Varma is disclosing for the second time now 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.
In 2019, Varma’s report ranked number one in the ‘Climate change’ category of a Finnish sustainability reporting competition.
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 returns outlook. On the other hand, climate change also presents investors with opportunities.
“Mitigating climate change is a key sustainability target for Varma, so reporting on how we prepare for climate change is only natural for us – especially since in recent years, we have been developing the climate-friendliness of our investments and have been successful in international comparisons in this area,” says Varma’s Communications and Sustainability Manager, Katariina Sillander.
Late 2019, Varma set new climate targets, in which the company commits to a carbon-neutral portfolio by 2035. As a milestone, emissions on equity and corporate bond investments should be halved by 2027.
“In the report, we disclose the analyses behind the renewed climate targets and the means that we believe will help us achieve carbon neutrality,” says Varma’s Hanna Kaskela, Director of Responsible Investment.
Emission scenarios behind the introduction of geothermal heating
The Annual and Sustainability Report also contains information on the scenario analyses that Varma has conducted concerning the development of its real estate investments’ emissions. The benchmark used was the Paris Agreement’s goal to limit global warming to 1.5°C.
“On the basis of the analysis, Varma decided to start an energy renovation in its housing stock, which means that district heating will be replaced by geothermal heating and solar power in some of Varma’s blocks of flats,” Kaskela says.
Real estate exposure to flood risk was analysed, since around 70% of the real estate owned by Varma is located in the Helsinki metropolitan area. Practically all of the buildings are located within a radius of approximately 10 kilometres from the seashore, and thus their climate burden is higher than average.
Annual and sustainability report all in one
The Annual and Sustainability Report covers Varma’s main results for 2019 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 Sustainability Report 2019 has been published online as a PDF at varma.fi/annualreport. The Report of the Board of Directors and Financial Statements 2019, 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 5.3 billion in 2019 and pension payments stood at EUR 5.9 billion. Varma’s investment portfolio amounted to EUR 48.7 billion at the end of 2019.
- Katariina Sillander, Communications and Sustainability Manager, tel. +358 40 709 9836
- Hanna Kaskela, Director of Responsible Investment, tel. +358 40 584 5045
- Hanna Leskelä, Communications Manager, tel. +358 40 703 5164
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