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The Church Pension Fund, Finland

Initial target disclosure: September 2022

Portfolio level

Portfolio level – Portfolio decarbonisation reference target

Baseline date: 31 December 2020

Our Climate Strategy update in 2021 used the most recent positioning as a reference target point.

Baseline performance: 109.2 tC02e/EUR Mn revenue (WACI)

Target year(s): 2025, 2035


  • 2025: -25% CO2e/EURMn revenue; and direct real estate heating fossil-free
  • 2035: Net zero

GHG scopes included: Scope 1 & 2.

Current interim target does not consider scope 3 emissions, but they are disclosed annually. The plan is to phase in scope 3 emissions over time.

Asset classes in scope:

  • 2025: Listed equity and corporate fixed income; direct real estate investments (heating fossil-free)
  • 2035: The whole fund

Methodology: The Church Pension Fund’s Climate Strategy published in 2021 was developed based on the Net Zero Investment Framework recommendations.

Net zero scenarios: Current emissions already approximately 50% of that of the benchmark, whereas per IEA SDS scenario, the portfolio emissions will exceed its budget in 2042.

The Church Pension Fund wanted to set a short-term interim target that will continue to take us in the right direction and reassess in 2025 our decarbonization pace as the methodologies continue to develop across asset classes.

Emissions metrics: We disclose emissions both in terms of intensity as well as absolute emissions. We will continue to monitor both and reassess the targets if necessary.

Portfolio level – Investment in climate solutions target

Quantitative target

Baseline date: 31 December 2020

Baseline performance: 4.4% of AUM in green investments

Target year: 2025

Target: 10% of AUM allocated to green investments

Methodology: Qualitative assessment of thematic investments by using the EU Green Taxonomy and SFDR Article 9 to support the classification. No scenarios used to determine the target level as of today.

Asset level

Asset level – Portfolio coverage target

Baseline date: To be determined in the next Climate Strategy update.

However, the Pension Fund annually monitors the percentage of listed equity and corporate fixed income holdings that have set Science-based targets under the SBTi.

In addition, the Church Pension Fund annually tracks the Carbon Risk Rating score (CRR, developed by ISS ESG) for its listed equity and corporate fixed income issuers. The CRR assesses how an issuer is exposed to climate risks and opportunities, and whether these are managed in a way to seize opportunities, and to avoid or mitigate risks. It provides the Church Pension Fund with critical insights into how issuers are prepared for a transition to a low carbon economy and is a central instrument for the forward-looking analysis of carbon-related risks at portfolio and issuer level.

Baseline performance: To be determined in the next Climate Strategy update.

Percentage of listed equity and corporate fixed income holdings that have set Science-based targets under the SBTi as of 31 December 2021:

  • committed SBT 14%
  • approved SBT 21%.
  • ambitious target accounts for 14%, non-ambitious 14% and no target 36%.

The average CRR score (scale 0-100, 100 being the highest score) for the portfolio was 53 as of 31 December 2021.

Target: To be determined in the next Climate Strategy update.

Asset classes in scope: The current assessment covers listed equity and corporate fixed income.

Data sources: Science-based targets under the SBTi; ISS ESG Carbon Risk Rating score (CRR)

Asset level – Engagement threshold target

Target: To be determined in the next Climate Strategy update.

Approach: Currently supporting engagement through CA100+ and the CDP’s Science Based Targets Campaign. In addition, the Church Pension Fund focuses especially on the CRR scores of the highest emitters in the portfolio and use this information as a basis for engagement dialogue with external fund managers responsible for selecting the companies.

Additional information

Further work: The Church Pension Fund plans in due course to explore and research climate data opportunities and availability in illiquid asset classes.

Fossil fuel investment: The Church Pension Fund avoids companies that have a significant financial risk because of climate change and whose activities are not in line with the net zero trajectory. For fossil fuels, the Church Pension Fund has defined the exclusion criteria used to manage direct investments.

Most of the asset managers and funds used by the Church Pension Fund have excluded coal mining companies and electricity companies that significantly benefit from coal power from their investment portfolio. Some have even more extensive exclusion criteria in place for fossil fuels. The Church Pension Fund monitors the exclusion criteria of asset managers and funds and their development through an annual ESG survey.

The Pension Fund favours funds and asset managers that comply with and report transparently on climate change principles. In addition, the public commitment of asset managers to a net zero target has been highlighted as an important criterion in the selection of funds.

See Climate Strategy of the Church Pension Fund (2021), page 9 on Exclusion Criteria.

Operational emissions: Carbon Neutral Church by 2030

The Church Pension Fund, Finland case studies

The Church Pension Fund Finland: Engagement and monitoring of managers’ climate performance

27 March 2023

Commitment 7: Engaging with industry, including asset managers and data providers