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Valtion Eläkerahasto

PRI reporting framework 2017

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

VER's ESG criteria

In its investment activities, VER focuses on ESG criteria that are consistent with its investment objectives and in respect of which VER is in a position to implement and monitor the criteria, given the resources available. Key criteria:

Respect for the PRI and promotion of ESG goals;
Respect for universal international standards; 
Transparency of ESG issues in all asset classes.

Implementation of responsible investing

The methods used in responsible investing may vary in terms of the adopted approach because there is no universally applicable definition of ESG in the investment industry; instead, each player perceives it differently placing the emphasis on different priorities. The methods used by VER to pursue responsible investing are governed by the following considerations with due allowance for the asset class involved: 

Integration of ESG issues in the decision-making process;
Direct monitoring of ESG performance – active ownership; 
Indirect monitoring of ESG performance – passive ownership;
Active participation in meetings of shareholders;
Exercise of influence;
Compliance monitoring;
Exits.

Screened by

          Controversial weapons and CO2 emissions in our portfolio.
        

Description

VER’s portfolio managers document the ESG issues related to investment decisions and monitoring in accordance with standing instructions.The ESG compliance of VER’s direct investments is assessed annually by an independent party with regard to norm violations and production of controversial weapons.[1] 

[1] Global Compact and Ottawa Landmine Convention.

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Implementation of responsible investing

The methods used in responsible investing may vary in terms of the adopted approach because there is no universally applicable definition of ESG in the investment industry; instead, each player perceives it differently placing the emphasis on different priorities. The methods used by VER to pursue responsible investing are governed by the following considerations with due allowance for the asset class involved: 

Integration of ESG issues in the decision-making process;
Direct monitoring of ESG performance – active ownership; 
Indirect monitoring of ESG performance – passive ownership;
Active participation in meetings of shareholders;
Exercise of influence;
Compliance monitoring;
Exits.

The fundamental policies outlined in our responsible investing may only be revised by the decision of VER’s Board of Directors. VER’s Management Team issues guidelines and seeks to develop the procedures to promote the practical implementation of the principles of responsible investing.   

The screening criteria is defined in our policy for responsible investing which is reviewed by continuous basis.

We do not actively notify our clients nor our beneficiaries about changes made in our responsible policy.


LEI 07. Processes to ensure screening is based on robust analysis

07.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

07.2. Additional information. [Optional]


LEI 08. Processes to ensure fund criteria are not breached

08.1. Indicate which processes your organisation uses to ensure fund criteria are not breached

08.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

ESG issues are discussed at meetings between VER’s portfolio managers and fund asset managers even after the investment is made. If any of the companies in the fund’s portfolio fails to meet the ESG standards applied by VER or if its ESG performance raises questions, VER initiates talks with the asset manager or takes other action to influence the fund’s operations. VER may also exit the fund if its portfolio companies fail to satisfy VER’s ESG standards. However, quick exits from private equity, real estate, infrastructure and private credit funds are not usually possible.

VER engages in passive investing by making investments in fixed-income funds and ETFs. With these investments, ESG performance is assessed before the decision is made. Compliance is verified through passive monitoring because investments in fixed-income and exchange-traded funds are based on a given index, without any consideration of the individual assets to be included in the portfolio. As a rule, VER can dispose of these investment quickly if preferred.

08.3. Additional information.[Optional]


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