The Finnish Cultural Foundation’s investment activities are well planned and monitored. They are based on an investment plan and shareholder policy approved by the foundation’s Board of Trustees, as well as on sustainable investment principles. 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. This data covers over 60% of the portfolio. In 2022, the portfolio’s rating according to MSCI’s ESG assessment was raised from A to AA. 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).
To broaden the scope of the assessments, the Cultural Foundation commissioned two one-off sustainability analyses of its portfolio in 2022. Based on these, the foundation’s equity portfolio is in line with the Paris Climate Agreement. The carbon intensity of the foundation’s current equity portfolio has been going down by approximately 15% per year since 2019, while the portfolio’s carbon footprint was lower than that of the specified benchmark.