Migros Pensionskasse (MPK), the CHF28bn (€25.6bn) pension fund for the Swiss retailer, has expanded its strategic asset allocation for 2021 to include emerging market bonds, to be measured against an ESG index.
MPK has also set up a new asset class – Clean Energy – at the beginning of the year to build up a renewable energy portfolio with investments in solar, wind and water power plants over the next two years, it said in its sustainability report for 2020.
The investment volume for the Clean Energy asset class will increase to at least CHF300m by 2023. It includes investments in government or corporate green bonds as long as returns are in line with the market, it added.
Migros’ asset management goals include a reduction of CO2 intensity of its equity and corporate bonds portfolios by 2% per year, and dropping companies generating over 1% of their revenues from coal mining activities or 30% of their revenues from energy production from coal.
The Pensionskasse has recorded a better performance overall for its equity allocation, compared to the standard benchmark, since the introduction of an ESG index in 2018.
According to its sustainability report, the use of the MSCI ESG Universal Indices for its equity portfolio led to it outperforming the standard index by 2.5%.
This confirms that taking sustainability aspects into account improves the risk-return profile of investments and leads up to further returns on investments, it said.
MPK aims to cut CO2 intensity in its equity and corporate bonds portfolios by 50% against the standard benchmark by 2030. Its portfolio has recorded a 37% lower CO2 intensity at the end of 2020, it said.
It is starting to exclude from this year the largest emitters of CO2 from investments, while continuing to engage with invested firms through its membership of the Swiss Association for Responsible Investments (SVVK-ASIR).
MPK wants to implement a carbon-reduction strategy for internal and external mandates as well and is also planning to cut CO2 emissions for its real estate portfolio by 50% by 2030 compared to the level of 2018, and by 80% by 2050, through a reduction of energy consumption and replacing fossil fuels.
MPK has found a new chief investment officer – Stephan Bereuter will succeed the current CIO, Adrian Ryses, from 1 January 2022.
Bereuter is now head of portfolio management for bonds at Migros Pensionskasse. He previously served at Generali Group in Switzerland, most recently as head of asset management.
Ryser, who joined the Migros Group in 2001 as head of treasury and finances, will retire at the end of the year. He has served as CIO, responsible for asset management, for over a decade.