Finances

The central objective of the Finnish Cultural Foundation’s investment operations is to secure the fulfilment of the Foundation’s purpose. The investment income is used to cover the cost of grants, cultural activities and other operations.

The aim is for investments to produce good returns, within the guidelines set by the Board of Trustees. Stability and a long investment horizon determine the Foundation’s investment decisions. The aim is to establish long-term positions rather than to secure quick profits over the short term.

The foundation wants to keep its expenditure stable, even in times of market fluctuation; therefore, a steady cash flow is important. The funds used for the foundation’s grants come from dividends, interest income and similar sources of revenue. Capital gains are mostly reinvested.

The Foundation’s assets are mostly used for distributing grants, whose sums follow the development of the income level index, in principle. This is not possible to achieve with a very low-risk investment portfolio, whose expected returns would not be high enough.

Most of the Foundation’s capital is invested in shares, interest rate instruments (bonds and money market investments) and real estate, as well as in alternative investments (private equity and private debt and forest investments).

The foundation’s mission is “to promote and develop cultural and economic life in Finland”. One way to fulfil this is through domestic ownership. The Foundation has a long history of ownership of Finnish listed companies, as well as a major holdings in corporations such as Huhtamäki Plc, received through donations.

By securing a sufficient cash flow and liquidity buffer, the Cultural Foundation can operate steadily through diverse market conditions.

The Board of Trustees approves the investment plan and ensures that proper internal controls are in place for asset management.

The Foundation’s Finance Committee comprises at least three and at most five members of the Board of Trustees, elected for one financial year at a time. The Finance Committee prepares a proposal for the investment plan together with the office, as well as the budget and annual financial statements for the Board of Trustees’ approval. The committee is responsible for ensuring that the investment plan is up to date. It oversees the development of the investments and related reporting, ensuring that the board receives regular updates on the performance of the investment portfolio.

The practical execution of the investment plan is the responsibility of the foundation’s investment team. The Finance Committee monitors and oversees the development of the foundation’s invested capital, as well as its distribution across asset classes, and the investment risk. The members of the committee are not involved in making or carrying out individual investment decisions.

Auditor: PricewaterhouseCoopers Ltd

Members of the Finance Committee

The Finnish Cultural Foundation has long followed sustainable investment principles. The sustainability of the investments is assessed on a regular basis.

The foundation takes into account environmental, social and corporate governance (ESG) criteria in choosing its investments in all asset classes. The sustainability of investments is also assessed on a regular basis.

The foundation applies diverse sustainable investment approaches, depending on the asset class and investment type, such as exclusion, ESG integration, active ownership and impact investing.

The Foundation does not invest in the tobacco industry, which is excluded due to its conflict with the medical backgrounds of many donors and/or the designated purpose of donations. The foundation also aims to avoid investments that are dependent on fossil fuels; this is due to their environmental impact, as well as to long-term economic prospects.

In fund investments, the foundation only partners with asset managers who operate responsibly and with transparency, and who are committed to the UN Principles for Responsible Investment (UN PRI) or other equivalent principles.

The Foundation monitors the sustainability of its investments with the help of independent external service providers. Sustainability indicators develop continuously, and the ESG reports and analyses conducted by different parties have different emphases. While they do not give an entirely unequivocal picture of the sustainability of an organisation’s investments, if conducted consistently, they do provide an understanding of its development over time.

The portfolio’s ESG profile is based on market values, so the biggest investments have a great impact on the Foundation’s overall ESG rating. The Foundation has a long history of ownership of Finnish listed companies, as well as major holdings in large industrial corporations such as Huhtamäki Plc, received through donations. The sector distribution of the Helsinki Stock Exchange shows an emphasis on basic industry and industrial products, and this is reflected in the Foundation’s Finnish holdings, increasing the carbon intensity of its portfolio as a whole. In contrast, when it comes to governance principles, Finnish companies are at the international forefront in sustainability.

The sustainability of the portfolio is assessed monthly, based on ESG data from MSCI. In 2022, the portfolio’s rating according to MSCI’s ESG assessment was raised from A to AA and has remained in AA level since. The proportion of alternative investments and real estate investments in the portfolio lowers the coverage of MSCI reporting, but separate sustainability reports are also obtained on alternative investments (private equity and private debt investments, as well as forest investments). Cross-sector sustainability analyses of invested assets are conducted annually.