Annual Report 2013

Responsible investment

Finnish Industry Investment's Board of Directors has confirmed the company's principles for responsible investment:

  • FII believes in the positive economic impact of responsible investment and corporate responsibility, both in portfolio companies and in its own operations.
  • FII is a responsible investor that addresses factors relating to the environment, society and corporate governance when making investment decisions, managing portfolio companies and asset management.
  • FII is dynamic and proactive in its responsible investment activities, and operates together with other investors, management companies, portfolio companies and other stakeholders.
  • Responsible investment is addressed as a part of FII's investment process. Responsible investment activities are constantly developed and seen as part of business planning.

Responsibility in different investment areas

FII's responsible investment approach involves concentrating on material issues, influencing actively and constructively where possible, and working together with stakeholders. These principles are applied in all investment activities, which can be divided into three categories:

  • investments in funds,
  • investments directly in portfolio companies,
  • and asset management.

The standpoints of FII's responsible investment are as much about identifying new investment opportunities as managing risks. Responsibility in investment activities is a part of the investment and decision-making process, and an element of good corporate governance. FII adheres to the principles of responsible investment also in managing the assets of Finnish institutions, with the aim of maximizing economic benefit.

FII monitors developments and practices in the corporate responsibility of its portfolio companies through board work and other channels of interaction. From an investor’s viewpoint, the primary aim is to encourage a shift in operating practices towards more corporate responsibility through discussion and incentives should a margin for improvement be apparent. The investor’s own experience can greatly assist in bringing about change. Opportunities for influencing different fields vary greatly from company to company, as the emphasis on each aspect differs between sectors and geographical areas.

Overview of responsibility in 2013

FII's central themes for responsibility in 2013 were the reinforcement of standardized responsibility practices throughout the company’s investment process, and promotion of responsibility awareness and expertise both in-house and at investee interfaces. During the year, FII's investment personnel received training and attended consulting sessions on responsible investment, which have strengthened responsible investment practices within the company. Interaction regarding corporate responsibility was increased at the portfolio company level and within other stakeholder groups. Continuation and development of these activities will be the main thrust of future corporate responsibility work.

Responsibility in portfolio companies and management companies

In 2013, FII conducted a survey of the corporate responsibility procedures, responsible investment practices and prospects for developing corporate responsibility in its portfolio companies and in the management companies of funds in which it invests. The results confirm that corporate responsibility and the means to develop it are being addressed, and that corporate responsibility is an established element in business operations and business development. The implementation of corporate responsibility practices and of corporate responsibility principles is generally directly commensurate with the development phase of the organisation.

The responses to the survey highlight corporate responsibility practices in portfolio companies and fund management companies:

  • Over one-half of respondents have ratified corporate responsibility principles and/or practices.
  • Development of corporate responsibility practices is a process linked to the continuous improvement of operations.
  • Corporate responsibility is often an implicit part of the operations and operational planning of an organisation, even if corporate responsibility reporting procedures are not yet in place.
  • The UN Principles for Responsible Investment are generally adopted as a frame of reference for responsible investment.
  • Implementing corporate responsibility and responsibility in business activities are regarded as a competitive advantage.
  • Challenges include, inter alia, the adequacy of resources, global operating networks, verification of corporate responsibility, and the opportunities for minority owners to exert influence.

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