Responsible investing is taking care of the future pensioners

The responsibility for pension funds extends over decades. We create life-long security and ensure that our customers receive their earnings-based pensions both now and in the future. Responsibility is an essential part of Elo’s strategy and values. Responsible investment is also underpinned by our broader societal mission – our responsibility to policyholders and the insured.

How do we invest responsibly?

We invest earnings-related pension funds profitably and securely in accordance with our strategy and operating principles. We ensure sufficient solvency in all market situations and manage pension assets cost-effectively and responsibly. By acting responsibly, we manage the risks associated with investments, achieve a good return, and identify societal changes and systemic risks.

We assess the sustainability of our investments from the perspective of environmental responsibility, social responsibility and good governance. We believe that the only way companies achieve long-term sustainable results is through sustainable business.

Our Principles for Responsible Investment guide the sustainability of our investment activities. The principles apply to all our investments, and when investing, we also take into account the specifics of each asset class and form of investment.

The areas of responsible investment are:

Our principles for responsible investing guide the sustainability of our investment activities. The principles apply to all our investments, and when investing, we also take into account the specific characteristics of asset classes and investment types.

For us, advocacy means engaging in a dialogue with our investees. Our goal is to develop our investees' operating methods to be more sustainable. We influence our investees both individually and in collaboration with other investors and stakeholders. Investees can be most effectively influenced through projects involving a significant number of other investors. With public commitments and statements, we draw attention to important issues.

Elo's advocacy policy for investments describes the principles, practices and objectives of advocacy.

In matters related to climate change, our investment activities are guided by our climate policy for investments. We are committed to a carbon neutral investment portfolio in line with the goals of the Paris Agreement. In 2021, we joined the Net Zero Asset Owner Commitment for carbon neutrality under the Paris Aligned Investment Initiative (PAII). We have taken into account the commitments and objectives of the initiative in our climate policy.

We implement a carbon-neutral investment portfolio by

reducing the carbon footprint
increasing investments in sustainable solutions
reducing the proportion of fossil fuel production in investments
taking into account the risks and opportunities of climate change for the various asset classes and in our investment strategy and allocation work
examining how aligned the objectives and strategies of our investees are with the objectives of the Paris Agreement and
influencing businesses and other economic operators in line with our climate policy objectives

Learn more about our climate policy.

For investors, the loss of biodiversity is an economic systemic risk similar to climate change. Therefore, its effects should be identified. The profitable and secure investment of pension funds also requires that biodiversity is taken into account.

We have created a roadmap for taking biodiversity into account. The roadmap consists of four phases: familiarisation, analysis, integration and reporting. The stages run in parallel and require constant familiarisation, self-assessment and development.

Biodiversity roadmap

Sustainable development means development that secures good living opportunities for current and future generations. In autumn 2015, the UN announced the Sustainable Development Goals (SDGs), which address the world's most pressing environmental and social challenges. The SDGs include 17 Sustainable Development Goals aim at sustainable development in the areas of economy, people’s wellbeing and the environment.

We contribute to the achievement of the UN Sustainable Development Goals, and our goal is to increase investments in sustainable solutions. Sustainable solutions mean activities that aim to meet significant societal and ecological challenges. These include products and services related to areas such as energy efficiency, alternative energy, pollution reduction, healthcare, waste management, and education.

Our definition of the sustainability of our investments is based on national legislation as well as international standards on business operations, the environment, human rights and corruption. We expect investee companies to comply with the following international standards, among others:

The UN Global Compact, based on UN declarations on human rights, the environment and corruption
OECD Guidelines for Multinational Enterprises
ILO labour conventions and recommendations
United Nations Guiding Principles on Business and Human Rights (UNGP)

We monitor the activities of investee companies based on information provided by an external service provider and other analytics services, as well as public data sources. If we detect a breach in the company’s operations, we investigate the severity and extent of its effects and the company’s response to the shortcomings. We engage with the company either independently or in collaboration with other parties, or we monitor the situation through our service provider. The investment may be divested if the company does not take credible measures to remedy the breaches. In fund investments, the monitoring of any shortcomings and influencing their correction are mainly done by fund managers, with whom we engage in regular dialogue.

We have excluded certain industries from our direct investments on ethical or climate change grounds:

tobacco manufacturers
controversial arms companies (cluster bombs, landmines, biological and chemical weapons, nuclear weapons and depleted uranium)
companies that derive 15% or more of their revenue from the production or use of coal in energy production without a clear strategy to reduce the use of coal, and companies with new coal investments
energy companies that derive 5% or more of their revenue from Arctic oil or gas production or the exploitation of oil sands

We annually review the investment universe of sovereign debt investments and exclude those countries that are at a very weak level in terms of responsibility and where there is no sign of a turn for the better.

Climate targets for investments

Elo is committed to responsible investing and combating climate change. Below are the concrete climate targets that guide our investment activities toward a low-carbon and sustainable future.