Finnish pensions insurer Ilmarinen is aiming to double the volume of its direct equity investment related to solutions for sustainable development by 2020, it has announced.
Ilmarinen’s CIO Mikko Mursula said: “We are actively seeking investment opportunities, where the business is associated with, for example, renewable energy, clean water, or improving resource efficiency.
“Companies that provide business solutions to global challenges can grow faster than the market, and are therefore also good investment targets,” he said.
At the moment, 6% of the annual turnover of Ilmarinen’s direct equity investments derives from sustainable development solutions, and Mursula said the goal is to double this proportion to 12% over the next four years.
Ilmarinen, which had total assets of €35.7bn at the end of June this year, has around 23% of its assets in direct equity investments, which are worth some €8.5bn.
”At the same time, we have sold investments in companies where more than 30% of the business was in coal,” Mursula said.
The pensions insurer said it would only invest in such companies in cases where they had credible plans to reduce the use of coal in the future.
Ilmarinen said the plan to increase sustainable direct equity investments forms part of its climate-related responsible investment principles, which it will publish in their entirety later this autumn.
Ilmarinen said the principles will set out “ambitious, concrete targets” aimed at curbing climate change.
“We genuinely believe that considering climate change within our investment activities is a strategic and responsible choice, in order to ensure the best return for Finnish pensioners in the long-term,” Mursula said.
He said Ilmarinen calculated the carbon footprint of its equity portfolio for the first time in 2015, and had now committed to follow this up every year.
“This year, the portfolio of direct greenhouse gas emissions decreased by 27%,” he said, adding that this had been achieved by reducing investments in coal and increasing investments in renewable energy, with an emphasis on electrical companies.
“It is our aim to maintain the same trend in the future,” he said.
However, climate change would not be stopped just by buying or selling shares, he said.
“It requires changes in operations, and for an investor, the best opportunity to influence climate change mitigation is to try to influence the practices of the companies it owns,” he said.
As an asset owner, Ilmarinen said it supported and encouraged companies to develop energy-efficient and environmentally-friendly solutions, as well as to report openly on emissions and other environmental factors.
Solutions-, or impact-focussed, investing is garnering increased interest among large European institutional investors, with major Dutch pension investors and Nordic asset owners recently having put their name to a commitment to step up investment targeted at helping achieve the UN Sustainable Development Goals (SDGs).