This spring, we announced our ambition to make climate change and its related policies more prominent in our investments. In order to concretize our work, and present a clear approach to it, we published our Principles for Climate Change in May 2019.
Publication of carbon footprint, divestments and starting engagement processes
Concrete actions included the publishing of the carbon footprints of Evli's equity and bond funds and analyzing the funds’ investments for potential holdings of coal and peat companies. Based on the analysis of the coal and peat companies, we decided to divest three investments in Evli's equity and bond funds, to start engagement with two companies, and to monitor three other companies to verify if they are following their plans to reduce coal usage.
At Evli, decisions to exclude or initiate engagement processes are made by the Responsible Investment Steering Group, which consists of Wealth Management unit executives and the Responsible Investment team. Each investment in a company that exceeded the coal revenue threshold was discussed with the portfolio manager, who gave his own comments on the investment to the Steering Group.
The companies to be excluded had a significant proportion (above 30%) of their revenue from coal mining or the use of it in power generation and do not have any plan to abandon coal. Exclusions are implemented on a six-month schedule.
Companies in the engagement process currently gain more than 30% of their revenues from electricity produced with coal, but these companies have shown positive progress in reducing coal use. During the summer of 2019, we approached these companies to specify their plans to reduce coal use. For companies that exceed the coal revenue threshold (30%) but have a clear plan to reduce coal use, we decided to stand by and monitor how the plan is executed.
Evli became a public supporter of TCFD
In August 2019, we became a public supporter of the TCFD (Task Force on Climate-Related Financial Disclosures) and will be working to begin reporting on TCFD recommendations for Evli Bank in the coming years. The TCFD is an international climate risk reporting framework in which the financial implications of climate risks are incorporated into official financial reporting.
Our work to develop responsible investment continues
In addition to the Principles for Climate Change, we will continue our systematic work to develop responsible investment and transparency in our mutual funds and asset management. At Evli, responsibility is an integral part of all of our funds and investment processes. In addition to various investor initiatives and investor cooperation, we also actively engage in direct discussions with companies on corporate responsibility and assist our clients and other stakeholders with their responsible investment issues.
Text: Elina Niiranen, BBA, Responsible Investment Analyst at Evli and member of Evli’s Responsible Investment team. Elina has been with Evli since 2004 and has experience from different positions within Asset Management. During the last few years, Elina has continued her studies, and in addition to Master Studies, she is also studying Sustainability.