:
Large-scale electrification of heat and production processes, such as electric smelters powered by renewable energy, can significantly reduce emissions, improve energy efficiency and enhance value creation. This transition requires long-term commitments and investments in production infrastructure, machinery and electricity supplies.
Investments in research and development (R&D), new assets and strategic partnerships are essential for developing lower-carbon alternatives. These include fossil-free steel, bio-based composites, carbon capture and storage (CCS) and advanced recycling technologies, which can provide competitive advantages and new revenue streams.
Building circular business models and closed-loop ecosystems can lower costs, ensure raw material security and strengthen compliance with tightening EU regulations.
Building circular business models and closed-loop ecosystems can lower costs, ensure raw material security and strengthen compliance with tightening EU regulations.
The materials sector faces significant operational risks due to physical climate impacts. Extreme winds can damage electricity infrastructure critical to energy-intensive, low-carbon processing operations. Drought conditions can impede water-dependent material processing, while flooding can damage production and processing equipment and disrupt transportation.
Supply chain challenges are also prevalent. Virgin material restrictions and limited availability of feedstock can constrain production capacities and increase operational costs. China’s substantial overcapacity with newer, more efficient assets enables highly competitive pricing and large supply capability. This dynamic has led to a market situation characterised by trade risks, supply concentration towards China, and heightened geopolitical concerns.
However, these challenges also present opportunities for innovation, spurring the development of new materials that meet evolving market demands and ensure long-term supplies.
Forward-looking companies are mitigating these risks by implementing advanced monitoring systems to track supply flows and production volumes, and demonstrate circularity progress. They are also assessing trade dependencies to ensure supply chain resilience, while maintaining regulatory compliance across jurisdictions and seizing business opportunities.
At Nordea, we work with companies across the Nordics to finance transitions, from supporting large-scale electrification projects to enabling circular-economy partnerships. We look forward to supporting the sector’s next chapter by offering a range of solutions and products to our large as well as small- and medium-sized corporate customers.
Regulatory changes
Technological development
Physical climate risks in operations and supply chains
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