Principles for Responsible Investment

Responsible investment takes key factors related to environmental (E), social (S) and governance (G) matters into account in investment decisions.

From an investor’s perspective, making allowances for sustainability does not conflict with return expectations. At Varma, the goal of responsible investment is to reduce risks and to identify investees that benefit from responsible operations as well as the return potential of such investments. Varma’s principles for responsible investment cover all asset classes and are applied differently depending on the asset class and type of investment.

Active ownership and engagement are an integral part of responsible investment. The active ownership and engagement principles describe Varma’s engagement goals, focus areas, methods and reporting.

Varma has signed the UN’s Principles for Responsible Investment.

UN’s Principles for Responsible Investment on PRI website

Responsibility influences our investment decisions alongside financial factors. Responsible investment at Varma is guided not only by our strategy, sustainability programme and principles for responsible investment, but also by Varma’s:

• environmental policy 
• ownership policy
• active ownership and engagement principles
• annual responsible investment targets that are defined for each asset class

In analysing responsibility, Varma focusses on the most material responsibility aspects related to the specific industry and asset class.

Varma has published an environmental policy. Varma has identified climate change and biodiversity loss as significant risks in its investment portfolio. As regards climate change and biodiversity, we will further develop our investment portfolio by:

1. investing in companies that enable a change towards lower emissions and whose business offers solutions for resolving climate-change and biodiversity-loss issues

2. fostering collaboration in the financial markets in order to promote climate change mitigation and adaptation as well as the mitigation of biodiversity loss

3. focussing on analysing the material financial risks related to the environment in the investment portfolio

4. transparently disclosing the material environmental impacts on our investments and the impacts of our investments on the environment.

Varma’s ownership policy outlines Varma’s activities as a major shareholder. We regularly meet with the management and boards of directors of the companies in which we have a holding, especially companies in which Varma is a large shareholder. We also participate in general meetings of shareholders and shareholders’ nomination boards; in some cases, Varma is represented in the company’s Board of Directors.

Our engagement focusses on companies where our engagement opportunities and holdings are significant. We especially focus on domestic companies and fund management companies, as well as the rest of the value chain.

Varma engages with the companies it invests in also with other investors, for instance, through collaborative initiatives and partnerships. Through its engagement, Varma also strives to promote sustainability and sustainability reporting to investors. Our aim is to promote the implementation of the UN’s Sustainable Development Goals, both directly and indirectly.

Varma requires that its investees comply with laws and international standards and agreements. Compliance with laws and standards is monitored by screening our portfolios on a regular basis.

The active ownership and engagement principles describe Varma’s engagement goals, focus areas and methods, as well as how engagement reporting takes place.

Significant change is brought about through investments and engagement, not through exclusion. That is why we focus on due diligence and active ownership, which enable transparent and strategic engagement. 

Varma has also identified industries with a pronounced need for due diligence. Due diligence concerns the following industries:

• Industries significantly exposed to climate risks, such as the oil and gas, electricity and heat production, automotive, mining, concrete, building materials, forestry, transport and chemical industries
• Industries significantly exposed to nature risks, such as food, pharmaceutical, and cosmetics industries, packaging material manufacturers, fashion and luxury goods industries, and waste management companies
• Alcohol
• Tobacco
• Legal cannabis products
• Adult entertainment
• Gambling
• Defence sector
• Companies with verified involvement in controversial weapons and headquartered in NATO countries, the Indo-Pacific Four (Japan, South Korea, Australia and New Zealand), or Switzerland.

Varma has excluded the following from its direct investments:

• Companies with verified involvement in controversial weapons (such as nuclear weapons, landmines, cluster bombs and chemical and biological weapons) and not headquartered in NATO countries, the Indo-Pacific Four (Japan, South Korea, Australia and New Zealand), or Switzerland.
• Companies with coal-based operations accounting for more than 5 per cent of their net sales, production or production capacity. The exception to this general rule is companies that have a science-based target of reducing emissions (SBTi).

Varma’s tax strategy and principles are laid down in its tax policy. 

Varma’s Board of Directors approves the Principles for Responsible
Investment.

Updated: January/2026