Finland’s Varma said it will draw up an internal plan this year for reducing the negative impact of its €59bn investment portfolio on biodiversity, following work last year on the risks to different industries of shrinkage in the variety of species that still exist.
Publishing its combined annual and corporate social responsibility report this morning, the mutual pension insurance company also revealed it had calculated its Scope 3 greenhouse gas (GHG) emissions for the first time last year.
Varma said: “The calculation showed that approximately 98% of Varma’s greenhouse gas emissions come from the value chain, ie, Scope 3 emissions.”
On the issue of biodiversity, Varma said that in 2021, it had looked at the risks that biodiversity loss posed to different industries from an investor’s perspective, and identified themes it could take into account in order to reduce its own impact regarding biodiversity loss.
“In 2022, we will develop a roadmap to take biodiversity into account,” Varma said.
In its report, Varma listed the four chosen themes as the sustainable use and protection of water and marine resources; the transition to a circular economy; the prevention and reduction of pollution, and the protection and restoration of biodiversity and ecosystems.
The Helsinki-based firm – which aims to make its investment portfolio carbon-neutral by 2035 – also reported it was introducing a new tool for climate risk analysis, Climate Value at Risk (Climate VaR), saying it had been challenging to assess how climate risks would affect companies’ business models in future using traditional backward analysis.
Hanna Kaskela, director of sustainability, responsible investment and corporate sustainability, at Varma, said: “Climate VaR seeks to solve this problem by describing the potential impact of temperature scenarios on the market value of the investment.”
Varma said that from an investor perspective, climate change brought physical risks such as sudden devastation caused by extreme weather events like drought or heavy rainfall, and transitioning to a low-carbon economy also meant changes in regulation, technology and consumer behaviour, among other factors.
Reporting its financial returns for 2021 last month, Varma beat its nearest rival in the earnings-related pension system, with an 18.5% investment gain compared to Ilmarinen’s 15.3%.