Finnish earnings-related pension provider Varma is shifting its responsible investment policy towards impact and away from exclusion.

It argued that promoting responsible practices does not happen by excluding investment targets, but by being part of the change.

Varma director of responsibility, Hanna Kaskela, said: “Shareholders have the opportunity to influence the companies they invest in and promote issues that are important to them in the companies’ operations.

“When we receive information about a company, we can monitor its development and make decisions based on that information. This is particularly important in adapting to climate change and in issues related to artificial intelligence and supply chain responsibility.”

She stated that people want to see “concrete results,” not just a list of things that Varma is not doing.

Therefore, Varma has updated its responsible investment principles so that it will no longer exclude investment targets on ethical grounds.

Varma development manager for responsible investment, Vesa Syrjäläinen, said: “Exclusion is often justified by its signalling effect on other investors. However, this effect is often minimal. Shares sold by responsible investors usually find a buyer on the market.”

In particular, the change will apply to investments in tobacco companies, which the pension company said it will continue to assess in accordance with its due diligence process for high-risk industries.

However, investments in coal and lignite companies will remain “off limits”, Varma said, due to their environmental impact.

Furthermore, controversial weapons manufactured by companies not headquartered in NATO, Japan, South Korea, Australia, New Zealand, or Switzerland (the Indo-Pacific Four) are also excluded.

Varma also said that it will focus its influence on Finnish companies, as it believes that it is in an “ideal position to influence the responsibility practices of Finnish investment targets”.

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