TALLINN, 6 August 2025 – The analysis of the National Audit Office suggests that while the state has started looking for ways to manage in the most rational way possible, i.e. within the means of society and the economy, the ambition to achieve climate neutrality by 2050, which was set earlier at the political level, private sector companies should not be left with the feeling that the state expects more from them than from state-owned enterprises when moving towards the goal. According to the National Audit Office, it is necessary to consider at this stage for which state-owned companies, given their area of activity, size and impact, it would be possible and reasonable to set greenhouse gas reduction goals centrally and for which it should be left to the management level in order to avoid creating undue burdens.

The greenhouse gas reduction targets adopted in Estonia are logically and justifiably associated mostly with the energy sector as the main greenhouse gas emitter. The National Audit Office also investigated the situation of 19 other companies which have a smaller footprint, but are also owned by the state. This is because, alongside the major greenhouse gas emitters, the climate neutrality target concerns all companies – both public and private – and all companies in turn have an aggregate impact on the achievement of the targets. In its analysis, the National Audit Office proceeded from the principle that the state cannot and should not require from private sector companies what it does not require from its own or what it considers too burdensome in terms of both economic and administrative burden.

When the National Audit Office examined during the overview whether the state, as the owner of the companies, had given sufficient thought to the issue of reducing the environmental footprint, it turned out that this was rather not the case based on the results of the audits of five ministries and 19 companies. Thus, the Ministry of Climate admitted to the National Audit Office that when updating its document on the expectations of business owners it has not yet given attention to climate policy and the environmental aspects of sustainability, which are often emphasised in words.

As various governments of the republic have declared in their agreements that they consider it very important to make Estonia’s economic model more climate-neutral and sustainable, the government has set the goal of adopting a Climate Resilient Economy Act and drawing up sectoral roadmaps in Estonia, which should explain in more detail how to make the transition to a clean economy in different sectors. For example, neither the Ministry of Climate nor the Ministry of Finance has considered it necessary to set principles or specific sub-targets for reducing greenhouse gas emissions for the state-owned companies analysed in the overview. Some state-owned companies are dealing with the issue on their own initiative and to the extent of their knowledge.

The National Audit Office emphasises that the current situation specified in the overview does not mean that it is now practical and necessary to rush headlong into setting climate targets in owner’s expectations documents or other guidelines for all state-owned enterprises. What the National Audit Office means is that the issue should be considered at the government level in the context for which state-owned enterprises, given their areas of activity and size, greenhouse gas reduction targets can and should be set centrally, and for which companies setting these targets should be left to the management boards. Giving attention to this issue and thinking it through may identify regulatory obstacles and problems, and facilitate their resolution from the perspective of both the state and the private sector. Thoughtfulness may also prevent steps and decisions motivated by overeagerness, some companies being left on their own or the personal agendas of some managers, which may prove to be too burdensome and unmanageable, creating a negative attitude towards the whole issue in society.

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At present, two of the 19 companies surveyed have a clear emission reduction target in the owner’s expectations documents established by the ministries managing shareholdings in state-owned enterprises. The specific expectation to reduce greenhouse gas emissions is expressed only in the owner’s expectations of AS Hoolekandeteenused and Riigi Kinnisvara AS. Nearly half of the owner’s expectations documents include broader objectives that have a greenhouse gas reducing effect. For example, increasing energy efficiency, producing and using renewable energy, introducing alternative forms of energy and building a solar park.

The Ministry of Social Affairs, which manages a state-owned company – AS Hoolekandeteenused – says it addresses the consideration of climate impact as part of its management culture. The expectations of the owner of AS Hoolekandeteenused include an assessment of the greenhouse gas footprint and the goal to develop targets and an action plan to reduce greenhouse gas emissions across the special care sector.

The Ministry of Economic Affairs and Communications, on the other hand, pointed out that the administrative burden and cost of measuring and reducing greenhouse gas emissions could hamper the company’s core business.

The ministries that manage shareholdings in state-owned companies consider it necessary that the objectives relevant to the state are agreed in the principles of the shareholding policy, which are prepared by the Ministry of Finance and approved by the government. The ministries managing the shareholdings admit that their awareness of climate issues, including the measurement and reduction of greenhouse gas emissions, is limited.

Several companies have still implemented measures to reduce greenhouse gas emissions themselves, irrespective of the content of the owner’s expectations. State-owned companies have focused mostly on improving energy efficiency, increasing the use of renewable energy and sourcing environmentally friendly materials. Most of the state-owned companies that collect data to estimate greenhouse gas emissions noted that finding the necessary data and navigating the different requirements is complex and resource-intensive.

The overall impact and appropriateness of the measures implemented by state-owned companies are not currently monitored or assessed. Neither the ministries managing the shareholdings nor the Ministry of Climate or the Ministry of Finance plan to aggregate information on greenhouse gas emissions, as they find it unnecessary and consider it to be a significant administrative burden.

The National Audit Office believes that the emergence of excessive administrative burden should of course be avoided, but at the same time it would be important – as the implementation of climate neutrality targets affects both the public and private sectors – to analyse the problems encountered by state-owned companies and how to solve them, so that this experience and know-how can be shared with the private sector, private companies that may be facing similar problems. It would also be possible to share with private companies the best practices of state-owned companies on how to avoid unmanageable economic impact and excessive administrative burden.

Background

The overview focuses on the activities of the Ministry of Finance as the coordinator of the shareholding policy, the Ministry of Climate as the leader of the climate policy and the ministries managing shareholdings in companies (Ministry of Regional Development and Agriculture, Ministry of Economic Affairs and Communications, Ministry of Social Affairs) in guiding state-owned companies in setting and achieving climate policy objectives.

The National Audit Office investigated how the need to reduce greenhouse gas emissions has been addressed in the state’s shareholding policy, the owner’s expectations and the respective reports of the Ministry of Finance and the ministries managing the shareholding, and in the annual reports of state-owned companies. The National Audit Office carried out interviews and sent written questions to the ministries that manage state-owned companies.

The National Audit Office conducted a survey among state-owned companies, the sample of which included 100% state-owned companies AS ALARA, OÜ Eesti Keskkonnauuringute Keskus, AS Eesti Raudtee, AS Saarte Liinid, AS Tallinna Lennujaam, AS Teede Tehnokeskus, Elering AS, Lennuliiklusteeninduse AS, OÜ Rail Baltic Estonia, AS Eesti Liinirongid, AS Eesti Post, AS Vireen, AS Eesti Varude Keskus, AS KredEx Krediidikindlustus, AS Metrosert, Riigi Kinnisvara AS, AS Eesti Loto, AS Hoolekandeteenused and, as an exception, Eesti Põllumajandusloomade Jõudluskontrolli AS with a small private shareholding (19 companies in total). For example, Eesti Energia AS and AS Tallinna Sadam, whose bonds and shares are traded on the stock market and whose activities have been publicly discussed, were left out.

 At the Paris Climate Conference in 2015, 195 countries signed an agreement to curb global warming and achieve climate neutrality. Estonia ratified the agreement on 4 November 2016 and on 10 February 2023, the Riigikogu adopted the resolution “General Principles of Climate Policy until 2050”, which reiterated the goal of achieving climate neutrality by 2050.

Priit Simson
Communication Manager of the National Audit Office
+372 640 0777
+372 5615 0280
[email protected]
[email protected]
http://www.riigikontroll.ee/

• Posted: 8/6/2025 8:00 AM
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