Responsible Investing

For VER, responsible investing means an effective and consistent policy of considering investor responsibility. It calls for monitoring the performance of portfolio companies in terms of corporate social responsibility (CSR) and sustainability and a dialogue concerning CSR actions with the companies and third-party asset managers.

VER pursues the policy of responsible investing in all investment categories. However, actual policy implementation may vary according to asset class because the applicability of the underlying principles varies.

In its investment activities, VER applies an ethical code of conduct and the principles of sustainable development as follows:

– Ethical investing means avoiding investments in certain sectors, more specifically companies that generate a significant percentage of their revenue from armaments, tobacco, gambling or adult entertainment.

– Sustainable investing means the inclusion of ESG (environmental, social and corporate governance) criteria in the investment process. 

Responsiblity management as part of risk management

VER perceives responsibility as part of risk management. VER’s operations are governed by the principles of responsible investing adopted by its Board of Directors and its shareholder control policy that sets out VER’s objectives and business practices, such as exclusion criteria and the exercise of control in VER-owned companies. VER’s principles of responsible investing were last updated in 2020.

The principles are applied to direct and fund investments, and the investment decisions are governed by ethical and ESG criteria. VER is aware that compliance with the principles may be difficult with certain investment instruments. With regard to decisions on new investments, compliance with the guiding principles is ensured during the course of preparation. Existing investments are monitored and, if necessary, influence is exercised in the portfolio companies to improve performance. As a last resort, VER may dispose of the investment.

VER’s CSR and sustainability performance is reported to the Board of Directors on a regular basis, and the management team addresses CSR issues as appropriate. As far as asset managers are concerned, VER evaluates their performance in complying with the ESG criteria. Sustainability performance is assessed regularly and action taken when necessary. 

Monitoring and reporting as part of the strategic approach

VER ensures, for its own part, that VER-owned companies are duly prepared for ESG-related risks and opportunities. As stated in its principles of responsible investing, VER will not make any equity or fixed-income investments in companies which generate more than 10% of their revenue from operations based on the use of coal or lignite. Additionally, VER refrains from making any direct equity or fixed-income investments in the following industries:

  • Tobacco companies
  • Arms manufacturers
  • Drugs, excluding medical use, distribution and manufacturing
  • Adult entertainment companies
  • Gambling companies

Additionally, VER has identified industries with an elevated need for ESG monitoring:

  • Industries with a significant exposure to climate risks, such as oil and gas, power and heat generation, automotive, mining, concrete and transportation industries
  • Alcohol

A key consideration in VER’s responsible investing principles is the carbon footprint of its investments, which is specifically monitored by watching the carbon intensity indicator of the portfolio. VER is committed to reducing the carbon footprint of its equity portfolio by 10% during 2020–2023 and also seeks to establish equivalent reduction targets for its corporate loan portfolio. At the same time, VER monitors its own carbon footprint relative to the benchmark index, which it seeks to outperform. VER’s carbon risk and the measures it calls for are actively monitored.

VER has commissioned third-party service providers to report on the ESG performance of the individual portfolios and any regulatory infractions as well as carry out screening related to controversial weapons.

Exercise of influence

VER exercises influences through shareholder control and cooperation. VER has defined specific principles for shareholder control designed to promote its objectives in companies in which VER holds significant interests and in which it perceives real opportunities for exercising influence. Portfolio managers monitor the operations of the portfolio companies and seek to contribute to the attainment of the objectives established for VER-owned companies. VER’s primary tool for exercising influence is to discuss policies with its portfolio companies. VER’s portfolio managers meet members of corporate management regularly and engage in an active dialogue concerning sustainability and other topical issues.

VER signed the United Nations Principles for Responsible Investment (UN PRI) in 2011. Additionally, VER is involved in the Carbon Disclosure Project (CDP) and a member of Finsif, Finland's Sustainable Investment Forum. Under the UNPRI scheme, the signatories are required to report on their activities annually. The reporting model is extensive requiring detailed information on compliance with the six UNPRI principles for responsible investment.

VERs board of directors has adopted the principles of responsible investing.