Ilmarinen reached almost all of its climate targets for 2016–2020 – Annual and Sustainability Report 2020 published
Ilmarinen reached almost all of the climate targets it had set for the period 2016–2020. The most notable success was the 14 per cent decrease in the carbon footprint of real estate. Furthermore, investments in sustainable development nearly doubled and the carbon sinks of forest investments grew 44 per cent. The Annual and Sustainability Report for 2020, which is published today, also presents new forward-looking data and analysis on the climate impacts of investments.
During the target period 2016–2020, the target of aligning the investment portfolio with the two-degree scenario under the Paris Agreement was not yet reached. In 2016, Ilmarinen set as a target to have the key sectors, i.e. electricity companies, fuel manufacturers and automobile companies, aligned by 2020. Closest to reaching the target were investments in fuel manufacturers, with 67 per cent of the investees included in the listed security portfolio being in line with the target.
Already a year ago, Ilmarinen set a new ambitious target: to achieve a carbon-neutral investment portfolio by the end of 2035. In 2020, Ilmarinen extended the monitoring of carbon risk in its investment activities from coal to fossil energy sources in general. The limit for high-carbon-risk business will be gradually lowered from the current 30 per cent to 15 per cent by 2025. The ambitious climate target requires continuous development, and Ilmarinen will continue working on its climate roadmap in 2021.
New kinds of scenario models for climate targets
The report for 2020 includes new disclosures regarding, for example, the two-degree scenario model under the Paris Agreement and physical and transition risks. Ilmarinen also discloses, for the first time, the carbon footprint of its government bond portfolio.
Ilmarinen’s climate reporting garnered international recognition in 2020 when the company was named to the PRI Leaders’ Group.
“It is important for us as an investor to influence companies to achieve real emission reductions. While we expect companies to improve their emissions reporting, we continuously develop our own operations. In 2020, we supplemented our Responsible Investment Policy with a tax policy and prepared internal sustainability guidelines for the various asset classes. We also further developed our analysis tool that helps integrate sustainability data from different sources into investment decision-making,” says Karoliina Lindroos, Head of Responsible Investment.
In 2020, equity index funds investing in a responsible benchmark index covered as much as 90 per cent of the passive investments in the listed equity portfolio. Concerning real estate, Ilmarinen continued LEED certification and recycled the thermal glass of its office building’s glass roofs into glass wool. In addition, the company renewed its online service to make it accessible to everyone.
Most solvent employment pension insurance company during the Covid-19 year
In spite of the exceptional circumstances caused by the Covid-19 pandemic, Ilmarinen successfully consolidated its position as the leading employment pension insurance company in 2020. Thanks to a good return on investments, Ilmarinen became the most solvent employment pension insurance company and substantially improved the cost-effectiveness of its operations. Despite the challenging market situation, the return on investments was 7.1 per cent, or EUR 3.5 billion. The value of investment assets increased to an all-time high, at more than EUR 53 billion, and solvency strengthened to 130.2 per cent.
Ilmarinen’s Annual and Sustainability Report provides a comprehensive overview of how pensions were managed in 2020.
“To us, responsible management of pension provision means that we operate in a way that is as customer-focused and cost-effective as possible, while at the same time continuously improving our operations. Strong solvency protects pension assets as markets fluctuate and enables long-term investment activities. The financing of the earnings-related pension system will face increasing challenges in the future. The financing of pensions is particularly affected by the declining employment rate, zero-interest-rate environment and low birth rate,” comments President and CEO, Jouko Pölönen.
Ilmarinen’s Annual and Sustainability Report helps everyone – both employees and entrepreneurs – familiarise themselves with their pension security. The report also highlights specialists’ and customers’ viewpoints to a greater extent than before.
“Sustainability is not something that has to do with just a single company; it affects society at large. Therefore, we also want to shine a light on our customers’ sustainable actions and the reasons why responsible management of pensions is important for our customers, too. We also bring to the fore our various specialists more extensively than before,” says Heidi Lehmuskumpu, Communications Manager, Sustainability, Investments and ESG.
The Annual and Sustainability Report is available in Finnish, Swedish and English. It has been implemented in an accessible manner. This is the sixth time that Ilmarinen reports in accordance with the GRI guidelines. Concerning climate issues, the international TCFD (Task Force on Climate-related Financial Disclosures) framework is also used. Ernst & Young has provided a limited level assurance for the information disclosed in the report.
Heidi Lehmuskumpu, Communications Manager, Sustainability, Investments and ESG, tel. +358 50 577 9870, email@example.com
Liina Aulin, Executive Vice President, Communications and Corporate Responsibility, tel. +358 40 770 9400, firstname.lastname@example.org
Nordic Engagement Cooperation (NEC) expanded its focus to sustainable water management – annual report 2020 published
Nordic Engagement Cooperation (NEC), a collaborative engagement network between large Nordic institutional investors (pension funds), expanded its focus to sustainable water management in invested companies in 2020. At the end of 2020, Ilmarinen had altogether 13 ongoing engagement processes, of which eight were part of the NEC collaboration.
Master your ESG data
Gold mining from the rich sources of alternative data in finance might be challenging, yet it is rewarding. As there is a vast mixture of data sources and data available to investors with a sustainability mindset, it is increasingly important to have a comprehensive understanding of the methods behind the ESG data to make valid inferences to support the decision-making process. Master your data and it will become your competitive advantage.
Ilmarinen invests in Australia’s rental housing market together with Greystar, APG and Ivanhoé Cambridge.
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