Wärtsilä's strategic positioning is centered on driving the decarbonisation of the marine and energy markets. As a technology leader in this transformation, Wärtsilä possesses substantial value creation potential as both a pioneer, and a leading partner in the field of decarbonisation.
Strategic risk assessment is a critical component of the strategic planning process. It plays a pivotal role in the Group's risk management framework by promptly identifying and evaluating threats to long-term value drivers.
Business cycles and global megatrends influence Wärtsilä’s product demand, financial stability, and overall performance. To ensure resilience in a cyclical market, the company employs a flexible, assembly-based manufacturing model, maintains a diverse customer base across both the energy and marine sectors, and relies on a substantial portion of its revenue from services—an area with considerable growth potential.
In 2025, the global economic growth rate remained relatively stable but volatile amid ongoing trade tensions and heightened geopolitical uncertainty. The moderation in inflation in most regions, along with a pivot towards lower interest rates by central banks, has offered some support for financial conditions, though investment sentiment remains cautious in light of persistent risks and policy uncertainty.
In 2025, elevated and persistent geopolitical tensions—including the continuing war in Ukraine, further escalation of conflict across the Middle East, and the growing risk of confrontations in Asia—alongside sweeping shifts in US trade policy and newly imposed global tariffs, have further heightened risks of global fragmentation and contributed to an exceptional uncertainty in the macroeconomic outlook. Business operations worldwide are increasingly exposed to altered trade flows and volumes, disruptions in supply chains, volatile financial conditions, intensified geopolitical unpredictability, and the expansion of both existing and new sanctions. The acceleration of economic rivalry, protectionist measures, and aggressive trade policies—such as the US administration’s tariff hikes, are rapidly reshaping the global economic landscape, with pronounced sectoral effects in energy, technology, and manufacturing. These changes present acute challenges for business operations, and are likely to further hinder global economic growth in the short to medium term, with persistent policy and regulatory uncertainty amplifying long-term risks.
Shifts in climate policies and regulatory frameworks can introduce considerable market uncertainty, which may influence customer decisions regarding energy technology investments. Additionally, increasing geopolitical tensions and the rise of trade barriers could create significant obstacles for global demand, with the United States market being particularly sensitive to such changes. For Wärtsilä’s Energy and Energy Storage business in the USA, these factors could lead to delays in investment decisions, and increased and changing competition as local content requirements and tariffs evolve. Nevertheless, Wärtsilä lowers its exposure to risks associated with reliance on any single market by maintaining a diversified presence across all geographic regions. In addition, the service business provides Wärtsilä with resilient sales and profits, plus good future growth potential.
Wärtsilä, together with its customers and suppliers, is indirectly affected by various economic developments. These include environmental regulations, the liquidity and solvency of financial institutions, including their ability and willingness to extend credit, capital costs, and the counter cyclical stimulus programmes introduced by governments – particularly in the power and infrastructure sectors. Other influencing factors include the activities of multilateral financial institutions, and the availability of export credit and guarantee schemes.
Decarbonisation is anticipated to significantly reshape global markets and present new business opportunities for Wärtsilä in the marine and energy sectors. However, any substantial delays or unexpected changes in the enactment of environmental policies and regulations could have a direct or indirect effect on customer decision-making.
Marine markets
The maritime industry, including the shipping and shipbuilding sectors, is under increasing regulatory, financial, and consumer pressure to decarbonise its operations. Factors such as the EU taxonomy, Poseidon principles, and Environmental, Social, and Governance (ESG) criteria are influencing access to capital. Furthermore, the cost of carbon, driven by regulations such as the EU’s Fit for 55 initiative, the International Maritime Organization’s (IMO) carbon levy, and local green policies, is expected to significantly increase the overall cost of conventional fuels. This, coupled with longer trade distances resulting from increased geopolitical tensions and disruptions at key waterways, may lead to increased costs for shipowners and operators that cannot be fully passed on to end customers.
In 2023, the International Maritime Organization (IMO) set a goal of achieving net zero greenhouse gas emissions from ships by 2050. This alignment, together with other regulations already in place, guides and incentivizes stakeholders on necessary investments. In 2025, 18% of all contracted vessels and 37% of contracted capacity were alternative-fuel capable. Overall, about half of the total orderbook can run on alternative fuels.
In October 2025, the vote to adopt the IMO’s Net Zero Framework was postponed by one year, opening the door to a fragmented landscape of carbon pricing mechanisms introduced by individual regions and countries. The EU already has its system in place, while China is signalling plans for its own programmes, thus adding complexity to global shipping.
