Carbon footprint of Varma’s investments clearly smaller than benchmark index
Varma has analysed the carbon footprint of its investments, specifically its listed equity and corporate bond investments, and its real estate investments.
The calculation covers EUR 16 billion, i.e. 39% of Varma’s EUR 41.3 billion investment portfolio, and reflects the situation at the end of 2015.
The carbon footprint of investments is a measure of the annual greenhouse gasses generated by the investee companies. For investors, the carbon footprint is one way of assessing the carbon risk and climate impacts of their assets.
Varma will, from now on, measure and disclose the carbon footprint of its investments annually.
Carbon footprint of Varma’s equities and corporate bonds clearly smaller than benchmark index
According to the calculation, the carbon footprint of Varma’s listed equity investments in relation to the market value of the investments was 168 CO2e tonnes, which is 32% lower than Varma’s benchmark index.
The share of investee companies that disclosed their greenhouse gas emissions was 85%, which is slightly better than for the benchmark index. Most of Varma’s carbon footprint, thus, is based on the data disclosed by the companies themselves, which enhances the reliability and usefulness of the figures.
The carbon footprint of Varma’s listed corporate bonds in relation to the market value of the investments is 865 CO2e tonnes, which is 23% lower than the benchmark index. For corporate bonds, 86% of companies disclosed their greenhouse gas emissions, which is a clearly better achievement than the benchmark index.
“This positive result is not surprising, since Varma’s listed investments are not heavily weighted in carbon-intensive sectors,” says Varma’s Executive Vice-President, Investments Reima Rytsölä.
Lowering the carbon risk of investments has been a part of normal investment risk management at Varma for a long time now. Last year, Varma excluded from its equity investments European power companies that generated more than a third of their electricity with coal.
The carbon footprint of Varma’s real estate last year was 58,050 CO2 tonnes. The figures include direct real estate investments that Varma is responsible for maintaining. These account for two thirds of all of its direct real estate investments. The carbon dioxide emissions per gross square metre amount to 33.8 kg (CO2).
Carbon footprint helps meet climate policy targets
Mitigating climate change is one of Varma’s CSR targets. Varma’s climate policy for investments will be published by the end of May.
“The carbon footprint report is part of a broader analysis where we charted the impacts of climate change on our investments and how we can best promote the mitigation of climate change. We used the results to set targets for our climate policy,” says Rytsölä.
The assessment of Varma’s listed investments was carried out by South Pole Group, which specialises in calculating carbon footprints, and it covers both direct greenhouse gas emissions from sources owned or controlled by the companies, and indirect emissions from the generation of mostly purchased electricity.
Varma joins Montréal Pledge and CDP
Varma has joined the Montréal Carbon Pledge initiative supported by the Principles for Responsible Investment (PRI) and the United Nations Environment Programme Finance Initiative (UNEP FI). Under the Pledge, investors commit to measure and publicly disclose the carbon footprint of their listed equity investments on an annual basis.
Varma has signed the CDP (formerly Carbon Disclosure Project), which compiles data on companies’ greenhouse gas emissions and other climate-change-related data.
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 860,000 people in the private sector. Premiums written totalled EUR 4.6 billion in 2015 and pension payments stood at EUR 5.2 billion. The company’s investment portfolio amounted to EUR 41.1 billion at the end of March 2016.
For more information, please contact:
Reima Rytsölä, CIO, tel. +358 10 244 3180 or email@example.com
Leena Rantasalo, Communications Manager, tel. +358 50 300 7980 or firstname.lastname@example.org
Attachment: Presentation material on the carbon footprint of Varma’s investment: http://www.slideshare.net/tyoelakeyhtio_varma/varmas-carbon-footprint
Annual report: http://annualreport.varma.fi/
Financial information and investments: