Biodiversity Roadmap

Through our investment decisions, we are building a world that is safe and sustainable for future generations. Mitigating climate change is one of Varma’s key sustainability targets. Our goal is to achieve a carbon-neutral investment portfolio by 2035. Attending to biodiversity is now emerging as a key theme alongside promoting climate change mitigation and adaptation. The climate targets, together with the Principles for Responsible Investment, guide our operations and cover Varma’s investments in their entirety. Our goal is to ensure that the biodiversity and climate targets carry equal weight in the near future and that they together promote our environmental responsibility. How the climate and biodiversity work is applied depends on the asset class and type of investment.

Varma has continued its biodiversity work by creating a Biodiversity Roadmap for its operations, with the intention to create a framework for investment sustainability requirements, policies and goals, which prevent biodiversity loss.

We launched our biodiversity work by carrying out a preliminary biodiversity analysis of the biodiversity of our investment portfolio in 2020. We focussed on forest industry companies, since they are most directly linked to land use. Our analysis showed that all the forest industry companies in which Varma had shareholdings had taken biodiversity into account in their sustainability policies. The analysis also revealed that from an investor’s point of view, biodiversity indicators still lack comparability The work was continued in 2021 by exploring the risks, from an investor’s perspective, that biodiversity loss presents for different industries, as a consequence of, for example, nature loss, changes in land use and endangerment of species. We also looked into the measures that companies could employ to mitigate biodiversity loss.

When referring to biodiversity, investors should note a double materiality that refers to the impacts that the investee company has on biodiversity and the sustainability risks impacting the investee company itself. The investor is then able to understand how biodiversity loss causes financial risks to the investee companies. First of all, it is important to understand the relationship between the investee companies and biodiversity and ecosystems. For this purpose, we have created a roadmap in which we examine our investments’ dependencies and impacts on biodiversity. The Taskforce on Nature-related Financial Disclosures (TNFD) defines dependencies as ecosystem services that the company leans on in its business processes. According to the TNFD, impacts mean a company’s positive and negative impacts on nature. Risk assessment is important so that we can identify any risks that could impact our investments’ return expectations. In assessing dependencies, we assess our investee companies’ dependence on biodiversity. The more dependent the investee company is on biodiversity, the greater the risk it is exposed to due to decreasing biodiversity. Similarly, the greater the impacts of the investee company’s operations on biodiversity, the more important it is for the investee company to have its own policy to minimise the negative impacts of its operations. We have analysed the sector-specific impacts of our investment portfolio on biodiversity. In the future, rather than sector-specific impacts, our aim is to focus on the impacts of individual companies on biodiversity in different asset classes.

Our goal is to systematically assess the risks and impacts of our investments in terms of biodiversity loss. Our Biodiversity Roadmap applies to the entire investment portfolio.

Biodiversity Roadmap focal areas

High-risk sectors and geographical areas exposed to biodiversity loss

In 2022, we conducted a sector risk assessment in order to identify our investment portfolio’s sectors with the greatest risks related to biodiversity through their impacts and dependencies. Almost all sectors face risks resulting from biodiversity loss. The risks can be divided into physical, legal, transition and systemic risks. Physical risks are, for example, the depletion of natural resources or disturbances in the operating environment. Legal risks include increasing EU regulation and international agreements, for instance. Transition risks refer to changes, for example, in regulation, technology and consumer behaviour that the measures preventing biodiversity loss could entail. System risks mean an extreme risk in which nature loss can lead to the collapse of entire regional ecosystems. If the Amazon rainforest is destroyed, for example, rainfall volumes can change as far afield as the United States. In these types of situations, biodiversity loss can be identified as a clear cause of system risks impacting the economy.

Biodiversity: Impacts and dependencies

Varma has identified the sectors with the greatest risks related to biodiversity through their impacts and dependencies. The sectors are consistent with the high-risk sectors defined in the TNFD’s reporting framework. We encourage our investee companies operating in high-risk sectors to draw up policies on biodiversity and to report in accordance with the TNFD framework. The policies may include, among other things:

  • strategies for reducing the impacts of biodiversity loss
  • a policy on how biodiversity will be integrated into risk management
  • reporting on the impacts, risks and dependencies of their own operations and indicators for verifying them
  • objectives concerning biodiversity.

Besides business sectors, we also examine geographical areas that are exposed to biodiversity loss and where we have investments or operations, and we report on them. We classify the following areas as sensitive locations:

  • areas important for biodiversity and/or
  • areas of high decline in ecosystem integrity.

By analysing this information we can create measures to minimise biodiversity impacts and risks, for example, through monitoring targeted at specific geographical areas.

We report on our investments in high-risk sectors and areas vulnerable to biodiversity loss in line with the TNFD as part of our Annual and Sustainability Report.

Impact analysis

We aim to analyse in more detail the impacts of our investment portfolio on biodiversity. In the analysis, we will assess companies’ impacts on biodiversity by reviewing environmental pressures on species and habitats, the entire value chain and the geographical location.

We have assessed the sector-specific impacts of our investments on biodiversity, and, in the future, our goal is to shift our focus from general sector-specific impacts to the kinds of impacts individual companies have on biodiversity in different asset classes. We are doing this because there can be significant differences within sectors in terms of how biodiversity loss is accounted for in operations and how biodiversity loss is incorporated into risk management. Our goal is to first take a deeper look into higher risk sectors and develop Varma’s investment policy by implementing biodiversity awareness into negative screening, norm violation monitoring, selection criteria, active ownership and targeted engagement.

