The document discusses the Bank of Finland's approach to responsible investment. It notes that central banks are increasingly incorporating environmental, social and governance factors into their investment decisions and ownership practices. The Bank of Finland aims to cover its entire investment portfolio with a responsible investment strategy, excluding companies that do not comply with UN Global Compact principles and controversial weapons. It is a member of the Network for Greening the Financial System and has signed the UN Principles for Responsible Investment, with plans to further increase green bond investments and integrate climate considerations into its strategies over the long term.

1. The Board, Bank of Finland
Responsible Investment
at the Bank of Finland
Consular Corps in Finland, 6 February 2020, Helsinki
Tuomas Välimäki

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By responsible investing our aim is to incorporate
environmental, social and governance (ESG) aspects
in our investment decisions and active ownership.
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Responsible investment in central banks
• Delate start at central banks (compared to the private sector
pioneers)
o Liquidity has traditionally been the key issue for investment objectives
o Hence, possessions mainly consist(ed) of government bonds in reserve currencies
• Recently responsibility has become a relevant topic also for central
banks
o Initially, concerning central banks’ investment activities outside monetary policy
o With international co-operation (e.g. NGFS), focus has shifted to cover also policy side
o Debate on the role of ESG when it comes to the monetary policy framework will be part of
ECB’s monetary policy strategy review
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The Network for Greening the Financial System (NGFS)
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• A global group of central banks and supervisors aiming at greening the
financial system and strengthening the efforts of the financial sector in
achieving the Paris climate agreement goals.

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NGFS´s first comprehensive report gives six recommendations
for central banks, supervisors and policymakers on greening
the financial system
1. Integrating climate-related risks into micro-supervision and financial stability monitoring
2. Integrating sustainability factors into central bank portfolio management
3. Bridging the data gaps
4. Building the awareness and intellectual capacity and encouraging technical assistance and
knowledge sharing
5. Achieving robust and internationally consistent climate and environment-related disclosure
6. Supporting the development of a taxonomy of economic activities
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We need more standardised concepts and data!
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Objectives and portfolios
Monetary policy purchases
• Safety
• Liquidity
• Return
Foreign reserves
EUR denominated reserves
Policy purpose,
joint decision-making
ALM, independent
decision-making
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No investment activity
Investment activities covered by the
current responsible investment strategy
Bank of Finland´s financial assets
(as of 30.9.2019)
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mn.
EUR %
Fixed income 7 430 66
Equity funds 996 9
Real estate funds 124 1
Gold 2 150 19
SDR 519 5
Total 11 219 100

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Fixed income investments provide liquidity and safety
for financial assets
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%
Government bonds 60
Government related bonds 19
Covered bonds 11
Corporate bonds 10
Total 100
Hard to apply a responsibility
strategy to sovereign debt

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Outline of the BoF´s responsible investment strategy
• Our aim is to cover the whole investment reserves by using
different strategies to different asset classes
oFixed income assets
Companies that do not comply with the UN Global Compact are excluded
Controversial weapons are not among the investment universe
Green, social and sustainability bond investments
oEquity and real estate investments (outsourced)
Responsibility analysis when selecting fund managers
Interaction and monitoring of selected fund managers
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Principles for Responsible Investment (PRI)
• ”The six Principles for Responsible Investment are a voluntary and aspirational set of
investment principles that offer a menu of possible actions for incorporating ESG
issues into investment practice.”
• Bank of Finland signed the UN Principles for Responsible Investment in 2019
 Commitment to incorporate the various responsibility factors in the investment processes as
well as ownership policies and practices
 Systematic development of the responsibility practices
 External evaluation of the progress
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Long journey ahead
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Increasing green bond
investments
Including other climate-
related thematic investments
New principal
responsibility specialist Networking
Integrating EU taxonomy to
investment process
Creation of a
climate strategy

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Thank you!
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