Shipping companies should update their decarbonisation plans, invest in newbuilds to replace non-compliant vessels, and enhance existing fleets with efficiency upgrades and fuel conversions. The focus is on fuel flexibility and upgradeability. Transitioning to carbon-neutral and zero-carbon fuels will involve drop-in fuels, hybrid solutions, and abatement technologies for short-term goals, while long-term targets will necessitate sustainable fuels and abatement solutions. With its existing comprehensive product offering for decarbonisation, Wärtsilä can enable its customers to reach their intermediate and 2050 targets.
Seaborne trade growth moderated in 2025 with an ease in ordering following the extraordinary activity seen in 2024. Improved market sentiment could be seen in Q4 2025. Wärtsilä focuses on the most high-value, performance driven key segments where, notably, activity continued to be healthy. Geopolitical risks have altered global trade flows, resulting in longer shipping routes that increased transportation costs and caused supply chain delays. Market sentiment improved towards the end of 2025 as uncertainty eased and a truce in the Middle East raised prospects for increased Suez Canal usage, although actual transit volumes remained below 2023 levels.
Personal travel interest continued to increase, thereby supporting growth in global cruise passenger volumes, as well as passenger traffic volumes in the ferry segment. The momentum in cruise newbuild market continued with both European and Chinese yards taking new orders, while ferry operators also continue to make further investments in fleet renewals.
China has solidified itself as the world’s unrivaled shipbuilding giant. As of December 2025, Chinese shipyards command 67% of the global orderbook by vessel count. Even with actions to increase capacity and output —particularly in China and South Korea—shipyards are still highly utilised and have lengthy orderbooks, underlining the sector's persistent supply-side constraints.
Limitations in shipyard capacity, advancements and implementation of sustainable future technologies, uncertainties at the global level regarding decarbonisation-related financial incentives, and the necessity to determine optimal investment timing and pace based on financial viability and regulatory compliance may influence the willingness of ship owners and operators to invest. These factors are relevant to both newbuild initiatives and the effective management of current fleets.
In addition, ship owners, operators, and shipyards, may face risks to their business profitability due to the limited ability or desire of people to travel, a lower demand for goods because of persistent high inflation or economic slowdown, as well as higher voyage, operating, and financing costs. Highly indebted shipowners, operators, or shipyards may not withstand the potential risk of slower than expected growth in demand, higher financing costs, or a lowered credit rating.
Energy markets
In 2025, energy markets continued to be impacted by protectionism and elevated risks in the geopolitical environment. Despite a reduced climate ambition in some countries, the global energy transition is progressing, with agencies, such as IEA and BloombergNEF, maintaining positive wind and solar growth forecasts. Strong economics and supportive policies continue to drive renewables, while electrification across sectors and data centre investments have increased the overall power demand—including that for gas. Tariff and regulatory uncertainty, which is expected to persist into 2026, challenges supply chains and lengthens delivery times. Improved macroeconomic conditions have enhanced the investment climate; natural gas and LNG prices fell in 2025 and are expected to drop further as supply grows, while lithium prices slightly recovered from recent lows.
The energy sector is moving towards a 100% renewable future, with policies and regulations accelerating the overarching trend towards renewable energy sources, such as wind and solar. The pace of this shift is the principal driver in the growth of battery energy storage and thermal balancing technologies. At the same time, there is a growing demand for energy. Many countries have set ambitious and more progressive climate pledges, supportive market reforms are developing, and old, inflexible coal and gas plants are being retired. However, more targets, policy changes, and market redesigns are needed to encourage flexibility, and accelerate the shift to high renewable power systems. Reciprocating engines remain to be important providers of baseload generation, particularly in remote locations and other locations where access to grid power is uncertain or time sensitive. Demand for baseload generation is expected to remain stable, with further growth opportunities in data centres.
Going forward, the increasing levels of intermittent renewable energy in power systems are expected to further accelerate the need for various flexible balancing solutions. At the same time, power systems are becoming increasingly complex with different types of generation assets. Sustainable fuels, together with flexible engine power plants, balance the grids in an affordable and sustainable way, including for extended shortages in intermittent renewable generation supplies.
In battery energy storage, demand is closely linked to the increasing share of intermittent renewables in the energy system, which continues to progress strongly. The annual market for utility-scale battery storage is expected to have surpassed 200 GWh in 2025, and is expected to exceed 400 GWh before the end of the decade, according to BloombergNEF. The US market is facing headwinds in the regulatory environment, though several drivers remain solid, with data centres as a potential new opportunity. Globally, competition has tightened up as battery manufacturers, for example, have expanded downstream, putting pressure on profitability.
