More asset owners across Europe have been accelerating their timetable to exit from coal-related investments in an effort to reduce their carbon emissions to zero by 2030 in line with European Union objectives.
The most recent investor to shorten its carbon reduction target was Finland's €47.4 billion ($52.2 billion) pension company Varma Mutual Pension Insurance Co., Helsinki. After the €33 billion Etablissement de Retraite Additionnelle de la Fonction Publique, Paris, announced changes Nov. 14 to accelerate its timetable, Varma said Monday it is gearing up to have a fifth of its investment portfolio made up of companies that stop the advancement of climate change by 2025. Varma will focus on low-emission companies that promote renewable energy.
"Over the past year, it has become clear that emissions must be cut much faster than previously thought in order to keep global warming within the 2-degree limit. New information about climate change and its impacts has come to light, which means we must also renew our climate targets," Varma CIO Reima Rytsola said in a news release.
"We believe that carbon-efficient companies who are reducing their emissions also have the best chance of success," Mr. Rytsola added.
In addition, Varma updated climate targets across its asset classes. In equities and corporate bonds, the pension fund by 2027 aims to divest 50% of firms whose revenue is linked to greenhouse gas emissions.
In addition in equity investments, oil exploration will be entirely excluded by 2030. In index funds, the share of low-carbon funds will increase to 35% by 2025.
"Our goal is to have the companies that we engage with decommission their coal plants by 2030. We see no future for coal-based electricity generation," said Hanna Kaskela, Varma's director of responsible investment, in the news release.
In real estate investments, Varma wants to reduce the carbon dioxide emissions of its direct real estate portfolio to fossil-free heating and electricity in its properties by 2030 and 2025, respectively.
Varma also said in its private equity fund investments it will increase renewable energy to 50% of its electricity generation investments by 2030.
