Sitra’s Responsible Investment Review 2025

Responsibility in Sitra’s investment activities

Sitra invests its assets responsibly and profitably. For Sitra, responsible investment means considering not only return and risk but also environmental, social and governance (ESG) factors in all investment decisions.

Sitra’s responsible investment activities are based on the UN Principles for Responsible Investment (PRI), which Sitra signed in 2015. The Global Compact principles are another international framework.

The practical implementation of responsible investment is based on the Guidelines for Responsible Investment approved by Sitra’s Board of Directors, which was last updated in 2025.

Updates to the Guidelines for Responsible Investment and Climate and Nature Strategies

In autumn 2025, both the guidelines for responsible investment and the climate strategy were updated, and at the same time, the first nature strategy for Sitra’s investments was drawn up. The aim of the updates was to clarify the policies and ensure that the guidelines correspond to Sitra’s current investment activities and take into account the development of responsible investment.

The key changes to the Responsible Investment Guidelines were:

• Biodiversity and human rights were emphasized more strongly as the basic principles of the guidelines.
• References to direct investments were removed, as Sitra no longer makes direct investments.
• The escalation policy was compiled into a single, clearly describable entity.
• The exclusions were tightened, especially for thermal coal and tobacco, and the definition of controversial weapons was clarified.

Minor updates were made to Sitra’s investment climate strategy, and a new nature strategy was drawn up alongside it. The goals already set in the climate strategy remained largely unchanged, but they were refined and expanded to reflect changes in the international framework.

The reforms included:

• The Kunming-Montreal Biodiversity Framework was introduced alongside the Paris Agreement as the basis for the strategy.
• TNFD was chosen as the framework for nature reporting.
• The risk descriptions were expanded to also cover nature risks.
• Sitra committed to adopting international standards for assessing and reporting on nature impacts as they become established.

PRI’s assessment of Sitra’s responsible investment practices

Sitra reports annually on its responsible investment practices to the Principles for Responsible Investment (PRI) initiative, which assesses these practices. Sitra has complied with the PRI principles since 2015.

We reported in 2025 based on the practices of 2024. The last time Sitra reported to the PRI was in 2023 (based on practices in 2022). Reporting for 2023 practices was not carried out because the changes in that year were minor and reporting was voluntary at that time.

Based on the PRI scoring system, Sitra achieved four stars out of five in all the areas assessed, as was the case in the previous reporting round. The summary below shows the scores of the modules and the median results of the respondents.

We achieved high scores, for example, in the reporting of climate-related information in accordance with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), the measurement of temperature scenarios in the investment strategy, the assessment of the sustainability measures of senior management, and the engagement and monitoring of fund investments using a variety of methods. Based on the PRI assessments, we identified areas for development such as the lack of guidelines tailored to each asset class and the need to take human rights into account more comprehensively in the guidelines. The human rights perspective was taken into account in the update of the guidelines for responsible investment at the end of the year.

Based on the 2025 PRI assessments, Sitra’s asset managers’ responsible investment practices are also at a strong level as a whole. Most of the asset managers assessed achieved four or five star scores in key modules, such as sustainability policy, governance, climate action and active ownership. This shows that sustainability has been integrated into investment processes at least in line with the international median level, and in many respects even above.

However, the assessment coverage was exceptionally inadequate, as less than half of Sitra’s asset managers who signed the PRI submitted the results in the 2025 round. This was mainly due to the fact that the PRI offered many signatories the opportunity to skip the assessment reporting for the year in question if they had submitted an extensive report in the previous year. Several asset managers took advantage of this exemption. In addition, some asset managers had only recently joined the PRI and were not yet obliged to submit an assessment. As a result, part of the market value of Sitra’s portfolio was excluded from the new assessment results.

In individual cases, development needs were identified, but these were mainly expected and related, for example, to the learning curves of first-time reporters. On the whole, Sitra’s asset managers’ sustainability work is competitive and provides a good basis for further development.

Funds and responsible investment

Sitra’s investments are mainly implemented through funds. Fund investments are managed by external asset managers, who carry out individual investment analyses and select the investment targets. The minimum requirement is that the asset manager has signed the PRI or has another responsible investment policy.

95 per cent of Sitra’s investment assets are managed by asset managers who have signed the PRI principles. All asset managers of listed equity and fixed income funds comply with these principles, and with the exception of venture capital, the majority of asset managers in other asset classes are also committed to them.

Several of Sitra’s asset managers and funds have set a net-zero target. In addition, many asset managers are committed to the Net Zero Asset Manager Initiative (NZAMI), which serves as a voluntary collaboration platform for operators in the sector. NZAMI’s principles were updated in 2025-2026 due to the withdrawal of major asset managers, such as BlackRock and JP Morgan, as well as regulatory and legal concerns, among other things. Today, the initiative emphasizes the independence of asset managers and no longer requires a specific net zero year or mandatory milestones. The initiative focuses on providing an open platform for assessing climate-related financial risks and opportunities. The majority of asset managers in listed investments are committed to the initiative, while commitment to unlisted investments remains limited.

