Aldi Suisse Pensionskasse, the pension fund of the German retailing company in Switzerland, is investing its equity holdings through ESG funds managed by Zürcher Kantonalbank (ZKB), a move that has led to cutting the CO2 exposure in its portfolio.
The switch to funds investing in line with suitable criteria meant that the Pensionskasse has cut its CO2 intensity in emerging markets and developed world equities by close to a quarter compared with MSCI benchmarks, according to an update of the climate rating of pension funds published by Climate Alliance, a league of civil society organisations.
The CO2 intensity in the scheme’s Swiss equity portfolio has decreased by more than a fifth compared with the SPI benchmark, it added. Overall, Climate Alliance has calculated at least a quarter less CO2 intensity in the securities portfolio of Aldi Suisse Pensionskasse, compared with the benchmark.
The scheme still uses a convention approach towards investments in corporate bonds, however, that make up only a tenth of the total equity and bonds investments.
The portfolio allocation to Swiss bonds is larger, but not relevant from an ESG or climate standpoint, Climate Alliance noted.
Pension funds still finance fossil fuel industry
Aldi Suisse pension fund’s asset allocation is now in line with the goals of the Paris Agreement, and with the provisions set by the Target Setting Protocol of the UN -onvened Net Zero Asset Owner Alliance (NZAOA), Climate Alliance said.
But 66% of second pillar members’ money still finances the fossil fuel industry, and therefore global warming, while 12% of investments are rated as “orange”, meaning on path to decarbonisation.
Climate Alliance also found that 33% of pension assets are currently invested by schemes in Switzerland to cut financing of greenhouse gas emissions and support climate targets. Only 1% of assets is invested to only finance economic activities with a positive impact on society, the environment and on climate, it added.
According to Sandro Leuenberger, responsible for finance and climate at Climate Alliance, Swiss pension funds are still not sufficiently aware that their expected impact is based on targets set out by the NZAOA, namely decarbonisation at portfolio level by more than half by 2030, compared with 2020, active ownership, and green and sustainable impact investing through green bonds, infrastructure, private equity and private debt.
Climate Alliance is currently conducting a rating on real estate investments, including indirect investments in funds, of pension funds.
Next year it will send to the board of trustees a letter underlying the importance of dealing with “double materiality”, “financial materiality”, and “impact materiality”, and recommendations on measures to take in line with NZAOA and Green Real Estate.