Varma influences its investee companies mainly through the appointment of boards of directors. From the owner’s viewpoint, the board of directors’ role in the company’s strategy, risk management and choice of CEO is becoming increasingly important.
Varma’s updated ownership policy describes the expectations Varma has of companies in which it is a major shareholder. Responsibility has also been added as a new area of the policy.
“Nowadays, the board of directors plays an even more central role in companies’ development. One of the most important tasks of a shareholder is to appoint to the board of directors members who meet the company’s needs and who bring true added value to the company. We also pay attention to the diversity of the boards,” says Varma’s CIO, Reima Rytsölä.
With investments of approximately EUR 44.4 billion, Varma is a major shareholder, especially in Finnish companies. Approximately 37% of Varma’s EUR 16.8 billion equity portfolio is invested in Finland. Varma attends some 90 shareholders’ meetings annually.
“We support and encourage companies to succeed, as this secures and improves our investment returns in the long term. The updated policy gives a transparent account of our expectations as a shareholder and, as of next year, we will also make voting decisions that are made at shareholder meetings public,” says Rytsölä.
Responsibility becomes part of ownership policy
Varma has, for many years already, required that its investee companies comply with international corporate responsibility norms and agreements, for example on human rights, in their operations. These requirements are now also a part of ownership policy.
Mitigating climate change is one of Varma’s key responsibility targets.
“Going forward, we expect companies to report on the impacts climate change has on both their business operations and their growth prospects, now and in future,” stresses Rytsölä.
Engaging in regular dialogue
As a shareholder, Varma receives information about companies’ operations through various channels, such as annual reports and general meetings. Investor meetings provide an opportunity to engage in dialogue, and Varma employees regularly meet with the management of companies, especially in cases where Varma is a major shareholder in the company. At the meetings, the company’s targets, challenges and, if necessary, responsibility are discussed.
The ownership policy additionally outlines, among other things, attendance at shareholder meetings and exercising voting rights, management’s remuneration schemes, capital structure and the distribution of funds. The policy covers Varma’s equity holdings in Finland and abroad.
Varma Mutual Pension Insurance Company is the most solvent earnings-related pension company and largest private investor in Finland. The company is responsible for the statutory earnings-related pension cover of some 870,000 people in the private sector. Premiums written totalled EUR 4.7 billion in 2016 and pension payments stood at EUR 5.3 billion. The company’s investment portfolio amounted to EUR 44.4 billion at the end of March 2017.
Reima Rytsölä, CIO, tel. +358 10 244 3180 or firstname.lastname@example.org
Timo Sallinen, Director, Equities, tel. +358 10 244 7645 or email@example.com
Leena Rantasalo, Communications Manager, tel. +358 50 300 7980 or firstname.lastname@example.org