Our asset managers are also involved in many other initiatives promoting responsible investment (e.g. UN Global Compact, Climate Action 100+, Nature Action 100, SPRING and industry-specific GRESB, BREEAM, FSC).

The EU’s Sustainable Finance Disclosure Regulation (SFDR) entered into force in 2021. Fund products are classified into three categories based on sustainability: Article 6, Article 8 and Article 9. Asset managers are obliged to disclose the category to which fund belongs.

Changes are coming to the EU’s SFDR classifications with the aim of improving the transparency of investment products and harmonising the reporting of sustainability-related information. Sitra actively monitors the development of regulation and updates its own operating models accordingly to ensure up-to-date and responsible investment practices.

So far, Sitra has not set any minimum requirements for the funds in terms of SFDR ratings. The ratings are shown in Figure 3 according to the market value.

Most of the funds in Sitra’s portfolio are in the Article 8 category, which means that they promote sustainability-related factors in their investment process. Article 6 funds are not obliged to take sustainability into account as a key part of the investment process. The most responsible is Article 9, which includes funds that actively seek to achieve sustainability-related objectives. The distribution remained almost unchanged compared to the previous year. The share of Article 6 category funds increased slightly and the share of unclassified funds decreased correspondingly. These include only illiquid funds. The share of Article 8 and 9 category funds remained relatively unchanged.

The analysis company MSCI evaluated Sitra’s listed fund investments in 2025. The ESG rating of the entire portfolio remained at AA, which is the second best category. The majority of the funds selected for the portfolio were classified as leaders, and there were no funds classified as laggards.

Engagement

As a fund investor, Sitra has the opportunity to influence its investments through discussions with asset managers. If engagement does not improve the situation, the last resort is to sell the fund holding. In 2025, there was no need to set active engagement targets for any fund. ESG issues were discussed at approximately every second asset manager meeting.

Sitra conducts industry and norm violation screening based on MSCI’s reporting. The reporting covers listed equity and fixed income funds. In 2025, sector-related exclusions were successfully implemented in all funds. Potential serious norm violations were identified in three companies. The companies in question are subject to engagement measures by relevant fund managers. The number of companies was the same as in the previous year’s screening, but they were different companies.

Unlisted investments (real estate, infrastructure, private debt, private equity and venture capital) are reviewed annually based on the reports submitted by asset managers. No deviations from Sitra’s industry restrictions or significant negative ESG events were detected. The lack of access to information, especially in the private equity and venture capital asset classes, poses a challenge for an in-depth examination of sustainability issues. Asset managers are aware of these shortcomings and reporting is constantly evolving.

Sitra has been a support member of the Climate Action 100+ initiative since 2020 and a member of the Nature Action 100 initiative since 2023. The Climate Action 100+ initiative encourages companies to meet emission reduction targets in line with the Paris Agreement and to report on the risks posed by climate change to their business. Nature Action 100, on the other hand, is an international investor initiative that aims to halt biodiversity loss and promote the preservation of biodiversity by engaging the world’s largest companies with an impact on nature.

Sitra’s investment portfolio included a total of 70 companies included in the Climate Action 100+ and 82 companies in the Nature Action 100 initiatives. Engagement measures taken were asked from nine asset managers whose funds included these companies and who were members in the initiatives. The most common means of engagement were voting, bilateral discussions with companies, discussions with other investors, participation in the engagement teams of the CA 100+ and NA 100 initiatives, and demanding that companies meet the targets set out in the SBTi initiative.

Climate targets

Climate change mitigation is one of Sitra’s most important sustainability goals, and we support, among others, the goals of the Paris Agreement.

Sitra’s climate strategy for investments was published in spring 2021, and it was updated in 2023 and 2025. The long-term objective is that all Sitra’s investments are in line with the Paris Agreement. The concrete objective is to achieve carbon-neutral investment portfolio by 2035 in accordance with Finland’s national target, provided that the investment environment enables the transition. The development of the investment environment in relation to the targets has been clearly slower than hoped, and not all companies have yet been able to reduce their emissions quickly enough. Achieving sustainable results requires time and consistent engagement.

In the reporting and analysis of climate risks, we utilise the international TCFD reporting recommendation and framework (Task Force on Climate-related Financial Disclosures). The TCFD is an international reporting recommendation that instructs companies to report consistently on the financial risks and opportunities of climate change. According to the recommendation, it is important to determine the carbon footprint of investments, assess fossil fuel reserves and low- and high-carbon-emitting investments, as well as monitor the implementation of carbon emission limits in accordance with international climate agreements.

