Ilmarinen Mutual Pension Insurance Company
Portfolio level – Portfolio decarbonisation reference target
Baseline date: 2020 (total portfolio):
- Direct listed equity 2020
- Finnish real estate 2018-2020 average
- Corporate bonds 2020 (roadmap under development)
- International real estate 2021 (roadmap under development)
More detailed asset class specific roadmap are being built
- Direct listed equity: 216 tCO2e/MEUR sales (WACI)
- Finnish real estate use phase: 27 CO2e/m2
- Finnish real estate new construction net: 387 CO2e/m2
- Direct listed equity: 2025, 2030, 2035
- Finnish real estate: 2025, 2030, 2035
- Total portfolio: 2035 Net Zero
- Direct listed equity: -30% (2025) and -50% (2030)
- Finnish real estate use phase: -50% (2025) and -80% (2030)
- Finnish real estate new construction: -15% (2025) and -30% (2030)
GHG scopes included: Direct listed equity targets cover scope 1 and 2 emissions. However, we monitor and report scope 3 emissions and investigate the possibility to further set targets. Finnish real estate covers scope 1 and 2 and the material scope 3 emissions (construction and demolition phase).
Asset classes in scope: Direct listed equity and Finnish real estate. We are currently building a corporate bond roadmap and international real estate roadmap. Going forward, our aim is to cover the whole portfolio (one to two asset class specific roadmaps per year).
Net zero scenarios/methodology: Aligned with IEA scenarios from energy technology perspective and the PAII Net Zero Investment Framework. In Finnish real estate, we used data from energy suppliers and their climate roadmaps.
Emissions metrics: We monitor and report annually both intensity-based footprint and absolute emissions (financed emissions) of our direct listed securities portfolios.
We have noticed our listed equity portfolio absolute emissions have increased less than portfolio size, so the portfolio has become more efficient. Corporate bonds financed emissions have decreased, but the portfolio is limited in size.
We are investigating options to include absolute emissions-based targets in the coming years.
Portfolio level – Investment in climate solutions target
Baseline year: 2021
Target year: 2025
Target: by 2025, 1.5 times 2021 level
Methodology: We included both direct and fund holdings.
We’ve run our listed equity holdings through MSCI SDG tool and measured the investees’ exposure to environmental solutions.
Our current data system doesn’t allow product level analysis on our private equity holdings.
We hope to develop our systems going forward and believe we can provide data on private equity in time.
Green infrastructure includes investments in the industries listed by IIGCC except ICT.
Green bonds are labelled green bonds, and we also added our non-listed debt investments in the industries listed by IIGCC except ICT as explained above.
Climate friendly property is property with environmental certificate such as LEED Gold or similar.
Sustainable forestry is certified forest holdings.
Asset level – Portfolio coverage target
Approach: Ilmarinen currently has the following baseline and targets at the total portfolio level:
2020 baseline for direct listed equity: 2.4C degree trajectory
- 2025: below 2 degree
- 2030: below 1.5 degree
Asset level target setting, and monitoring is currently under development. Overall, collecting and analysing data is work in progress in relation to IIGCC alignment criteria.
2020 baseline is 34% (2021: 40%), where our data is based on our service providers’ alignment methodology (i.e. share of portfolio below 2 degree trajectory). One should note that the coverage is 80%. This approach is different to IIGCC’s definition of “aligning companies”.
Data sources: For listed equity we are using service provider data and other open-access sources such as TPI
Asset level – Engagement threshold target
Work in progress: We aim to set a target in the coming years.
Direct and collaborative engagement with most high emitting companies in our portfolio, currently covering over 40% (direct engagement only) of financed emissions. Engagement target is work in progress. For proxy voting we use Sustainability Policy that pays specific attention to climate and other ESG-relevant items.
Methodology: Our targets are directly in line with 50% global reduction target and secondly, we invest in transition which supports real economy decarbonisation.
Operational emissions: Work in progress
Fossil fuel investment: Coal policies for direct listed equity:
- Excluding companies planning new thermal coal investments starting 2021
- Excluding companies with thermal coal extraction revenue starting 2021
Ilmarinen Mutual Pension Insurance Company case studies
Ilmarinen Mutual Pension Insurance Company: Transitioning real estate
23 March 2023