Varma, one of Finland’s two largest pension insurance companies, has announced it is renewing its climate targets in response to recent findings about the progression of climate change, and aiming for a carbon-neutral investment portfolio by 2035.
The earnings-related pension provider also said it will exclude oil exploration companies from its equity investments by 2030 and axe all equity stakes in thermal coal by 2025.
Reima Rytsölä, Varma’s CIO, said: “Over the past year, it has become clear that emissions must be cut much faster than previously thought in order to keep global warming within the two-degree limit.
“New information about climate change and its impacts has come to light, Which means we must also renew our climate targets,” he added.
The firm’s new goals are published today in its latest Climate Policy for Investments, which sets out targets for 2020-2035, following on from the last policy document released in 2016 with aims to be met by 2020.
Achieving a carbon-neutral portfolio by 2035 also requires changes in the investment environment, Varma said.
“Varma invests in companies that enable emissions reductions and adaptation to the changes brought by global warming,” it said, adding that it is committed to promoting collaboration within the financial markets and participating in international joint initiatives to mitigate climate change.
Varma, whose total assets came to €47bn at the end of September, also said in its new climate policy document that it aims to have a fifth of its portfolio invested in companies that either directly or indirectly mitigate the advancement of climate change. These are firms that produce low levels of emissions, provide solutions for reducing emissions or promote the use of renewable energy, it explained.
Within its direct real estate investments, Varma said it now aims to switch to fully renewable heating and electricity by 2030 and 2025, respectively.
Hanna Kaskela, Varma’s director of responsible investment, said the pensions investor paid close attention to its choice of funds and fund managers.
“Together with other investors, our goal is to engage with fund managers to encourage them to take climate perspectives into account in their operations as part of responsible investment,” she said.
The Helsinki-based firm was judged last year to be one of the more transparent large pension funds internationally regarding climate. In the 2018 report of the Asset Owners Disclosure Project (AODP) – part of investment campaign group ShareAction – it was placed in the top bracket alongside Ilmarinen, the biggest Finnish pensions insurer.