New technology innovations, as well as the price and availability of fuels and raw materials, affect Wärtsilä’s business. Volatile gas prices directly impact the relative competitiveness of the portfolio against other generating technologies, especially in thermal baseload plants. Similarly, policies related to the energy and electricity markets have direct and indirect impacts on future energy capacity and the generation mix.
Geopolitical fragmentation, trade tensions and the enforcement of sanctions or embargos, pose a risk to Wärtsilä’s scope of international business activities, since the company operates in 199 locations in 78 countries, and has delivered power plants to 180 countries. Political developments and changes in legislation can, therefore, have a significant impact on Wärtsilä’s business.
The company actively monitors these political, regulatory, and legal changes in its markets, and engages in dialogue with various official bodies on projects pertinent to its operations. Much of this engagement occurs through interest groups and trade organizations. Wärtsilä ensures rigorous monitoring of political and legislative changes at both corporate and subsidiary levels.
Governments worldwide are increasing regulatory activity. Wärtsilä ensures regulatory compliance and awareness, as appropriate. For instance, ongoing and changing trade sanctions are closely monitored and complied with as required.
Policies related to the energy and electricity markets have direct and indirect impacts on future energy capacity and the generation mix. For example, energy and climate policy may accelerate or delay the energy transition. Recent years have highlighted the role of geopolitics in energy market policy and investment decisions.
New regulations may have a material impact on Wärtsilä´s operations, strategy, resourcing and cost base. To ensure compliance, Wärtsilä is meticulously evaluating all relevant regulatory changes with early involvement from its business units and support functions.
Wärtsilä is a purpose-driven organization, with sustainability at the core of both its purpose and strategy. Wärtsilä is advancing towards its “Set for 30” goal to achieve carbon neutrality in its operations, and to provide a zero-carbon fuel product portfolio by 2030. Wärtsilä’s sustainability strategy is based on three closely interrelated pillars: economic, environmental, and social performance. Wärtsilä businesses focus on developing and providing solutions and services that optimise the environmental and economic performance of fleets and individual vessels, power plants, and entire energy systems.
Rapidly evolving environmental regulations are driving the demand for decarbonisation enablement. Risks are mainly related to the complexity of the overall landscape of emissions in the marine and energy sectors, the balance between commercially available fuels and their resulting emissions, available abatement technologies, and the financial feasibility of the various alternative ways to meet regulatory demands for decarbonisation. Wärtsilä has thousands of suppliers in its global supply chain. This means that there may be potential sustainability and reputational risks related to, for example, non-compliance with human and labour rights obligations, occupational health and safety requirements, and environmental management aspects. Wärtsilä has clear expectations, policies, and procedures for managing these risks.
In general, Wärtsilä’s risks related to sustainability, including climate change risks, are identified, evaluated and mitigated in accordance with the Enterprise Risk Management (ERM) framework and practices defined therein. Altogether, sustainability risks, both strategic and operational, are assessed to be low for Wärtsilä.
Wärtsilä prepares its Sustainability Statement in alignment with the requirements of the EU Corporate Sustainability Reporting Directive (CSRD). As regards the practices needed to deliver the sustainability statement, all relevant sustainability risk areas were assessed in cooperation with the Corporate Risk Management function, by using the same evaluation scales as in the Enterprise Risk Management system. Risks identified in the ERM were also taken into consideration in the double materiality assessment. For annual validation, material topics for the double materiality assessment are also separately maintained in the Enterprise Risk Management system with linkages to supportive documentation.
As a large corporation, Wärtsilä has the capability to invest in various technologies, thereby mitigating the risk of obsolescence. While research and development and innovation present significant opportunities, competitors who commercialize similar technologies more rapidly or efficiently than Wärtsilä, as well as emerging disruptive technologies, pose potential risks.
The company enhances the competitiveness of its solutions and manages technology risks and opportunities through ongoing R&D efforts and innovation. To advance the development of decarbonisation technology, Wärtsilä has increased its R&D investments. In 2025, the company's R&D investment amounted to 4.8% (4.6% in 2024) of net sales, with a significant focus on decarbonising the marine and energy sectors.
The company is committed to optimising lifecycle value for its customers and reducing the environmental impact of their operations. This is achieved with Wärtsilä’s range of engines, digital technologies, propulsion systems, hybrid technology, and integrated powertrain systems that are designed to provide efficiency, reliability, safety, and environmental performance for marine customers during the transformation and beyond. In the energy sector, Wärtsilä supports its customers in their decarbonisation efforts with future-fuel enabled balancing power plants, hybrid solutions, as well as energy storage and optimisation technology. For both industries, Wärtsilä aims to have a product portfolio ready for zero carbon fuels by 2030.