Carbon footprint

The climate impacts and risk of Sitra’s investments are mainly measured using the carbon footprint. At the moment, the most important indicator is weighted carbon intensity, which measures the carbon equivalent emissions of the investees relative to their revenue and weighted by the market value of the investments.

In the short term, Sitra’s goal is to significantly reduce the carbon intensity of its investment portfolio and to remain below the benchmark index. The target was set for the weighted-average carbon intensity of Sitra’s investments to be at least 50 per cent lower in 2025 than in the base year 2020 and at least 75 per cent lower in 2030.

Carbon footprint and intensity numbers include emissions from the company’s own operations (scope 1) and indirect emissions related to purchased energy (scope 2). Indirect emissions (scope 3) are also reported, but no reduction targets have yet been set for them due to the related uncertainty.

At the end of 2025, the weighted carbon intensity of all of Sitra’s listed investments was 68 tCO2e/M€ revenue. This represents a decrease of approximately 10 per cent compared to the previous year. The positive trend has continued, and the 50 per cent reduction target set for 2025 was achieved ahead of schedule. The decrease in carbon intensity was mainly due to changes in the weights of investments in funds; a particularly significant impact was caused by the decrease in the weight of one cement company. The emission reductions implemented by companies had only a marginal impact on the portfolio, and insufficient emission reductions were observed in the real world.

In addition, the weighted carbon intensity is 48 per cent lower than the benchmark index used.

Despite the decrease in weighted carbon intensity, the financed emissions intensity (scope1+2) of listed investments increased by approximately 10 per cent compared to the previous year. A significant reason for the increase was exchange rate fluctuations. Reported in US dollars, financed emissions remained at the previous year’s level.

Through MSCI, we are able to calculate absolute emissions for approximately 51% of the value of the entire investment portfolio, i.e. the majority of listed investments. There is still significant uncertainty related to the figures, especially with regard to scope 3 emissions. In addition, we have supplemented the calculation of the investment portfolio’s emissions for illiquid asset classes by asking asset managers to report the absolute financed emissions of our investments. These calculations have not been verified and involve significant uncertainty. Including these emissions, we are able to calculate the portfolio’s carbon footprint (scope 1+2) for approximately 58% of our portfolio. Scope 1 and 2 emissions totalled 19,000 tonnes and scope 3 emissions 178,500 tonnes.

Financing climate solutions

One important tool in mitigating climate change is funding climate solutions. Climate solutions refer to investing in targets which produce solutions enabling emission reductions and take the progress of climate change into account in their activities. There is currently no clear and universally accepted definition for climate solutions.

Currently, the number of climate solutions in listed investments is measured by the so-called green revenue, which is the share of green revenue in companies’ total revenue, weighted by the market value of the investment.

The growth in the share of green business came to a halt in 2024 and has since declined by 1.4 percentage points. The annual variation in the share is due to, among other things, fluctuations in the market values of companies and changes in the allocation of the portfolio. In addition to listed investments, Sitra’s portfolio includes a significant amount of other financing for climate solutions, such as renewable energy infrastructure investments, sustainable forest investments, certified real estate investments and venture capital investments in companies developing climate solutions. However, there is currently no commensurate information available on these.

Biodiversity

Biodiversity is a development target for Sitra’s responsible investment. Like climate risk, biodiversity loss can also affect investment portfolios, regardless of asset class, sector or geographical area.

This year, for the second time, we reported on Sitra’s nature-related investment risks and opportunities. The report covers the financial year 2025 and it was conducted in accordance with the so-called TNFD recommendations. Nature-related reporting has proven to be clearly more challenging than climate reporting, as there are no clear individual indicators available. Our portfolio is very broadly diversified and, due to the nature of fund investing, we do not have a real-time view of the several thousand investments in the funds. For this reason, we have not yet had the opportunity to assess the environmental impacts related to the geographical locations of the investment targets.

Five of our asset managers have already started or committed to starting reporting in accordance with the TNFD recommendations. These asset managers manage approximately 18 per cent of Sitra’s investment portfolio. We also monitor the share of companies in our portfolio that have publicly committed to science-based targets for nature (SBTN). So far, there are only seven of these companies in the world, and these companies account for 0.003% of the market value of our listed investments. So far, we have not set targets for nature-related indicators, but we aim to set the first targets in the next few years.

Read the report

TCFD and TNFD Disclosure Report 2025

Disclaimer: Although Sitra’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the ”ESG Parties”), obtain information (the ”Information”) from sources they consider reliable, none of the ESG parties warrants or guarantees the originality, accuracy and/or completeness, of any data herein and expressly disclaim all express or implied warranties, including those of merchantability and fitness for a particular purpose. The Information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for, or a component of, any financial instruments or products or indices. Further, none of the Information can in and of itself be used to determine which securities to buy or sell or when to buy or sell them. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein, or any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.