Varma is now, for the first time, disclosing its climate-related risks 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. Transition risks refer to changes, for example, in regulation, technology and consumer behaviour that the transition to a lower-carbon economy entails. These risks affect companies’ cash flows and therefore their risk-return profile. On the other hand, climate change also presents investors with opportunities.
A common reporting framework provides a better understanding of climate risks and comparison between industries. This is why Varma expects companies in which it has a holding to report on how climate change affects their business operations.
“At Varma, when we expect responsible actions from the companies that we have a holding in, we will be at the forefront of taking those actions ourselves. Disclosing how we are preparing for climate change is a logical step for us, as we have been developing the climate-friendliness of our investments in recent years,” says Varma’s Sustainability Manager, Katariina Sillander.
A scenario analysis performed on Varma’s investments showed that the equity portfolio is in line with the 1.75 degree global warming target. Keeping this situation, however, will require reducing the carbon dioxide emissions of equity investments even more in the future. We also charted the risk of, for example, our real estate investments being affected by the rising sea level.
Annual and CSR Report all in one
The Annual and CSR report covers Varma’s main results for 2018 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 Annual and CSR Report 2018 has been published online as a PDF at varma.fi/annualreport. The Report of the Board of Directors and Financial Statements 2018, as well as a section on governance, which includes the Corporate Governance Report and a Salary and Remuneration Statement, are available as separate reports at the same address.
Varma Mutual Pension Insurance Company is a responsible and solvent investor. The company is responsible for the statutory earnings-related pension cover of some 900,000 people in the private sector. Premiums written totalled EUR 5.1 billion in 2018 and pension payments stood at EUR 5.7 billion. Varma’s investment portfolio amounted to EUR 44.0 billion at the end of 2018.
Katariina Sillander, Sustainability Manager, tel. +358 40 709 9836
Hanna Leskelä, Communications Manager, tel. +358 40 703 5164
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