In response to growing climate concerns, Varma Mutual Pension Insurance Company has renewed its climate targets to accelerate decommissioning of coal-fired power plants, exclude oil exploration and hold a carbon-neutral portfolio by 2035.
The new Climate Policy for Investments outlined by Varma sets 2025 as the deadline for exiting thermal coal investments.
Hanna Kaskela, director of responsible investment at Varma, said: "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".
2025 is also the target for one-fifth of the investment portfolio to comprise investees that "directly or indirectly mitigate the advancement of climate change".
They aim to achieve this by seeking investment in companies and investees that "have low emissions, provide solutions for reducing emissions, promote the use of renewable energy or offer carbon sinks".
Varma has set 2027 as the goal to reduce the proportion of greenhouse gas emissions in relation to revenue by 50% from the 2016 level and oil exploration is to be excluded by 2030.
In relation to real estate, Varma aims to reduce carbon dioxide emissions of its direct real estate investments by switching to fossil-free electricity by 2025 and fossil-free heating by 2030.
Varma has said it will seek BREEAM environmental certification for all "significant properties" by 2025.
Varma's new goals target a 50% share of electricity generation investments to be renewables within private equity funds by 2030. For index funds, the share of low-carbon funds will increase to 35% by 2025.
Varma first released its Climate Policy for Investments in 2016 and according to the new policy, the climate targets will be updated every three years and will cover all asset classes.
Reima Rytsölä, CIO of Varma, said: "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 two-degree limit.
"New information about climate change and its impacts has come to light, which means we must also renew our climate targets."
Kaskela added: "We pay close attention to our choice of funds and fund managers. Together with other investors, our goal is to engage with fund managers to encourage them to take climate perspectives into account in their operations as part of responsible investment."
This article was first published on sister website Investmentweek.co.uk