Responsibility for pensions is responsibility for the future – Ilmarinen has published its Annual and Sustainability Report 2021
The carbon intensity of direct listed equity investments decreased and the new Climate Roadmap shows our journey towards a net zero carbon investment portfolio. Ilmarinen’s Annual and Sustainability Report provides information on the impacts that managing your pension security has on the economy, people and the environment.
“In Ilmarinen’s operations, the most significant impacts on the environment and people both in Finland and globally come from the investment of pension assets. In Finland, we do our part to ensure the cost-effectiveness of our operations, in other words, to keep the costs of the pension system as low as possible,” says Liina Aulin, Executive Vice President, Communications and Corporate Responsibility from Ilmarinen.
In managing the pension assets that are invested to safeguard current and future pensions, Ilmarinen seeks to achieve carbon neutrality by the end of 2035. In 2021, Ilmarinen published a Climate Roadmap for investments, describing the tools and interim targets on the journey towards carbon neutrality.
“It is important for us as an investor to engage companies to deliver real emission reductions. While we expect companies to improve their emissions reporting, we also continuously develop our own operations,” says Karoliina Lindroos, Head of Responsible Investments.
An example of the first steps in the Climate Roadmap is that Ilmarinen only purchases electricity generated with zero carbon dioxide emissions for its Finnish real estate. In addition, Ilmarinen adopted even more stringent policies regarding the manufacture and use of fossil fuels. Ilmarinen does not invest in companies that are planning new coal investments.
“The Climate Roadmap guides our investment activities and also translates into practice. We have sold holdings in companies whose operations were not aligned with our policies,” Lindroos says.
In 2021, the carbon intensity of Ilmarinen’s direct listed equity investments decreased 30 per cent. Absolute emissions grew, however, because the size of the portfolio grew by a total of 15.3 per cent. At the end of the year, pension assets stood at EUR 60.8 billion.
A record year brings security in the face of new risks
“2021 was an excellent year for Ilmarinen. Investment assets and solvency capital rose to record levels and strong development continued in customer acquisition and in improving cost effectiveness. Our customers benefit from the excellent result through our client bonuses, which amounted to a record high EUR 209 million,” says Ilmarinen’s President and CEO, Jouko Pölönen.
“Driven by the good results achieved in previous years, Finland’s pension system is in good shape to take on the new challenges. Accelerated inflation and possible changes in interest rate and monetary policy are creating economic uncertainty. The Covid-19 pandemic has receded to the background due to the rapid change that took place in the geopolitical situation in February. Russia’s invasion of Ukraine and new sanctions against Russia are creating uncertainty in the economy and safety. The people that find themselves in the midst of the war suffer the most, but the increasing uncertainty has both short-term and long-term implications on the financial situation of Finns, too,” Pölönen adds.
Ilmarinen’s Annual and Sustainability Report provides insights into your pension security or that of your employees and into how Ilmarinen has managed it during the year. The report provides comprehensive information on the environmental and human rights impacts of Ilmarinen’s operations and on current topics that are relevant for your pension.
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. The report has been verified by KPMG with a limited level of assurance.
Let’s prepare by saving electricity
A year ago, saving energy, the ‘Down a degree’ campaign and power system support procedure were acute themes as Europe began preparing for a serious electricity shortage. Saving energy still matters.
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.