Sustainability at Ilmarinen

SUSTAINABILITY AT ILMARINEN

DEFINING CORPORATE RESPONSIBILITY

• Sustainability encompasses all aspects of the company’s operations pertaining to the environment, society and governance, and the management thereof.

• The organisation has responsibilities towards various stakeholders – including those other than the company’s shareholders.

• Sustainability must focus on what is most important = aspects which have major impacts and/or which influence decisions made by stakeholders.

• Sustainability goes beyond the requirements set by law and the organisation’s legal limits.

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Corporate responsibility = responsibility for (business) operations

CORPORATE RESPONSIBILITYTHREE STAGES OF DEVELOPMENT

Philanthropy Sustainability integration

Sustainability innovation

Relationship to core business

Outside of the core business

Integrated with the existing core business

Enlarging the core business or developing new business

Target of corporate responsibility

Extra activities Improving environmental and social performance of existing business operations

New product or service development

Expected benefit Image improvements and other reputation impact

Improvements ofenvironmental andsocial aspects of corebusiness

Alleviation of socialor environmentalproblem

Example ofIlmarinen’s actions

Monetary donations, e.g. to children’s hospital

LEED certification for buildings

Diversity as a part of well-being-at-work services

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From philanthropy to the heart of business operations

Strategic sustainability

Tabl

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(200

9)

4

STRONG SOLVENCY

STRONGER MARKET POSITION

GOOD ENERGY ANDSTRONG FORWARD

MOMENTUM

BEST CUSTOMER

EXPERIENCE

EFFICIENT OPERATIONS

APPEALING BRAND

DIGITAL QUANTUM LEAP

OWNED BY CUSTOMERS

ILMARINEN’S VISION AND SUSTAINABILITY

SERVICE COMPANY

INNOVATIVE RENEWER

RESPONSIBLE

SURPRISINGLY POSITIVEACTIONS

ATTITUDE THE MOST ATTRACTIVE EARNINGS-RELATED PENSION PARTNER

Sustainability in all operations strengthens

Ilmarinen’s attractiveness and supports efficient

business.

SUSTAINABILITY MEGATRENDS

CLIMATE CHANGE

• Implementation of the Paris

Climate Agreement and national

targets• Expectations of a reduction in

negative climate impacts from

business are growing

• Business opportunities for

companies offering solutions

TAX PAYMENT

• International tax regulations and the automatic exchange of information give governments better conditions for collecting corporate tax

• Companies are facing ever-greater public pressure to pay their taxes

DIVERSITY AND INCLUSION• EU directive requires reporting on diversity• Migration flows are making workplaces increasingly globalised• Careers are getting longer as the age of retirement rises• Young people in particular have different expectations of work

CYBER THREATS

• Cyber threats are increasing

• The importance of data security

and protection is growing

DEMAND FOR SUSTAINABILITY

• The demands of customers and legislation

are increasing the financial risks of

irresponsible operations

• NGOs have started to investigate mid-

sized companies and B2B companies, in

addition to consumer brands

5

6


RESPONSIBLE INVESTMENT

• Managing pension assets• Active ownership

• Sustainability as part of investment decisions

BEST CUSTOMER EXPERIENCE

• Managing pension cover• Services for extending careers

ETHICAL PRINCIPLES IN BUSINESS

• Compliance function to ensure compliance with regulations

• Key themes include data protection and sustainable customer work

TRANSPARENCY

• Open stakeholder dialogue• Consistent opinion-building

• Comprehensive sustainability reportingSOCIETY

• Statutory basic task and its cost-effective and high-quality

management

ATTRACTIVE EMPLOYER

• Energising workplace• Promoting diversity

• Fairness of remuneration and incentives


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Best customer experience

Societal basic task

Responsible investment

Attractive employer

Ethical principles Transparency

STRIVING FOR THE BEST CUSTOMER EXPERIENCE• We take care of the pension cover

of the personnel of our client companies and self-employed clients– Responsibility for the pension cover

of 900,000 Finns– Easy and straightforward customer

service– Speedy pension decisions a key

target• We offer services for extending

careers– Vocational rehabilitation– Services for work capacity

management– Better Working Life path

1,900

REHABILITATION AND WELL-BEING AT WORK SERVICES EXTEND CAREERS

The number of disability pension decisions has fallen by more than 30 per cent in the past decade.

