Insights

Sustainability-linked loan helps Ponsse to focus on environment and worker safety

01-10-2025

Ponsse, a leading forest machine manufacturer, has reinforced its commitment to environment and workers safety by refinancing its sustainability-linked loan with Nordea. The loan has already had a profound impact on Ponsse's approach to sustainability and aligns the loan portfolio with the company’s sustainability strategy and will further strengthen this.

Sustainability-linked loans (SLLs) are a type of lending arrangement where the company’s borrowing costs are tied to its performance on meeting a certain set of measurable annual sustainability targets. If the company meets those targets, it gets a discount on the interest paid. For Ponsse, it’s a loan type that fits well to how they want to drive the company forward.

Katja Paananen, Chief Responsibility Officer at Ponsse.

"The monetary effect through the margin effect is naturally important for us. More importantly, we can demonstrate internally that we are committed to the targets and are willing to invest in achieving them. The signalling effect is very important, as it demonstrates our dedication to sustainability both within the company and to external stakeholders," says Katja Paananen, Chief Responsibility Officer at Ponsse.

Ponsse's roots lie deep in the forest, and the company manufactures logging technology that promotes sustainable forestry. Respect for nature is one of their key sustainability targets.

“We design and manufacture forest machines that enable responsible harvesting in commercial forest. This means minimising environmental impact and handling valuable raw material efficiently, ensuring that the harvested wood is suitable for durable, long-lasting products," Katja explains.

At the same time, worker safety remains a critical issue in the manufacturing industry, and for Ponsse this is a top priority integrated into their sustainability goals.

Sustainability-linked loans are an excellent fit for a broader scope and more flexible use

SLL is a financial instrument designed to promote improved sustainability performance. Unlike green loans, SLLs have a broader scope with a focus on social and governance aspects as well as climate. They also offer flexible use of the financing, where green loans limit the use to green purposes only. With SLLs, an incentive on the loan terms is linked to the borrower's achievement of predetermined sustainability targets.

"This structure provides financial incentives when companies meet their selected targets within environmental, social, and/or governance (ESG) goals," says Mattias Linhardt, Sustainable Finance Advisor at Nordea. "It's popular among companies looking to align their financial strategies with their sustainability objectives."

Beyond environmental concerns

"With the updated sustainability metrics, our loan portfolio is now aligned with our strategic sustainability goals. Through the KPIs and agreed margin effect, we can demonstrate the financial value and direct impact of achieving these targets," explains Antti Leskinen, Group Treasury Manager at Ponsse.

Ponsse's SLLs incorporates three key performance indicators (KPIs):

Annual Scope 1 & 2 greenhouse gas emissions, calculated in accordance with the Greenhouse Gas Protocol
Waste recycling rate (%)
Lost-time injury frequency (LTIF)

These KPIs reflect Ponsse's strategic sustainability goals, extending beyond environmental concerns to include social aspects like worker safety.

Integration across operations

Linking financing to sustainability targets has had a profound impact on Ponsse's approach. "With the SLLs and the related signalling effect, we have observed an improvement in the awareness of our sustainability targets across different functions, not only within the Finance and Responsibility departments," Antti says.

"The leadership team (as well as the Board of Directors) has sanctioned the sustainability targets for Ponsse, ensuring that each function leader understands our commitments and the associated economic effects. The implementation and execution of our sustainability actions are naturally the responsibility of each function, but the direct results, such as the margin effect, are a crucial way to increase the meaning and awareness across the organisation."

Industry impact and partnership

"Ponsse's commitment demonstrates the growing importance of ESG in the forestry sector”, says Jussi Pääkkönen, Senior Relationship Manager, Business Banking Finland. “It shows how financial instruments can drive positive change and create value for both the company and the environment." He adds:

“SLL as a financing solution strengthens our customer relationship and also sets a precedent for sustainable finance in the forestry sector. As more companies seek to align financial strategies with sustainability goals, Ponsse's approach offers a compelling industry model.”

Sustainable Finance Advisory for small and medium-sized businesses

Nordea Business Banking has a Sustainable Finance Advisory (SFA) team dedicated to supporting and driving sustainability financing with a special focus on bilateral sustainability-linked loans (SLLs). The team offers expert advice to colleagues and customers on what may constitute material Key Performance Indicators (KPIs) and ambitious Sustainability Performance Targets (SPTs) in relation to SLLs.

While SLLs follow a set of principles that remain consistent across all sectors, the actual KPIs and the ability to achieve a real transition towards a more sustainable future are unique to each company. If you have any questions, please don't hesitate to reach out to the team.