Varma, the largest of Finland’s pension insurance companies, announced today it is putting bank financing of fossil fuel companies under closer scrutiny, and could sever relationships with those that act as its intermediaries – if they persistently lend to such firms.
The €56.4bn Helsinki-based pension fund said: “Varma Pension Insurance Company is starting to monitor more closely the amount of financing that banks acting as its investment brokers provide to companies that rely on coal and oil in their operations.”
Through monitoring and possibly negative screening, Varma said, its objective was to persuade banks to stop financing polluting forms of energy.
“Brokers are international banks that manage purchases and sales related to Varma’s investments, for instance stock trading, based on orders,” the earnings-related pension provider clarified.
Hanna Kaskela, sustainability director at Varma, said criticism had come out of the current COP27 meeting in Egypt that countries around the world were still pumping more money into fossil energy than into combating the climate crisis.
“By curbing the financing of coal power, we aim to increase the attractiveness of climate-friendly forms of energy, such as wind and solar power, compared to fossil-based energy,” she said.
Varma said its intention with the “engagement” was for banks to become more reluctant to grant loans to coal-reliant companies or help them strengthen their financing with new bonds.
Kaskela said the new action was aligned with its sustainability programme and climate targets which were updated in June.
“We have outlined that in addition to our own climate targets, we will start demanding more ambitious climate actions from our co-operation partners,” she said, adding that Varma was also developing its value chain, meaning the pension fund would require sustainability from the partners it bought services from.
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