FINLAND - A group of Finnish pensions industry representatives is reviewing existing guidelines concerning socially responsible investments (SRI).

Timo Viherkenttä, deputy chief executive officer of the Local Government Pensions Institution (Keva) and Matti Leppälä, director at Finnish Pension Alliance (Tela), are working with investment experts from six pension insurance companies to assess how Finnish SRI principles drafted in 2004 could be updated to better correspond with the current investment environment.

Matti Leppälä of Tela told IPE the new set of SRI principles would convey a stronger message to the industry as they will be drafted by investment experts, rather than by managing directors, as they were last time.

"The regulations will become more practical and all-embracing. It is important that SRI and corporate governance regulations are based, as much as possible, on the decisions of the work pensions industry and not dictated by legislation or the guidelines of the regulatory body," Leppälä said.

Rationale behind this latest SRI review is the launch of the Principles for Responsible Investment by the United Nations in April 2006, continued Leppälä, and its impact on the wider pensions market.

"As two Finnish mutual pension insurance companies, Ilmarinen and Pension Fennia, have already signed up to follow the UN Principles, alongside the Finnish Church Pension fund which also updated its SRI principles earlier this year, it is the time for the Finnish pension industry as a whole to update its recommendations on environmental, social and corporate governance (ESG) issues."

That said, Leppälä also recognises existing regulations do no necessarily need a complete makeover.

"The aim of our group is rather to check which issues could be expressed differently and which parts of the 2004 principles clearly need to be revised," he said.

Some members of the group, such as Mika Pesonen, chief investment officer of Etera mutual pension insurance company, note, however, making existing regulations more specific does not necessarily have obvious benefits.

"It is useful and necessary to go through the existing regulations and check if they correspond with the current investment environment. But dictating from above in a detailed manner how things should be may not, in the end, contribute anything particularly positive."

Hannu Nummiaro, strategist at Ilmarinen agrees as he said: "In our view, corporate governance and SRI activities of pension institutions develop best when regulations and rules are set by the fund or the firm itself."

Work on the SRI project should be completed by the end of 2007