Disability pensions

+ 24 % Rehabilitation decisions

160,000Covered by well-being at work projects

- 4,4 % Benefits of well-being at

work projects

4.1 Customerexperience ona scale of 1–5

Well-being at work projects

pers

ons2015

YEAR

Best customer experience

Societal basic task


Attractive employer

Ethical principles Transparency

SOCIETAL TASKWe take care of our basic task cost-effectively.

9 4.4 4.3Pension contributions received by us

EUR bn

Pensions paid by us

Return on our investments

35.8Our investment assets

EUR bn

75.5 %

Our cost-effectiveness

6.0 % 29.6 %

Our solvency ratio

98Client bonuses paid by us

EUR m, which is0.6 % of payroll

EUR bn2015

YEAR

Solvency capital

8.2 EUR bn

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

10

RESPONSIBLE INVESTMENT• We invest pension assets in a

profitable and secure manner• We take sustainability issues into

account in investment decisions– We assess the climate impacts of our

investments, among other things– Responsible investment ratings for

investees• We are an active owner• In real estate investments we

take responsibility for the impacts on the built environmentBest

customer experience

Societal basic task


Attractive employer

Ethical principles

Transparency

11

WE ASSESS CARBON RISKS• We calculated the carbon footprint of our direct

equity portfolio for the first time in 2015, in future annually (Montreal Pledge)

• April 30, 2015 equity portfolio’s carbon intensity was 485 tons (CO2e/million euros), i.e. ca 3.5 % below benchmark*

• As a result of the calculation, we renounced ownership in three carbon intensive companies and approached automobile and electricity sector companies with a climate agenda together with other investors

*We compared our carbon footprint to the combination of benchmark indices that we also use to assess financial returns.

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

12

ATTRACTIVE EMPLOYER• We energise our work

community– Modernised premises– Engaging innovation in Wauhdittamo

• We promote diversity and inclusion– Gender equality– New equality plan

• We pay attention to the fairness of remuneration– Remuneration is based on how

demanding a position is and on personal performance and competence

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

GENDER EQUALITY• In 2015 we participated in Dialogi, a project

aimed at promoting female leadership• As a result of the project we will improve:

– identifying potential– doing away with the obstacles of job rotation– supporting and highlighting female expertise– reporting on women’s career development

GENDER DISTRIBUTIONIN ILMARINEN:● Women● Men

66%

34%

Entire personnel

tot. 573 pers.

50%50%

Executive Group

tot. 8pers.

20%

80%

Board of Direc-tors

tot. 15pers.

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

14

ETHICAL PRINCIPLES IN BUSINESS• Compliance function ensures

compliance with regulations– Code of Conduct guides internal

practices• We follow the ground rules of

sustainable customer work– Well-being at work services based on

disability risk of the customers • We take care of data protection

– Non-disclosure of personal and company data

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

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CODE OF CONDUCT• We support equality and safety at

work• We comply with good insurance

practice• We condemn bribery• We identify and prevent conflicts of

interest• We do not abuse insider information• We take care of data protection• We know our customers• We source responsibly• We co-operate responsibly

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

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TRANSPARENCY

• We engage in open dialogue with our stakeholders

• We pursue consistent and responsible opinion-building

• We report on all sustainability aspects in a comprehensive and transparent manner– Including tax footprint

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency

EMPLOYERS + ENTREPRENEURS

Active ownership: Tax transparency of investment targets, meetings with management

Income tax

€ 98 mill.

€ 1.8 bill.

€ 173 mill.

€ 1 bill.

FUNDS RETURN ON € 2.1 bill.INVESTMENTS

PENSIONS € 4,4 bill.

PENSION RECIPIENTS

STATE

Withholding tax

€ 19.8 mill.

Income tax

PAYROLL

€ 16.7 bill.

~ € 3,3 bill.

€ 1 bill.

MUNICIPALITIES~ € 5 bill.

Taxes related to Ilmarinen’s operations

€ 24,4 mill.EMPLOYEES

Property tax

ILMARINEN’S TAX FOOTPRINT

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Client bonuses

Best customer

experience

Societal basic task


Attractive employer

Ethical principles

Transparency