Varma’s climate targets aim for a carbon-neutral portfolio by 2035. One milestone is to cut the emissions of equity and corporate bond investments in half by 2027.
“In the report, we disclose the measures with which we intend to achieve carbon neutrality and how our climate targets are progressing. For example, carbon footprint of listed equity investments has declined 29% in recent years, but the pace of change must accelerate in the future,” says Hanna Kaskela, Director of Responsible Investment.
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 investee companies 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.
“Mitigating climate change has been a key sustainability target for Varma in recent years, so being a pioneer in developing transparent climate reporting has been important to us,” says Varma’s Communications and Sustainability Manager, Katariina Sillander.
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.
“These risks affect companies’ cash flows and therefore their return expectations. On the other hand, climate change also presents investors with opportunities,” says Kaskela.
Flood risk analysis and analysis of portfolio emission reductions requirements
For its Annual and Sustainability Report, Varma has developed different ways of clarifying the risks and opportunities related to climate change.
“We disclose, for example, the share of industries exposed to climate-related risks in our portfolio and which industries make up the majority of our carbon footprint. The report also includes forward-looking scenarios on how emissions should be further reduced and a survey of the sea-flood risks of real properties,” Kaskela adds.
Varma has received international recognition for its climate reporting by the UN-supported Principles for Responsible Investment (PRI), which included Varma in the global PRI Leaders’ Group of 36 investors.
We supported our clients in the difficulties of a pandemic year
The Annual and Sustainability report covers Varma’s main results for 2020 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. We also report on how we create value for our customers.
In 2020, the Covid-19 pandemic put societies around the world to the test. For Varma, the year was financially surprisingly good, considering the extent of the crisis: investments yielded positive returns, pension assets reached a new record, solvency remained strong throughout the year and efficiency improved.
We supported our customers during the Covid-19 year by extending insurance contribution payment terms and providing rental reliefs for business properties. We focussed our resources on customer service for employers and entrepreneurs. Pension payments continued as normal.
The Annual and Sustainability Report 2020 has been published online as an accessible PDF at varma.fi/annualreport. The report complies with GRI (Global Reporting Initiative) standards, and it has been externally assured for the first time.
- Varma’s Annual and Sustainability Report 2020
- Video of Varmas year 2020
- Financial information and investments
- Sustainability
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 4.9 billion in 2020 and pension payments stood at EUR 6.0 billion. Varmas investment portfolio amounted to EUR 50.2 billion at the end of 2020.
Further information:
- 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
Email addresses are in the form firstname.lastname@varma.fi