Finnish earnings-related pension provider, Varma, has made an approximate €50m seed-stage investment in the responsible investment of the world's largest asset manager BlackRock ETF.

The ETF is a listed fund that invests in euro-denominated corporate bonds and will reduce investment emissions in line with the Paris Climate Agreement.

“Varma's goal is a carbon-neutral investment portfolio by 2035, and investing in the fund will support our work to achieve this key sustainability goal. A fund that meets the benchmarks under the Paris Climate Agreement and takes a wide range of responsibility issues into account is a suitable addition to our corporate loan portfolio,” Varma senior portfolio manager, Ann Brännback, said.

According to Brännback, Varma welcomes ETF funds to the market, which will help investors adapt their portfolios to the goals of the Paris Climate Agreement. The Paris Climate Agreement aims to limit global warming to 1.5 degrees compared to pre-industrial times. This is BlackRock's first fixed-income product under the Paris Climate Agreement.

The fund invests in euro-denominated corporate bonds and follows the recently launched Bloomberg MSCI index. The ETF's absolute greenhouse gas emissions and carbon intensity will be 50 per cent lower than the conventional index, with a target of a 10 per cent annual reduction in the future.

The fund will increase the weight of issuers that meet their carbon reduction targets. In addition, the fund's corporate responsibility profile will be improved by excluding companies with oil and gas, coal, disputed weapons or tobacco, as well as highly polluting electricity generators, companies that violate societal standards and companies with a low ESG rating.

According to Brännback, the fund is in line with Varma's principles of responsible investment and Varma's soon-to-be-published revised investment climate policy goals.

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