Principles of investee engagement

Engaging with investee companies is an integral part of responsible investment at Varma. Engagement supports the promotion of responsible business practices among investees, effective risk management and long-term sustainability. 

These principles outline Varma’s engagement goals and priorities, means of engagement and how monitoring and reporting on engagement take place. The principles of investee engagement describe how Varma pursues its strategic goals and the targets set in its sustainability programme, particularly by focusing its engagement on material topics. 

Varma also has an ownership policy that explains how Varma fulfils its role as an owner by voting at general meetings of shareholders and by serving on companies’ nomination boards and boards of directors. 

The practical implementation of these principles is supported by Varma’s engagement plan for investments. The engagement plan guides the engagement work and ensures that it is consistent and aligned with Varma’s strategy and sustainability programme.  

The purpose of the engagement plan is to: 

• coordinate and consolidate engagement activities 
• define the means and actions for engagement; 
• distinguish between different forms of engagement; 
• allocate engagement resources; 
• enable the assessment and monitoring of engagement. 

The engagement plan covers direct investments, fund management companies and the investees of funds across all asset classes except government bonds.  

Engagement has two main approaches that complement one another and guide the engagement work: reactive and proactive engagement. 

Varma monitors its investments to identify possible norms-based violations and risks. If a violation of national legislation or international norms is established or reasonably suspected, an assessment will be carried out to determine the potential for engagement. 

The goal of reactive engagement is to prompt the investee company to rectify the situation and prevent similar incidents in the future. For each case, the appropriateness of engagement and the means used are assessed, taking into account the severity and materiality of the violation, the investee’s significance to Varma, the initial conditions for effective engagement and the likelihood of achieving meaningful progress. 

Reactive engagement can take place directly by Varma or indirectly through third parties, depending on the investee and the circumstances. In terms of monitoring the remediation of violations, it is important for Varma that the investee company’s corrective measures show progress in the desired direction. 

Varma also promotes sustainability proactively by engaging with investees on material themes related to investment operations, risk management and long-term value development. 

Proactive engagement is planned ahead and based on annually defined priorities. The priorities are chosen based on strategic targets, the sustainability programme and changes in the operating environment. 

Varma regularly monitors the progress of its engagement activities. Monitoring ensures that engagement is systematic, targeted and aligned with Varma’s strategy, sustainability programme and engagement plan. 

Monitoring covers both reactive and proactive engagement and includes: 

• defining objectives for engagement and assessing progress; 
• systematically documenting engagement activities; 
• examining the outcome and effectiveness of engagement activities; 
• annual thematic summaries and reporting. 

This monitoring supports the assessment of progress against set objectives, as well as the extent to which engagement has brought about change. Monitoring also supports the development of engagement activities and the allocation of future resources. 

Engagement reporting takes place annually. The objective of reporting is to provide a transparent and consistent picture of Varma’s engagement approach, the key themes of engagement and the results achieved.

These principles apply to Varma’s investment operations across all asset classes, taking into account the type of investment and the nature of the engagement opportunities. 

Varma’s sustainability department is responsible for the preparation and maintenance of these principles. The engagement plan guides the implementation of these principles, which takes place in co-operation with the investment function as part of Varma’s investment processes. 

The principles are reviewed regularly and updated as needed to ensure they are aligned with Varma’s strategy, sustainability programme and changes in the operating environment. 

 
Updated: April/2026