Sitra as an investor
Sitra’s operating activities are funded by the returns on its endowment capital and corporate investments. In addition to returns, our investments aim to grow business that promotes sustainable well-being.
What is it about?
Investments in investment funds
Sitra’s endowment capital is invested profitably and safely, mainly through investment funds. At the end of 2016, the market value of our endowment capital was 807 million euros.
Sitra makes long-term investments. The purpose of our investment activities is to secure the continuity of Sitra’s operations. Therefore, sufficient management of investment risks is also required. As an investor, Sitra seeks a societal impact in addition to returns on investments. Our investment decisions are based on market terms. The targeted nominal yield in the long term is 4% per annum.
Sitra has investments in equity, bond and real estate funds. Our investments are managed by successful and responsible portfolio managers who have signed the UN’s Principles for Responsible Investment. Our portfolio managers take into consideration the practices of responsible investment in their investment strategies, processes, choices of securities and influence and ownership practices.
Responsibility in investing
Responsibility is an essential part of Sitra’s operation – and this goes for investment activities as well. In addition to returns and risks, we also consider factors related to the environment, social responsibility and good governance (ESG) when we make investment decisions.
Sitra is a member of FINSIF (Finland’s Sustainable Investment Forum) and we follow the UN’s Principles for Responsible Investment, PRI.
Our work to promote sustainable well-being is visible not only in our development of responsible operating practices, but also in the way we select new investment targets. In the autumn of 2016 we repeated the calculation of the carbon footprint of our domestic equity investments. The total carbon dioxide emissions (CO2e) had declined from 178,000 tonnes in 2015 to 121,000 tonnes.
Venture capital funds as tools for shaping the future
We are targeting new venture capital investments at venture capital funds. With risk venture capital funds, we seek financial revenues and the growth of new business that promotes sustainable well-being.
When we invest in domestic funds, we help to develop new funding models and boost sustainable development business in public-private partnerships.
For example, during 2016 Sitra invested a total of 10 million euros in three venture capital funds investing in growth-oriented small and medium-sized enterprises that are also capable of growth. It has been estimated that, in the next five years, these funds will bring a capital of approximately 100 million euros to be used to develop Finnish companies eager to expand.
Our long-term work with cleantech investments is already bearing fruit. For example, in 2008, Sitra invested in the Capricorn Cleantech Fund, which invests in European cleantech enterprises in the start-up and growth stages. In 2016, the fund realised its first significant exit and recouped a 17-fold return on its investment.
We also participate actively in the creation of impact investment practices. The purpose of SIB funds (Social Impact Bonds) is to create new operating models to solve social problems.
Venture capital investment in companies
Sitra has also invested directly in Finnish growth companies. Our portfolio contains companies that promote well-being and health, boost efforts to find solutions to social problems in society, improve material and energy efficiency, speed up the transition from non-renewable to renewable natural resources or promote an ecological lifestyle.
At the end of 2016, Sitra’s company portfolio consisted of 24 firms in fields such as energy, biotechnology, information and environmental technology, and industrial production and services. During 2016, we made further investments in seven companies in the portfolio.
We evaluate and monitor the companies we have invested in. In addition to the traditional economic analysis, we also look at the effects of ESG factors. A more extensive analysis gives us a better understanding of the company’s operation and the risks involved in our investments.
We promote the integration of the ESG factors in the operation of the portfolio companies and their commitment to responsible operating practices through our representation on the companies’ boards of directors, for example. We make long-term investments and commit ourselves to the ownership and development of the portfolio companies for an average period of 4 to 10 years.