Finnish earnings-related pension company Varma has updated its stewardship principles to split investee engagement into two complementary approaches: reactive intervention and proactive advocacy.

Reactive intervention will focus on addressing identified risks and breaches of norms to ensure that investee companies or funds rectify issues and prevent similar incidents from recurring in the future.

Engagement under this approach may be conducted directly by Varma or indirectly through third parties, depending on what is most appropriate for the situation and the investee.

By contrast, proactive advocacy is aimed at promoting sustainable practices in carefully selected areas that are material to long-term value creation and portfolio risk management.

Going forward, Varma intends to focus its engagement efforts where it has the greatest potential to make an impact. As part of this, it has developed new guidelines for engaging with investees, which have replaced the previous principles for active ownership and engagement.

The new principles are based on its strategy, which was revised in 2025, and are aligned with its corporate responsibility programme, which was updated last year.

Announced earlier this year, the pension company will direct its efforts toward areas where it has the greatest potential to make an impact. For Varma, this is Finnish companies and the investment value chain.

Varma head of sustainability, Hanna Kaskela, said: “Advocacy is our most important tool for advancing sustainability, and in responsible investing, what we do as investors is key.

“As shareholders, we can vote at shareholder meetings, serve on nomination committees, and engage in direct dialogue with the company. Our primary goal is to influence – not to exclude companies from our investment portfolio.”

In addition, Varma plans to take a more systematic approach to its advocacy efforts through annual thematic focus areas.

These themes could include, for example, climate, biodiversity and ecosystems, human rights, issues related to the use of technology and artificial intelligence, or other sustainability issues relevant to our investment activities.

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