Finland’s Ilmarinen is now investing €2.75bn in US and Japanese equities via two new climate-focused exchange-traded funds (ETFs), in the latest move by the pensions insurer to bring its passive equities exposure in line with its climate goals.

The €57.5bn institution, which provides earnings-related pensions via private-sector employers, announced this morning it is acting as an anchor investor in two new climate-focused iShares ETFs in the US and Japan, launched by the US asset manager BlackRock.

The Helsinki-based pension fund said it had invested €2bn in the US fund, and €745m in the Japanese fund, both of which track the MSCI Climate Action indices.

The investments were a continuation of its climate-oriented investment policy, said Ilmarinen, which is aiming for a carbon-neutral investment portfolio by the end of 2035.

This is a bigger ETF investment than the €1.86bn Ilmarinen put into DWS’ launch of the Xtrackers MSCI USA Climate Action Equity ETF back in April – an amount said at the time to make the ETF debut the largest of all time.

Juha Venäläinen, senior portfolio manager at Ilmarinen, said: “The investments may reduce the sensitivity of the passive stock portfolio to the risks resulting from climate change.

“The business environment will change globally over the next few years and decades due to climate change,” he added.

Venäläinen said Ilmarinen believed companies that cut the climate impact of their operations, or tried to benefit more than rivals from opportunities arising from the fight against climate change, were better investments for long-term investors compared to peers.

He told IPE that Ilmarinen was making an effort to change its passive exposure toward climate factors – but did not have a target for how much of the portfolio should be climate focused.

However, following this latest ETF investment, the current share of climate-focused investments within its passive equity assets was more than 85%, he said.

Ilmarinen’s listed equity portfolio consists of around €17bn of assets, with passive products – largely ETFs – accounting for about 29% of that.

Most of the mutual pension insurance company’s €17bn listed equities portfolio was benchmarked to the new MSCI Climate Action index from December 2022, moving away from the ESG benchmark indices previously used for Ilmarinen’s internally-managed equity investments.

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