Sustainability at Ilmarinen 2018: Responsibility for your pension
2018 was a historical year for Ilmarinen, due to our merger with Etera at the start of the year. After the merger, we continued our work as Finland’s largest earnings-related pension company, taking care of a key component of Finnish social security: pension cover. During the year, our investments in sustainable development solutions increased. We also built a better working life together with our customers.
Ilmarinen’s investments in sustainable development solutions grew last year. At the end of 2018, they covered 7.9 per cent of the net sales of our direct listed equity investments. Their share grew by 0.4 percentage points from the previous year. Most of the growth came from net sales linked to climate change, which includes investments in energy efficiency, sources of energy replacing fossil fuels and green construction.
In 2018, we participated in a survey carried out by 2˚ Investing Initiative to review the portfolios of European pension investors. The comparison is based on a scenario extending until 2023, which provides a 50-per-cent chance of limiting global warming to no more than 1.75˚C. According to the study, Ilmarinen’s equity portfolio scores better than average in all of the sectors included in the study. In the Asset Owners Disclosure Project’s (AODP) comparison on the management of carbon risks, we received the third best A rating. We placed ninth among the world’s hundred largest pension investors.
Last year, Ilmarinen also analysed how well our investment operations are aligned with the TCFD’s (Task Force on Climate-related Financial Disclosures) recommendations. The TCFD outlines and develops recommended procedures for use by companies in providing information on the financial impacts of climate change. It provides the various players with information on climate risks and shines a light on the business opportunities linked to climate change mitigation.
Dialogue and engagement
In 2018, we engaged with well over 100 investees to promote responsibility or good governance. We carried out engagement activities alone, through nomination committees and as part of international engagement co-operation.
We also discuss responsibility issues directly with the management of the companies we own. If a portfolio company fails to meet our responsibility criteria, we can initiate an engagement process instead of excluding the investee. If the undesirable activity does not end, our last resort is to exit from our ownership in the company. At the end of 2018, we had 12 on-going engagement processes.
Climate impacts of the built environment
The built environment causes significant climate impacts, which we take into account in the building design phase and in our circular economy and lifecycle approach. In 2018, we received LEED environmental certification for three properties. Ilmarinen has started up a project with the goal of attaining LEED certification for a total of 12 of its existing properties.
We have charted the accessibility of our properties together with the Finnish Association of People with Physical Disabilities. In 2018, we analysed nine new residential buildings and more than 600 flats together with the FDP’s Accessibility Centre ESKE.
We promote better work capacity
In addition to managing pension cover, we provide our customer companies with work capacity services to support more effective and high-quality work capacity management. During 2018, Ilmarinen had more than 3,200 projects for supporting work capacity underway in co-operation with customers. These projects covered around 176,000 employees insured with Ilmarinen. A total of 54 coaching sessions were also organised for customer companies around Finland.
In 2018, altogether some 4,500 vocational rehabilitation applicants received confirmation of support for changing careers or returning to work. More than 70 per cent of Ilmarinen’s rehabilitees returned to working life.
Responsibility for employees
After Ilmarinen’s and Etera’s merger, we have focussed on ensuring a good employee experience. The changes brought by the merger did not affect the overall score of the atmosphere survey, which remained almost equal to the previous year’s level.
One of the indicators we keep track of is the health percentage of our employees, i.e. the proportion of persons who have not been absent from work due to illness during the reporting year. In 2018, this percentage was more than 40 per cent of our employees.
Our activation coach got Ilmarinen’s employees moving also in 2018 through, among other things, exercise during breaks and personal fitness programmes. We encouraged active commuting among our employees by participating again in the Kilometrikisa campaign. We pedalled 850 kilometres per cyclist on average. This translates to a reduction in carbon dioxide emissions of more than 17,000 kg.
We also pay attention to the experience of youth taking their first steps in working life; we once again participated in the Responsible Summer Job campaign. Lengthening careers, also at their beginning, fits in perfectly with the role of earnings-related pension companies.
Gender equality is at a fairly good level at Ilmarinen. In 2018, 40% of the members of Ilmarinen’s Executive Group were women. Women held 60 per cent of the middle management positions and on the group supervisor level, the proportion of women was as high as 70 per cent in 2018.
Sustainability at Ilmarinen
Sustainability is at the core of Ilmarinen’s operations. We are a mutual company owned by our customers. We are responsible for the earnings-related pension cover of close to 1.2 million Finns. As we see it, sustainability strengthens our reputation and supports our business. Acting responsibly is part of every employee’s job profile, and sustainability is also included in the on-boarding programme for new employees. We use a number of sustainability indicators to measure day-to-day business and set targets.
Ilmarinen has reported on its financial, social and environmental responsibility since 2007. For the fourth time, the Sustainability Report follows the guidelines of the Global Reporting Initiative (GRI). The Sustainability Report has been verified by EY’s Climate Change & Sustainability Services.
Read more about sustainability at Ilmarinen from the Sustainability Report. In addition to the Sustainability Report, Ilmarinen publishes an online Annual Report.
Jaakko Kiander, Chief Communications Officer, tel. +358 50 583 8599
Anna Hyrske, Head of Responsible Investments, tel. +358 400 271 371
Ilmarinen’s return on investments 3.3 per cent – employment weakening
The return on Ilmarinen’s investments in January–September was 3.3 per cent. Measures to improve cost-effectiveness continued. “Last year, we became the most cost-effective company in the industry, measured by the ratio of operating expenses to expense loading components. This year our operating expenses, which are necessary for providing pension security, have decreased further, and we are lowering the price of administrative costs for our customers by 20 per cent,” states President and CEO Jouko Pölönen.
Ilmarinen’s Interim Report 1 January to 30 June 2023: Return on investments rose to 3.7 per cent, solvency strengthened and cost-effectiveness continued to improve
The return on Ilmarinen’s investment portfolio was 3.7 (-6.2) per cent, i.e. EUR 2.1 billion. The market value of investments grew to EUR 58.2 (56.3) billion. The long-term average return on investments was 5.8 per cent as of 1997. This corresponds to an annual real return of 3.8 per cent.
Ilmarinen’s Interim Report 1 January to 30 June 2022: Premiums written growing strongly, return on investments negative, solvency remained good
The return on Ilmarinen’s investment portfolio was -6.2 (8.9 per cent), i.e. EUR 3.8 billion negative due to falling stock prices and rising interest rates. The market value of investments fell to EUR 56.7 (60.8) billion. The long-term average return on investments was 5.9 per cent. This corresponds to an annual real return of 4.1 per cent.