Austrian Pensionskassen and Vorsorgekassen have a significantly lower exposure to the oil and gas production sector in their equity portfolios compared to banks and insurance companies, according to the results of an Austria-wide climate compatibility test conducted to assess whether investments are in line with Paris Agreement Capital Transition Assessment (PACTA).
Equity investments held by banks, insurance companies and pension funds financing the coal mining sector are not yet compatible with a 2°C scenario but have less impact on climate compared to investments of asset managers that instead finance an expansion of coal mining, which will not level off until 2023, it added.
Asset owners’ equity portfolios show that investments in the hydropower and renewable energy sectors prevail, the research showed.
According to the results of the test, 59% of the respondents stated they had set climate targets for their core business or were planning to do so.
The share of banks (73%) and asset managers (83%) that have set climate targets for their core businesses is higher than the proportion of Pensionskassen and Vorsorgekassen (29%), and insurance companies (50%).
Additionally, 65% of respondents stated to have equity investments in line with climate or ESG criteria – 71% for corporate bonds – while 70% apply coal exclusion as a criteria for equities and corporate bonds portfolios. Also, 59% said they use an exclusion criteria for nuclear energy.
A large number of Austrian financial institutions is not yet sufficiently committed to implementing a climate strategy or to establishing targeted efforts to reduce emissions in the real economy, the report showed, adding that cimate or ESG targets of Austrian Pensionskassen and Vorsorgekassen impact their established investment strategies for almost all asset classes.
Last year, Austrian pension funds were encouraged to submit their portfolios for an analysis of their alignment with the goals set in the Paris Agreement.
This year, the results of the analysis showed a growing interest of Austrian financial institutions in taking measures to fight climate change, but the final report underlined that a great amount of work is still needed in order to meet Paris Agreement targets.
The PACTA analysis covered 68% of assets managed by insurance companies, or €89.2bn, and 52% of assets managed by Pensionskassen and Vorosrgekasssen, €19.7bn, in Austria. It also covered 36% of banks’ assets, or €31.8bn, and 39% of the volume of funds run by asset managers (€76.5bn).
The PACTA method focuses on eight climate-relevant sectors accounting for 70-90% of the CO2 emissions financed in capital markets.The test gives an overview of the compatibility of investments by Austrian financial institutions in equities, corporate bonds and credit portfolios with the goals set in the Paris Agreement.