The largest of Finland’s pension insurers has detailed just how it will take biodiversity into account in its investments, and said its work on this environment issue will be given the same weight as its efforts on climate change mitigation.
With €56.4bn of assets, Varma is narrowly the biggest of the four pension insurance companies which together form the backbone of the Nordic country’s earnings-related pension system.
In a statement today, the Helsinki-based pension provider gave details of a ’Biodiversity Roadmap’ for its operations – a framework for investment sustainability requirements, policies and goals, which prevented biodiversity loss, it said.
Hanna Kaskela, sustainability director at Varma, said: “In the lead-up to the UN Biodiversity Conference it has become clear that we really need to step up our efforts to prevent biodiversity loss, as the depletion of biodiversity has continued.
“As a responsible investor, we cannot just sit back and wait for summit results; we must be active in creating our own targets to preserve biodiversity,” she said.
Varma said in today’s statement: “Taking biodiversity into consideration will guide Varma’s environmental sustainability on an equal footing with climate targets.”
Back in March, the institution said it would draw up an internal plan this year for reducing the negative impact of its investment portfolio on biodiversity, after 2021 work done on the risks to different industries of shrinkage in the variety of species.
The roadmap published today follows the set of biodiversity goals and plan launched by its closest peer and rival Ilmarinen in October.
From now on, Varma said, it would take biodiversity into consideration in its investment portfolio, to which end it had assessed the impacts and dependencies of its investments to identify their biggest biodiversity risks.
At the same time, Varma said, it had surveyed how big a slice of its investments were exposed to risks resulting from biodiversity loss.
That survey covered direct investments in companies and private equity, loan and hedge funds, which made up 77% of the entire portfolio, it said.
Kaskela said investors had to understand what kind of risks biodiversity loss could cause.
“If we allow the Amazon rainforest to be destroyed, for example, rainfall volumes can change as far afield as the United States,” she said.
“Taking biodiversity into consideration is risk management and it must be integrated into financial decision-making. It is not only about protecting nature but also ensuring that natural resources are used sustainably,” the firm’s sustainability chief said.
Raija-Leena Ojanen, legal adviser at nature NGO WWF Finland, said many companies were already making efforts to reduce their climate impact, but that together with investors, firms played an equally important role in halting biodiversity loss.
“Companies should start putting their business on an ecologically-sustainable foundation now, because regulatory requirements for halting biodiversity loss will increase and impact companies even more strongly going forward,” said Ojanen in Varma’s release.
“Those who anticipate changes are often also the winners of the market economy,” she said.
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