Stockholm (NordSIP) – Nordic institutional investors continue to lead the way in aligning their emission reduction goals with the Paris Agreement objectives through the adoption of science-based targets. On 6 October, Varma became the first Finnish pension insurance company to receive official validation for its emission reduction targets, which are based on the Science Based Targets initiative (SBTi). This achievement is particularly noteworthy, as globally, only two other pension companies—Danish AkademikerPension and PensionDanmark—have thus far succeeded in gaining SBTi approval for their targets.
More than 4,000 businesses worldwide are already working with the SBT initiative, which has firmly established its position as the leading international framework that promotes best practices in science-based target setting and offers a range of target-setting resources and guidance. A joint initiative of the Carbon Disclosure Project (CDP), the UN Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF), SBTi also provides independent assessment and validation of companies’ targets in line with its strict criteria.
“It is very important to us that our climate targets are based on science,” comments Hanna Kaskela, Senior Vice President of Sustainability and Communications. “The climate is warming at an alarming rate, and emissions must be reduced immediately if we want to stop global warming. We want to be sure that our targets are aligned with international climate agreements,” she stresses.
More specifically, Varma’s science-based target is to reduce the greenhouse gas emissions related to its own operations (Scope 1 and 2) by 60 per cent by 2030 compared to the 2021 level. Emissions from Varma’s own operations arise from the use of company cars and the real estate portfolio’s carbon dioxide emissions, which are caused by the consumption of electricity and heat Varma procures for its rental properties, i.e., apartment buildings and office premises. Given that Varma is a major real estate investor in Finland, these emissions are significant.
However, Varma’s targets are not limited to Scope 1 and 2 only. In terms of indirect emissions (Scope 3), a target has been set for the pension company’s investments in listed equities, corporate bonds, and real estate funds, which make up 45 per cent of Varma’s EUR 57.4 billion investment portfolio. In these asset classes, the target is to increase the share of companies committed to the SBT initiative to 51 per cent by 2027. In 2021, 28 per cent of these investees had set their own science-based targets.
“Our objective is to increase the share of companies that have set science-based targets in our investment portfolio,” says Kaskela. “We encourage companies to set their own climate targets. When our investee companies set ambitious emission reduction targets for their own operations, our overall emissions also decrease. According to our research, 98 per cent of our overall emissions stem from our investees. Due to the nature of our operations, reducing indirect emissions is very significant,” she adds.
Varma’s targets, now validated by the SBTi, are short-term. The company is, however, also committed to setting long-term targets. Meanwhile, the progress made in achieving the targets will be tracked in stages and reported to the SBTi.
