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 three 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 the ESG criteria, 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.
Indirect equity investments
In addition to discretionary asset management agreements, the Pension Fund has mutual funds for equity investments 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 rules. 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 responsibility 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 responsibility criteria. All of the index funds use responsibility screening; no investments are made in companies that violate international norms concerning human rights, labour law, corruption and the environment. Additionally, investments are not made in companies that are involved in coal mining operations or coal burning. Any affiliation with the manufacturing of key components for controversial weapons will also lead to a company being excluded. Furthermore, all index funds actively use the right to vote in annual general meetings worldwide.