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Keva

PRI reporting framework 2020

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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

          Ownership policy
        

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

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Keva's basic task is to manage its cross-generational pension liability. The purpose for Keva's investment operation is described in Keva's Investment Beliefs document. The starting point is "The objective of the fund is to generate real investment returns required to meet our long-term pension liabilities under the Act on Keva. This requires us to take on investment risk. Taking on investment risk might at times result in investment losses over short and medium-term horizons".

The timeframe of the investment operation is long: "The long-term nature of our pension liabilities and their predictable cash flows enable an investment strategy aiming for long-term investment results. A long-horizon investment strategy will generate better returns than a short-horizon investment strategy."

An integration of ESG considerations links to the timeframe. "Investment returns are driven by long-term economic growth, which must be sustainable since pensions are, by nature, long-term liabilities. Integrating the dimensions of responsible investment (ESG) into the choice of investments creates long-term added value through better returns and lower risk".

Steering documents were approved by Keva's board

Investment beliefs:

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/investment-beliefs.pdf

A whitepaper explaining the Investment beliefs

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/how-we-invest---investment-beliefs.pdf

Resposible Investment Beliefs:

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/responsible-investment-beliefs.pdf

Responsible investment beliefs by asset class

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/responsible-investment-by-asset-class.pdf

Environmental targets for real estate.

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/keva_environmental_strategy_real_estate_investments__2016.pdf

 

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

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

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

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

02.3. Additional information [Optional].

Below the most important public documents

Investment beliefs with an ESG reference

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/investment-beliefs.pdf

Whitepaper on investment beliefs (for a broader explanation of the beliefs)

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/how-we-invest---investment-beliefs.pdf

Responsible investment beliefs

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/responsible-investment-beliefs.pdf

Responsible investment beliefs by asset class

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/responsible-investment-by-asset-class.pdf

Environmental strategy for real estate investments

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/keva_environmental_strategy_real_estate_investments__2016.pdf

Ownership policy (currently only in Finnish)
https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/sijoitukset-talous-ja-raportointi/omistajaohjauksen-periaatteet.pdf

 


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.

The main general company-wide policies are discussed in Keva's code of conduct:

https://www.keva.fi/globalassets/2-tiedostot/tama-on-keva--tiedostot/keva-code-of-conduct-eng.pdf

In the external equity and fixed income investments, most significant conflict of interest relates to such unrecognized or emerging principal-agent- problem which jeopardizes the long-term return potential. 

Aligning the interest with the selected external asset managers is a critical, prioritized matter both in pre- and post-due diligence phase. Much of this relates to ensuring the same long-termism is consistently shared by both parties, and that the long-termism is enforced through e.g. appropriate incentive mechanisms.

However, there are occasionally incidents where transparency and predictability in the manager’s actions and long-term performance deteriorates. This includes e.g. shift in the firm’s focus, departure of key people, adverse changes in the ownership or investment style drift.  As a long term investors, we have patience to evaluate investment managers’ actions and performance over an extended time frame and strive for assessing the potential causalities of such changes in an objective manner. Severe conflicts of interest may, however, lead to termination of the investment strategy.

In the internal management, access to personnel ownership information of the people who are responsible for investment decisions is available on the website (code of conduct).

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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