Listed equity investments

The listed equity portfolio of the Pension Fund contains both direct equity investments and mutual fund investments.

Direct equity investments

The Church Pension Fund owns direct Finnish and European equities through discretionary asset management agreements. A discretionary asset management agreement means that the Church Pension Fund is listed as an owner in the shareholder register, but a mandate manager is authorised to make the investment decisions on behalf of the Pension Fund. The agreement specifies the limitations of the investment activities, including criteria for responsible investment, and the asset manager must manage the Pension Fund’s investments in accordance with the agreement. According to the agreement, the asset manager undertakes to consider ESG issues in its investment decisions, to serve as active owners and to report on its activities.

The Pension Fund participates in the annual general meetings of domestic listed companies in co-operation with its asset managers. The Pension Fund participates in the annual general meetings of European listed companies through an external proxy voting service provider.

Indirect equity investments

In addition to discretionary asset management agreements, the Pension Fund holds equity funds in different geographical areas. The Pension Fund selects asset managers that have proven their commitment to responsible investing by signing the Principles for Responsible Investment (PRI) and by drafting their own responsible investment policies. Such asset managers consistently incorporate ESG issues into their investment analyses through different methods, take advantage of their shareholder rights at annual general meetings and discuss responsible practices with companies.

The Pension Fund carries out a biannual, norm-based screening of all its equity investments and participates in engagement activities.

Equity index investments

In order to achieve a tactical allocation, the Pension Fund uses so-called passive investment methods such as equity index funds. Equity index funds offer the Pension Fund a liquid and cost-efficient means of participating in different equity markets. They facilitate the smooth change in allocation between the different market areas within the stock portfolio. The purpose of index funds is to acquire market-specific emphasis, not to focus on individual companies.

The asset manager that administers the Pension Fund’s equity index funds complies with a broad set of sustainability criteria. All index funds use norms-based screening. No investments are made in companies that violate international norms concerning human rights, labour law, corruption, and the environment. In addition, investments are not made in companies that produce tobacco, alcohol, cannabis, weapons, or that offer gambling or adult entertainment activities. Investments are also not made in companies extracting fossil fuels (coal, oil, and natural gas) or in oil sands. Companies with large fossil fuel reserves are also excluded. All index funds have a defined climate objective. In addition, all index funds actively exercise their voting rights at annual general meetings and engage in active dialogue with the investment object companies.