Biodiversity is integrated as part of the investment process. The integration process focussed first on our direct investments and high-risk sectors. We have evaluated the impacts, risks and opportunities related to sustainability using a double materiality assessment based on sustainability reporting. Both climate change and biodiversity loss bring significant sustainability risks that investors must prepare for.

Real estate portfolio’s biodiversity guidelines

In the real estate sector, eco-mindedness involves not only biodiversity, but also climate change mitigation, the use of natural resources and circular economy. These are also significantly intertwined. Varma has identified the need to improve biodiversity in its real estate portfolio.

We have created biodiversity guidelines for our real estate portfolio. The purpose of the guidelines is to offer ways to attend to biodiversity in properties that have already been built. Taking biodiversity into account in these offers a good foundation from which to begin biodiversity work and increase biodiversity in the built environment. The guidelines contain a wide array of examples on how to take biodiversity into account. The guidelines include the following examples, for instance:

  • A summary of the goals, significance and opportunities of biodiversity protection in a built environment
  • Real estate infrastructure solutions, rainwater etc. and opportunities to use them
  • Taking the changing climate into account in building design
  • Opportunities to build habitats for species of particular interest/protected species

Mitigating biodiversity loss and controlling biodiversity impacts requires the systematic consideration of the entire construction value chain, the prioritisation of measures targeted at the value chain’s key impacts and smooth co-operation between the parties in the construction value chain. The guidelines apply to built properties only and therefore do not provide detailed information on design, the construction phase or raw material procurement, for example. In the background assessment conducted together with the guidelines, we also reviewed the impacts and dependencies of the construction value chain on biodiversity on a general level.


We work together with other investors

We promote collaboration in the financial markets to mitigate and stop biodiversity loss, and we participate in the public debate and joint initiatives on the impacts of biodiversity loss.

We encourage our investees to report on their financial risks and opportunities in accordance with the Taskforce on Nature-related Financial Disclosures (TNFD) reporting framework and to set Science Based Targets for Nature (SBTN). The SBTN initiative helps companies set nature-related commitments. The TNFD and SBTN are complementary.

Active ownership and engagement

For an investor, one means of managing risks caused by biodiversity loss is to engage with investee companies. We recommend that companies report transparently on the current and future impacts of biodiversity loss on the company’s operations and growth potential. We encourage our investee companies to manage biodiversity risks and create policies for taking biodiversity into account. We communicate with companies in high-risk sectors and encourage them to report transparently on the biodiversity impacts and risks of their operations. Taking biodiversity into consideration is part of our norms-based violation monitoring.

We join collaborative initiatives that prevent biodiversity loss through their activities.

In 2022, Varma signed the Finance for Biodiversity Pledge for financial institutions. By signing the pledge, financial institutions commit to the next five stages before 2025:

  1. Collaborating and sharing knowledge
  2. Engaging with companies
  3. Assessing impacts
  4. Setting targets
  5. Reporting publicly

In 2023, Varma also joined the Nature Action 100 initiative. The initiative drives greater corporate ambition and action on tackling biodiversity loss. Participating investors will focus on mobilizing companies deemed to be systemically important to the goal of reversing nature and biodiversity loss.


We need science-based data in order to remain aware of our portfolio’s risks, impacts and dependencies with regard to biodiversity. We draw on the latest scientific data and tools to assess the impacts of biodiversity loss. Our reporting will initially focus on listed investments, but as the quality of the data improves, it will be expanded to cover other asset classes as well.

The key areas that our reporting will cover are risks and opportunities related to biodiversity. We will also assess our impacts and dependencies on biodiversity. We will furthermore report on our goals and measures, and on the indicators we monitor.

External reporting

We wish to remain aware of our portfolio’s risks, impacts and dependencies with regard to biodiversity. Our goal is to report in line with the TNFD for the first time in 2025 on the year 2024.

Internal reporting

Internal reporting enables the development of internal processes and allows portfolio managers to account for biodiversity in their areas of responsibility and in the entire investment portfolio.

Using internal reporting, we can better monitor the overall impacts of our investments on biodiversity and how dependent our investment portfolio is on biodiversity. Furthermore, we can better monitor our investments’ and individual companies’ impacts on biodiversity and thus make better investment decisions.

Internal reporting also enables the setting of targets and the systematic monitoring of progress towards the targets.

Creating our biodiversity policy

We have expanded the environmental policies related to our investments by creating a policy steering our biodiversity work to go alongside our climate policy in 2023. We carry out a systematic, comprehensive assessment of biodiversity covering the entire investment portfolio. This includes setting targets and reporting on them. Active monitoring and updates in keeping with the development of global actions to prevent biodiversity loss are also essential. These actions can help promote the protection of biodiversity and minimise the related risks to the economy and business operations.

The policy encompasses the identification and management of biodiversity risks, impacts and dependencies; the integration of biodiversity into the investment process; and engagement and reporting.

We monitor the development of global work combatting biodiversity loss and update our measures accordingly.

Environmental Policy


Approval of the Biodiversity Roadmap

Varma’s Investment Operations management team has approved the Biodiversity Roadmap for 2022–2025 on 7 December 2022. The Roadmap was updated in March 2024 in line with the current guidelines and requirements.