Varma’s Annual and Sustainability Report 2021 discloses information on climate risk management, and the progress made towards a carbon-neutral portfolio


Varma’s Annual and Sustainability Report 2021 has been published. The report contains broad disclosures on how Varma takes climate-related risks and opportunities into account in its investments (TCFD), as well as follow-up information on the progress made towards a carbon-neutral investment portfolio.

Sustainability is a strategic focus for Varma and mitigating climate change is one of the company’s key sustainability targets. We aim for a carbon-neutral investment portfolio by 2035.

“In the report, we disclose the measures with which we intend to achieve carbon neutrality and how our climate targets are progressing. In 2021, the emissions of our investments declined in accordance with the targets of our climate policy,” says Sustainability Director Hanna Kaskela, who is in charge of responsible investment and sustainability at Varma.

In 2021, we performed for the first time a scope 3 emissions calculation, i.e., assessed the emissions of the value chain and formed an overall picture of the company’s emissions. The calculation showed that approximately 98 per cent of Varma’s greenhouse gas emissions are caused by the value chain, or scope 3 emissions.

Varma discloses its climate-related risks and opportunities in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and encourages its investees to do the same. The TCFD is a global initiative that issues recommendations for companies to consistently disclose the financial risks and opportunities of climate change.

Climate change brings physical risks to investors, for instance, sudden damage caused by extreme weather conditions such as drought and heavy rains. The transition to a low-carbon economy also entails changes, for example, in regulation, technology and consumer behaviour.

New tools for analysing climate risks

Varma has developed different ways of analysing the risks and opportunities related to climate change. In 2021, we adopted a new tool for analysing climate risks. Climate VaR (Climate Value at Risk) is designed to provide an assessment of the impact of climate-related risks and opportunities in different asset classes.

“Climate risks have major impacts on companies’ business models and profitability, the outlook of which has been challenging to assess using traditional historical analysis. Climate VAR strives to address this problem by depicting the temperature scenario’s potential impact on the investment’s market value,” says Kaskela.

The analysis of our equity investments shows that both negative and positive potential impacts are the greatest in scenarios in which the transition is the strongest. Compared to the global equity market, the potential negative impacts of Varma’s equity investments are smaller, and the potential positive impacts are bigger in all scenarios.

We have also performed analyses on our real estate investments from the perspective of both climate-change-related transition risks and physical risks. An analysis of the development of the GHG emissions of our real estate portfolio showed that the emissions are well aligned with the target of the Paris Agreement to limit global warming to 1.5 degrees Celsius, and Varma is well equipped to achieve carbon neutrality in its real estate portfolio by 2030.

In 2021, we also explored the risks, from an investor’s perspective, that biodiversity loss presents for different industries. We identified themes that investors can pay attention to in order to reduce their impacts on biodiversity loss. In 2022, we will create a roadmap for attending to biodiversity.

Annual and sustainability report all in one

The Annual and Sustainability Report covers Varma’s main results for 2021 in terms of investments, the implementation of our strategy and achievement of our targets, as well as Varma’s responsible actions from the perspectives of pension asset management, our customers, our personnel and the environment.

The second Covid-19 year was surprisingly good for the Finnish earnings-related pension system. For Varma, 2021 was unprecedented, with record-high investment returns and higher-than-ever solvency capital. The total payroll, which forms the basis for pension contributions, increased significantly, and Varma’s efficiency remained at an excellent level.

Our Annual and Sustainability Report complies with GRI (Global Reporting Initiative) Standards, and it has been externally assured. The report also serves as a Communication on Progress of the UN Global Compact, and we report on our work to promote the ten principles of the Global Compact.

The Annual and Sustainability Report 2021 has been published online as an accessible PDF at

Further information:

Hanna Kaskela, Director of Sustainability, tel. +358 40 584 5045

Hanna Leskelä, Communications Manager, tel. +358 40 703 5164

Email addresses are in the form




About Varma

Salmisaarenranta 11
00180 Helsinki

010 2440

Varma Mutual Pension Insurance Company is a responsible and solvent investor of pension funds. The company is responsible for the statutory earnings-related pension cover of some 917,000 people in the private sector. Premiums written totalled EUR 5.6 billion in 2021 and pension payments stood at EUR 6.2 billion. Varma’s investment portfolio amounted to EUR 59.0 billion at the end of 2021.

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