Varma, one of Finland’s big-three pension funds, is revamping its responsible investment work to clarify that engagement with companies is more important than blacklisting stocks.
The €67bn mutual pension insurance company announced today that it had updated its principles for responsible investment as part of its new 2026–2030 sustainability programme.
Hanna Kaskela, senior vice president, sustainability and communications, at Varma, told IPE: “The update strengthens our focus on due diligence and active ownership, rather than relying primarily on exclusions.”
The Helsinki-based occupational pension provider said the update meant Varma would no longer exclude investees on ethical grounds.
It said the change applied to investments in tobacco companies, adding that it would in future evaluate companies in that sector “in accordance with the due diligence process for high-risk industries”.
Asked whether this meant Varma could now invest in tobacco companies, Kaskela said the revised wording did not necessarily make tobacco companies investable.
“Instead, we are now prioritising enhanced due diligence and active ownership. This shift does not imply direct investability,” she added.
“Tobacco is now classified as a heightened‑risk sector and is subject to an enhanced due diligence process,” she said.
Explaining the shift of emphasis, Kaskela said exclusions rarely created real‑world impact in public markets.
“When a responsible investor sells a listed share, it is almost always bought by another investor. The company’s operations, access to capital and incentives remain unchanged,” she noted, citing recent academic research by Berk & van Binsbergen in the Journal of Financial Economics, 2025.
Varma said coal and lignite companies would still be excluded on environmental grounds, and companies with verified involvement in controversial weapons and not headquartered in NATO countries, Japan, South Korea, Australia, New Zealand, or Switzerland, would also continue to be excluded.
Varma said it would focus its engagement on domestic investee companies. “As a Finnish pension insurance company, we are in the best position to influence the sustainability practices of Finnish investees,” it stated.
Separately, Ilmarinen – Varma’s peer on the private-sector side of the Finnish earnings-related pension system — announced that in its new climate plan, it is committing to science-based targets by the end of 2027, and tightening targets for 2026–2030.
Chief investment officer Annika Ekman commented: “We achieved all of the emission reduction targets we set for 2021–2025 with flying colours.”
Ilmarinen said it continued to manage climate risks and the transition to a low-carbon economy in order to secure the value of pension assets in the long term, and also invested responsibly — taking account of the impacts of climate change on the risk and return profile of its investment targets.
“We also see climate change mitigation and adaptation as an opportunity to create new business and jobs,” Ekman continued.
In the renewed climate plan, Ilmarinen said it aimed to reduce the carbon intensity of its direct listed equity and corporate bonds by 35%, and absolute emissions by 25%, as well as the carbon intensity of real estate by 44%.
