Varma has established an exchange-traded fund, (ETF) that takes sustainability criteria broadly into account. The ETF was created jointly with the asset management company Legal & General Investment Management (LGIM) and the index investment company Foxberry.
Varma has invested EUR 200 million in the ETF it has developed together with LGIM and Foxberry. The ETF is listed on the London Stock Exchange.
“We could not find an investment product that suited our ESG criteria for responsible investment, so we decided to develop one in collaboration with LGIM and Foxberry. As the responsible investment sector grows, the development of index funds with an increasingly responsible tilt is key , and they are precisely where change is needed,” says Timo Sallinen, SVP, Investments.
The ETF designed by Varma allocates to European equities and takes sustainability criteria into consideration. Companies that are selected as investees are assessed based on how well they take environmental, social and governance issues into account in their operations.
Tobacco companies, industries that manufacture controversial weapons and companies whose operations are based to a large extent on the use of coal and which have the highest emissions and significant fossil fuel reserves are excluded from the index.
The index also does not include companies that have breached international agreements and standards, concerning for instance respect for human rights and the use of child labour.
“Alternatives are needed for exclusion-based products. We also believe that co-operation between stakeholders goes a long way in promoting responsible investment. Many investors on their own may lack the resources to thoroughly look into companies for exclusion purposes,” Sallinen points out.
“Sustainability is integrated into Varma’s investment operations, and we also want to actively develop sustainable investment options. With this product, one of our main goals is to reduce the carbon emission of our investment portfolio," says Sallinen.
Timo Sallinen, Senior Vice-President, Investments, listed equities, tel. +358 40 543 9587, firstname.lastname@example.org