Varma Mutual Pension Insurance Co., Helsinki, said Thursday that it will incorporate human rights as sustainability risks in its investments, operations and supply chain.
Varma, which managed €56.4 billion ($54.9 billion) at the end of September, said in a news release that after assessing the human rights risks and impacts of its operations, it established principles for human rights and a commitment to address violations that could impact investments.
"Human rights have become increasingly important in the past few years. Russia's war of aggression against Ukraine also brought sustainability themes related to governments' actions under scrutiny in a new way. As global political events have unfolded, we have taken an even closer look at the sustainability of our investments in terms of geography and governments," said Hanna Kaskela, sustainability director, in the news release.
Varma monitors investments, including private credit, for possible human rights violations by screening for norm violations.
Violations are classified into one of three categories: blacklisted investments, investees that are involved in an engagement process, and investees that are on an observation list. Its means of engagement vary by those categories. This year, Varma had 67 active engagements, independently or with other investors, to address violations of international human rights agreements.
"Monitoring compliance with international agreements and national laws on human rights in investments is part of identifying sustainability risks," Varma said in the release.
Varma's guidelines on human rights risks and impacts extend to its personnel and suppliers, who, if requested, will have to demonstrate controls in place to ensure that human rights are realized in their operations and supply chain.
The approach follows the United Nations Guiding Principles on Business and Human Rights, including its human rights due diligence process that calls for companies to identify, prevent, mitigate and address the negative human rights impacts of their operations.
Screening investments and operations for human rights issues can help identify risks early, according to a study released April 20 by Business for Social Responsibility, Human Rights Roadmap for Transforming Finance.