The €6.3bn Austrian pension fund VBV has cut the carbon dioxide emissions of its investments by 100,000 tons a year by switching the index used as the basis of its main investment.
The reduction equates to a 55% contraction in the size of the pension fund’s carbon footprint, VBV said.
Guenther Schiendl, board member and CIO at VBV, said: “In the interest of our customers and with our responsibility for the market in mind, we have decided to send out a signal and hope there will be a knock-on effect among the companies we share the market with.”
The pension fund said it was shrinking its carbon footprint and focusing on a sustainable decarbonisation strategy in line with the COP21 Paris Agreement.
At the beginning of this year, VBV switched its biggest Austrian segregated account – the VBV Passive World Equities Fund – to track a low carbon index provided by MSCI, leading to a reduction in carbon intensity equal to the average annual consumption of about 40,000 diesel cars, it said.
This change of index cut the fund’s weighting in the carbon-intensive sectors of energy, raw materials, and suppliers.
The VBV Passive World Equities Fund has around €850m of assets and about 1,600 individual stocks, and accounts for around 40% of VBV’s total equity portfolio.
VBV said the next stage of its strategy was to roll out an environmental management system over the course of this year, across all areas of the pension fund.
This would enable VBV “to once more demonstrate its leadership within the sector,” the pension fund said.