Engagement is the focal point of Varma’s responsible investment

Going forward, in line with our new Sustainability Programme, we will focus on promoting sustainability practices in investee companies in which we have the most significant opportunities for engagement. 

Due to the change, our Principles for Responsible Investment have been updated. 
In future, investee exclusions will carry less weight. Globally, the focal point of responsible investment is also shifting towards engagement.

“Shareholders have an opportunity to influence the investee companies and promote issues that are important to them in how these companies operate. As we obtain information on the company, we can monitor the company’s progress and make informed decisions. This is particularly important for adapting to climate change and in matters related to the sustainability of AI and supply chains,” says Hanna Kaskela, Senior Vice President, Sustainability & Communications at Varma.

“People expect concrete results from us, not just a list of things we won’t do,” she adds. 

Exclusion rules out engagement 

Under our updated Principles for Responsible Investment, we will no longer exclude investees on ethical grounds. Exclusion rules out any possibility for investor engagement. The actual impact of exclusion on a company’s behaviour or on market dynamics is limited.

“Exclusion is often justified by the signal effect it has on other investors. This effect is often minimal, however. The shares excluded by a responsible investor usually find another buyer on the market,” says Vesa Syrjäläinen, Development Manager, Responsible Investment. 

The change applies to investments in tobacco companies, which we will, in future, evaluate in accordance with the due diligence process for high-risk industries. The aim of the due diligence process is always to identify sustainability-related risks and take action accordingly. 

Coal and lignite companies will still be excluded from Varma’s investments due to their environmental impacts, and due to our commitment to Science Based Targets. Excluded are also companies with verified involvement in controversial weapons and not headquarted in NATO countries, the Indo-Pacific Four (Japan, South Korea, Australia and New Zealand), or Switzerland.

We will focus our engagement on domestic investee companies. As a Finnish pension insurance company, we are in the best position to influence the sustainability practices of Finnish investees.

How does investor engagement take place? 

• Engagement can take place in several ways: by participating in general meetings and voting in favour of proposals that promote sustainability, through active discussions with company management and by submitting concrete suggestions, for example, to develop a climate strategy or a human rights policy. 
• Engagement is often most effective when working together with other investors. Varma participates in several international joint investor initiatives. 

Additional information:  

Hanna Kaskela, Senior Vice President, Sustainability & Communications, tel. +358 40 584 5045 or hanna.kaskela(at)varma.fi