Finnish pension company Ilmarinen has invested €580m in a climate-focused equity exchange-traded fund (ETF), bringing its total new investments in ETFs since the start of April to €5.19bn.

The latest investment sees Ilmarinen as an anchor investor in the Amundi MSCI Europe Climate Action UCITS ETF.

It also recently invested €2.75bn in the BlackRock climate-focused iShares ETFs and €1.86bn in the climate-focused equity ETF, Xtrackers MSCI USA Climate Action Equity ETF.

The Amundi ETF selects investees based on climate indicators and Ilmarinen said its investment continued its investment strategy that has a strong focus on climate change.

In its investment strategy, the company will shift from funds taking sustainability into account more generally to a focus on climate factors in fund investments.

After the investment, more than 95 per cent of Ilmarinen’s passive equity portfolio will track the indices built using the MSCI Climate Action methodology.

In the methodology, companies in each sector are rated using four climate indicators: Current emissions, rate of emission reduction, business focused on climate opportunities, and climate risk management.

Following a sustainability screening, the top 50 per cent of companies from each sector is included in the index.

“Europe has been a leader in mitigating climate change,” commented Ilmarinen senior portfolio manager, Juha Venäläinen.

“The expansion of emissions trading and tightening of climate regulation increase companies’ cost pressures but also offer new markets for innovative products.

“The Amundi MSCI Europe Climate Action UCITS ETF investment will achieve a Europe exposure in Ilmarinen’s passive equity portfolio to companies which we believe have a chance of performing better than their competitors when the business environment changes due to climate warming.

“We believe that for investors, these companies offer a more profitable investment in the long run than their competitors.”

Ilmarinen head of responsible investment and sustainability, Karoliina Lindroos, added: “The investment in the Amundi MSCI Europe Climate Action UCITS ETF also supports Ilmarinen’s goal of achieving a carbon neutral investment portfolio by the end of 2035.

“We consider the investment to be a significant step towards achieving this goal.”

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