The largest of Finland’s employment pension insurance companies said it failed to meet the 2016 to 2020 climate goal it set itself of aligning its investments to the Paris Agreement, even though it did hit most of the five-year environmental targets.
Releasing its 2020 annual and sustainability report, Ilmarinen said: “During the target period 2016–2020, the target of aligning the investment portfolio with the 2°C scenario under the Paris Agreement was not yet reached.”
Back in 2016, the €53bn pension provider said, the target that was set was to have the key sectors – electricity companies, fuel manufacturers and automobile firms - aligned by 2020.
“Closest to reaching the target were investments in fuel manufacturers, with 67% of the investees included in the listed security portfolio being in line with the target,” the Helsinki-based pension provider said.
Ilmarinen said in its report that over the five-year period, climate-related data had evolved “tremendously” and the calculation methods had been updated.
“That is why the comparison between the targets for 2016 and 2020 is not entirely straightforward; it is only indicative,” it said.
Ilmarinen said that while falling short of Paris alignment had been the “biggest failure” of the previous climate roadmap, clearly exceeding the targets for real estate investments had constituted the plan’s ”biggest success”.
“Compared to the 2015 baseline level, we have reduced our carbon footprint per square metre by 14%, while our target for the period was 10%,” it said.
Another target for real estate had been to achieve energy savings of at least 7% in line with the Ministry of Economic Affairs and Employment’s energy efficiency agreements, Ilmarinen said. In fact, this had been surpassed with energy savings coming in at almost 18% for business premises and 10% for residential buildings.
Ilmarinen also said that at the end of last year, it had been the Finnish employment pension insurance firm with the highest solvency level, despite the COVID-19 crisis.
President and chief executive officer Jouko Pölönen said: “Strong solvency protects pension assets as markets fluctuate and enables long-term investment activities.”
But he warned of increasing challenges ahead for the earnings-related pension system. “The financing of pensions is particularly affected by the declining employment rate, zero-interest-rate environment and low birth rate,” he said.
As reported early in February, Ilmarinen said its solvency ratio rose to 130.2% at the end of 2020, from 126.6% a year before.
Ilmarinen’s emphasis on solvency comes a week after the CEO of another of the four pension insurers, Elo, had to quit over problems involving a breach of the firm’s solvency limit last March.