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Valtion Eläkerahasto

PRI reporting framework 2017

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You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes

Outputs and outcomes

SAM 11. Percentage of externally managed assets managed by PRI signatories

11.1. Indicate approximately what percentage (+/- 5%) of your externally managed assets are managed by PRI signatories.

80 %

11.2. Describe how you ensure that best RI practice is applied to managing your assets

          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.
        

Measures

          VER expects the portfolio companies to have in place an ESG policy and comply with international standards based on the UN Global Compact principles. VER monitors the carbon footprint of the companies in its portfolio and seeks to reduce its footprint in the future. This can be accomplished by selecting 'the best in the industry' companies in the portfolio or reducing the weight of industries generating large carbon dioxide emissions.
        

11.3. Additional information. [Optional]


SAM 12. Examples of ESG issues in selection, appointment and monitoring processes

12.1. Provide examples of how ESG issues have been addressed in the manager selection, appointment and/or monitoring process for your organisation during the reporting year.

Topic or issue
          Active fund investments
        
Conducted by
Asset class
Scope and process

Basically, VER expects the portfolio funds to commit to ESG principles, integrate these issues in its investment decisions and report on its ESG performance to investors. VER prefers funds in which the asset manager has signed the PRI – or is otherwise, on the strength of the evidence provided, deemed to act responsibly – and is thus committed to monitoring the portfolio companies’ compliance with the Global Compact platform. Many asset managers provide ESG reports voluntarily already when marketing their products, and often the information so disclosed meets VER’s ESG requirements.

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.

Outcomes

If the company fails to meet the ESG standards applied by VER or if its performance raises questions, VER initiates talks with the company or takes other action to influence its behaviour. The primary objective is to improve ESG performance, normally a better alternative than exit, both in terms of promoting responsible action and earning a better return on the investment.

Topic or issue
          Passive fund investments
        
Conducted by
Asset class
Scope and process

VER engages in passive investing by making investments in index 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.

Outcomes

The primary objective is to improve ESG performance, normally a better alternative than exit, both in terms of promoting responsible action and earning a better return on the investment.

12.2. Additional information.


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