6.4 Responsible investment
In the investment of financial assets, the Bank of Finland takes into account the risks and responsibility aspects of investment activities, applying a variety of responsible investment approaches to the various investment categories. The Bank of Finland has signed the UN Principles for Responsible Investment (PRI).
The objective of the Bank of Finland’s asset management is to meet the liquidity, security and return requirements placed on the central bank in respect of the assets managed. Through its investment activities, the Bank of Finland secures the value of its financial assets and its ability to support the liquidity of the banking system, whenever necessary.
The Bank of Finland invests and manages its financial assets in accordance with central bank objectives and taking into account the risks and responsibility aspects related to investment activities.
The Bank of Finland's responsibilities in its investment activities are based, on one hand, on the general responsibility requirements for investment activities and, on the other hand, on the objective to improve the management of various risks.
Compliance with principles of corporate sustainability a prerequisite for investment
The majority of the Bank of Finland’s financial assets consist of fixed-income investment portfolios, which are held mainly in government debt instruments and government-related debt instruments. The Bank of Finland also has direct fixed-income investments in covered bonds and corporate bonds.
The issuers of corporate bonds and covered bonds are expected to comply with international standards. The Bank of Finland therefore excludes from its investments issuers that do not comply with the principles of corporate sustainability defined in the United Nations Global Compact.
The principles of corporate sustainability are derived from the Universal Declaration of Human Rights, the International Labour Organization's Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption. In addition, the Bank of Finland does not make direct fixed-income investments in companies that manufacture weapons prohibited by international conventions.
Fund management companies are required to commit strongly to principles of responsibility
In the planning and execution of its investment activities, the Bank of Finland utilises analyses by an external service provider on the responsibility of the investment instruments as to compliance with international standards. The Bank of Finland’s internal working group on responsible investment takes the final decision, based on responsibility criteria, on those instruments in which the Bank will not invest.
The Bank of Finland’s investment activities also include fixed-income investment in green, social and sustainability bonds and bonds issued by development banks.
The Bank of Finland's investments in equities and real estate are done through funds. The Bank invests only in funds that are managed by companies that are strongly and transparently committed to responsibility. In addition, the Bank of Finland expects management companies to exert influence on the companies they invest in, so that the companies take responsibility issues into account.
Bank of Finland signed the UN Principles for Responsible Investment
In December 2019, the Bank of Finland signed the UN Principles for Responsible Investment (PRI).
In signing the Principles, the Bank of Finland committed to incorporating the various responsibility factors in its investment processes as well as ownership policies and practices. The Bank also committed to reporting progress in responsible investment.
Commitment to the UN Principles for Responsible Investment strengthens the principles for responsible investment at the Bank of Finland.