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Valtion Eläkerahasto

PRI reporting framework 2017

Export Public Responses

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Indicate what norms you have used to develop your investment policy that covers your responsible investment approach.

01.5. Describe your organisation’s investment principles, and overall investment strategy, and how they consider ESG factors and real economy impact.

INVESTMENT STRATEGY

The State Pension Fund’s ambition is to be a valued and successful pension investor whose activities are characterised by a high standard of professional skill and ethical conduct. At the same time, the Fund seeks to clarify and promote its corporate image as an independent portfolio investor.

In its operations, VER is called upon to ensure the security, return and convertibility of its investments as well as their due diversity and distribution. Investments have been spread and diversified as customary in the employment pension system.

VER is a long-term investor serving as a buffer fund whose returns may fluctuate sharply over short time spans. All investment decisions are based on target return and the yield potential offered by prospective investments with due regard to the risk involved. Risks are spread by investing in different asset classes, markets, industries, instruments, companies, sovereign bonds and maturities.

VER pursues a policy of responsible investment in respect of all investment categories. However, actual policy implementation may vary according to asset class because the latitude available for the application of the underlying principles varies.
 

01.6. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

RESPONSIBLE INVESTING

For VER, responsible investment implies effective and consistent observance of the investor’s responsibility. It encompasses monitoring the responsibility and sustainable development of target companies, as well as conducting responsibility-related dialogue with these and with external asset managers.

VER pursues a policy of responsible investment in respect of all investment categories. However, actual policy implementation may vary according to asset class because the latitude available for the application of the underlying principles varies.

VER has signed the United Nations Principles for Responsible Investment (PRI) and complies with the Responsible Investment Guidelines issued by the Finnish Pension Alliance TELA.
VER is a member of Finland’s Sustainable Investment Forum (FINSIF). This is the Finnish contact organisation for the PRI, and it promotes awareness of responsibility within financial management and investment-related decision-making.

ETHICAL AND SUSTAINABLE INVESTING

In its responsible investment operations, VER observes the following principles of ethical and sustainable development:

Ethical investment refers to avoiding certain industries (companies with significant portions of revenue coming from arms, alcohol, tobacco, gambling or adult entertainment).
Sustainable investment refers to considering ESG (environmental, social and governance) factors in the investment process.

MONITORING AND REPORTING

The ethical principles are applied in all direct and fund investments. The sustainable development principles are applied by using ESG criteria in evaluating investment targets. The ethical and ESG factors are included in the investment decisions. VER is aware of the fact that these principles may be difficult to abide by in the case of certain complex investment instruments.

The fulfilment of responsibility principles is evaluated regularly and action is taken where necessary. Asset managers are also expected to observe the ESG factors, and the extent to which they do is periodically assessed.

With regard to decisions on new investments, compliance with the guiding principles is ensured during the course of preparation. Existing investments are monitored. If necessary VER influences as a shareholder to improve their performance. As a last resort, VER may relinquish the investment. Under the UNPRI scheme, the signatories are required to report. The reporting model is extensive requiring nformation on compliance within UNPRI's principals of


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Social responsibility implies a specific obligation to respect and comply with international conventions. For VER, this means the UN Global Compact principles and related international regulations concerning human rights, rights at work, environment and anti-corruption. Additionally, VER seeks to refrain from investing in industries that may involve questionable aspects in terms of social responsibility, such as arms, alcohol, tobacco, gambling and adult entertainment.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          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.
        

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