Ilmarinen is a responsible investor and an active owner with a long-term approach. We invest pension assets so that the return on them also secures the pensions of future generations. In investment decisions, we take into consideration also the sustainability of the investees. In addition, we take responsibility for our climate impacts and impacts on the built environment especially within real estate investments.
Managing pension assets
Pension assets secure the sustainable financing of pensions. According to law, earnings-related pension assets must be invested in a profitable and secure manner. By taking care of the successful investing of the pension assets under our management we ensure that the employees of our client companies and entrepreneurs will receive the pension they earned from employment. It is about bearing responsibility in the long term – a pension insurance company's quarter is rather 25 years than three months.
Most of the pension premiums written are used for paying current pensions, but one fourth of the earnings-related pension contributions are funded. We diversify these funds across various investments, such as equities and shares, debt instruments and real estate.
We have invested almost 30 procent of our investment assets of more than EUR 45 billion in Finland. Our long-term real investment return on pension assets is 4.3 per cent.
Read more about our investment operations.
Sustainability as part of investment decisions
In our view, the responsible and long-term investing of pension assets is a central part of profitable investment operations and effective risk management. Responsible investment means that, in addition to economic aspects, we take into account aspects related to the environment, social responsibility and good governance when making investment decisions. The environmental and social impacts and governance of business operations influence companies' profits, expenses and reputation, and thus also have a major impact on Ilmarinen's investment returns.
We have signed the UN's Principles for Responsible Investment (PRI) and we require the companies we own to comply with the UN Global Compact in addition to national legislation. Our service provider screens our securities investments regularly and reports any detected norm violations or suspicions thereof. For assessing the sustainability of investees we also have our own responsible investment ratings, which our portfolio managers follow together with the economic figures.
Read more about sustainability in our investment operations.
Ilmarinen is an important owner in Finnish companies and a key economic operator in Finnish society. We are an active owner, which entails, among other things, active participation in the General Meetings and Board nomination processes of the companies we own, active dialogue with their management and engagement to further their sustainability.
We discuss actively with the management of the companies we own with regards to sustainability matters, among other things. If a company we own systematically fails to comply with the UN Global Compact principles, we will deepen our dialogue into an engagement process that aims at ending the undesirable activity and at the adoption of responsible procedures. We implement engagement through, among other things, the Nordic Engagement Cooperation, the engagement processes of which are described in a separate annual report. If the undesirable activity does not end as a result of the engagement process, our last resort is to exit from our ownership in the company.
Read more about our ownership policy.
In our view, climate risks will affect investment returns in the foreseeable future through legislative amendments or as direct climate impacts, for example. Climate risks will also result in avoidance of certain investees. On the other hand, climate change also includes opportunities for investors as it generates new business.
We have developed the systematic assessment of risks and opportunities related to climate change as part of our investment decisions. The Climate Policy drawn up in 2016 strengthens the climate perspective in our investment operations and also sets concrete goals for the next few years. We monitor the carbon footprint of our investments annually across different asset classes. There are two possible responses to high carbon risks: either try to influence the company's activities through engagement or, if we consider the risks to be too high and rapidly realisable, to exit the investments. Our goal is also to increase investments in solutions that promote sustainable development.
We have taken carbon footprint measurements in use also in construction. It helps us identify measures to reduce the greenhouse gas emissions resulting from construction.
Read more about our climate policy.
Impacts on the built environment
Ilmarinen is one of Finland's largest real estate investors, a major property developer and a significant buyer of real estate services. The environmental impacts of buildings and the design and use of the built environment are key factors affecting societal well-being. We invest in resource-efficient buildings that are healthy and safe for their users and located along good traffic connections.
We take into account the entire life cycle of buildings. We maintain properties so as to retain their value. We promote the energy efficiency of buildings and reduce their detrimental impacts on the environment, such as water consumption. When renovating buildings, we also take into account their cultural values and impacts on communities.
Environmental ratings granted by external players are one way of indicating the environmental friendliness of a property. As a result of long-term responsibility efforts, Ilmarinen was one of the first companies to be included in the LEED Volume Programme v4 rating programme. During 2017, we started up a project with the goal of attaining LEED certification for a total of 12 of our existing properties.
As property developers, we require a LEED Gold or corresponding environmental label at the very least.
Read more about our real estate investments.
Read in our Sustainability Report how responsible investing was carried out in 2017.