Varma’s Principles for Responsible Investment
Responsibility issues are having an increasing measure of influence on the value of companies, which introduces new challenges, above all, to companies, but also to investors. In addition to the financial aspect, investors nowadays must assess potential investments from a broader perspective.
Responsible investment provides a framework for incorporating environmental, social and corporate governance criteria into investment operations and ownership policies, acknowledging that these issues may have a major impact on investment returns in the longer term.
Varma is committed to taking responsibility into account in its investment operations. This contributes to Varma’s objective of having first-rate investment competence and to the company’s position as a long-term pension investor.
Varma’s Principles for Responsible Investment cover the company’s investment assets in their entirety.
The principles are based on identifying the key responsibility aspects of investments and focussing on those. We aim to integrate responsibility issues systematically into our investment processes. The ultimate goal for investment activities is to produce returns, which must be accounted for in the application of the Principles for Responsible Investments and in the allocation of resources.
In our investment activities we take into account internationally acknowledged principles and norms, such as the UN Global Compact initiative for corporate responsibility, OECD guidelines for multinational enterprises and ILO labour conventions.
Varma has signed the UN Principles for Responsible Investment (PRI).
Through its Principles for Responsible Investment, Varma commits to
- incorporating environmental, social and corporate governance factors into investment analysis and decision-making processes.
- being an active owner and adopting environmental, social and corporate governance aspects into our ownership policies. We are also willing to discuss our approach and criteria with the investment objects.
- carefully assessing at the corporate, sector and asset class level investments which entail above-average risks relating to the environmental, social and corporate governance factors. Our aim is to engage with the companies we invest in, rather than excluding the investment. Exclusion is, however, possible, especially as a result of non-productive discussions.
- promoting appropriate reporting on environmental, social and corporate governance matters by its investment objects.
- promoting responsible investment within the investment sector together with other investors, the PRI Initiative and other operators.
- reporting on its activities and progress in implementing its Principles for Responsible Investment. We set annual targets for our activities, monitor our progress, and report on our activities annually.
For ethical reasons Varma excludes companies that concentrate on the manufacture of tobacco and nuclear weapons from its direct investments.
Varma acts lawfully and with integrity and in compliance with legal and regulatory requirements. Varma will not enter into transactions with the main purpose of securing a tax advantage contrary to the intention of the legislator in enacting the relevant tax legislation. Varma's principle is to avoid double taxation on its investment returns; double taxation would contradict the ultimate objective of the investment operations, which is to generate returns.
Specific policies for asset classes
Varma’s Principles for Responsible Investment are applied differently depending on the asset class and type of investment. Varma’s asset classes are fixed income investments, equity investments, private equity investments, real estate and hedge funds. Varma’s Principles for Responsible Investment provide general guidelines for investment activities, and more detailed asset-specific policies are drawn up on the basis of the guidelines.
About the principles
Varma’s Principles for Responsible Investment are included in the investment plan that steers its investment operations. Varma has also published a separate ownership policy, which provides guidelines for listed companies’ corporate governance.
Varma’s Board of Directors approves the Principles for Responsible Investment. The principles are updated as our responsible investment activities evolve and new issues to consider emerge. The Board receives annual reports on the operations.