Ninety-six per cent of Finnish earnings-related pension assets are invested in line with the United Nations-backed Principles for Responsible Investment (UN PRI).

Analysis by the Finnish Pension Alliance (Tela) has found that most of the €255bn in earnings-related pension assets are invested responsibly. The analysis examined responsible investment by means of various international commitments. Most of the assets are involved in promoting responsible investment projects and cooperation.

“International responsibility commitments are one way Finnish authorised pension providers can carry out responsible investment. As underwriters or through their external asset managers, pension providers are involved in many commitments and projects that promote responsible investment,” Tela analyst, Kimmo Koivurinne, said.

The analysis examined the responsibility of investing assets from three perspectives.

“The UN PRI is the most important international commitment and are the base for the responsible investment of earnings-related pension assets. Almost all earnings-related pension assets are invested in line with these principles,” Koivurinne said.

At least 96 per cent of earnings-related pension assets have been invested in line with the UN’s PRI. This means €245bn out of a total of 255 billion euros in earnings-related pension assets (amount at the end of 2021). In addition, some of the assets fall within the scope of the principles through the external asset managers used in investment activities, who are required to commit to the principles.

The principles mean that investment activities are committed to caring for the environment, social responsibility and good governance — the environmental, social and governance factors. ESG data are utilised systematically when making investment analyses and decisions.

The other two ways of implementing responsible investment, examined in the analysis, are influencing investment targets and investor cooperation, and measuring and reporting environmental impacts.

“Besides the PRI backed by the UN, for making the analysis we chose various significant influential international projects and environmental impact measurement and reporting commitments. This gives a sufficiently diverse picture of the goals of responsible investment and its practical implementation in the earnings-related pension system,” Koivurinne explained.

When the scale is global, authorised pension providers have an impact on investment targets through international commitments. These allow investors to join forces to influence companies.

“By participating in joint initiatives of large institutional investors, such as the Climate Action 100+ project that originated in the Paris Agreement of 2015, authorised pension providers can influence the operations of large companies that have major environmental impacts,” Koivurinne said.

At least 87 per cent of earnings-related pension assets fall within the scope of the Climate Action 100+ initiative and 62 per cent of the assets fall within in the scope of the Institutional Investors Group on Climate Change, another international body combating climate change. In addition, some of the assets fall within the scope of these commitments through the external asset managers used for investment activities.

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