The Fachverband der Pensionskassen, Austria’s occupational pension fund association, has floated the idea of a “green supplementary pension” to push pension funds torwards sustainable investments.
“We are convinced that this measure would increase the proportion of sustainably invested capital to more than 75% by 2025,” Andreas Zakostelsky, chair of the Fachverband, told IPE.
The basic idea behind the “green supplementary pension” is that pension funds create pots with tax-deductible contributions dedicated only for sustainable forms of investment.
“Our request to the government would be that everyone who pays for a green supplementary pension can deduct it from tax,” Zakostelsky said.
A privileged tax treatment for employee contributions has been demand of politicians for years, in order to make the pension fund instrument more attractive to savers, Michaela Plank, principal and member of the country leadership team at Mercer Austria, told IPE.
“The link [of tax deductions] with sustainable investments is welcomed, especially since pension funds cannot deny the topic of sustainability in the future,” she said.
A recent Fachverband survey revealed that Pensionskassen in Austria already invest €15bn sustainably, based on the United Nations’ Principles for Responsible Investment.
This represents 61.5% of Pensionskassen’s total investments volume.
“The topic of sustainability has already been included by all multi-employer pension providers, at least in their strategy,” Plank said, noting that, however, the access to sustainable investments is currently not regulated, meaning that each pension fund sets its own priorities.
For this reason, Plank added, it is necessary to define “uniform regulations” both at the local level and in line with the requirements of the European Union to build a foundation for domestic Pensionskassen to compete internationally.
“Our request to the government would be that everyone who pays for a green supplementary pension can deduct it from tax”
Andreas Zakostelsky, chair of the Fachverband der Pensionskassen
Responsible investments rose by 10% in 2019 to €1.7trn in Germany and in Austria, according to research by Forum Nachhaltige Geldanlagen (FNG), the industry association promoting sustainable investment in the DACH region.
But in Austria only 17% of asset owners and fund managers surveyed said they pursue impact approaches.
“We are seeing increased interest in implementing ESG policies in the investment process, but it would be preferable that all investors view ESG as the standard and focus on the topic of “transformation” and “what impact do I achieve”,” Angelika Delen, head of investment consulting at Mercer, added.
Returns from capital deployed in sustainable investments can be attractive from the point of view of investors, especially at a time when the COVID-19 pandemic pushes to rethink business models and growth.
“Sustainable investment does not automatically mean higher returns, but they are, meanwhile, at least equivalent, and often more profitable in the long term, as they focus on future-oriented industries,” Zakostelsky said.
Andreas Wimmer, senior group managing director at the CQ Investment Group, told IPE that asset managers at the group generally support measures to make sustainable investments available for a larger number of potential investors.
The inclusion of sustainable investments within a scheme’s portfolio “should further help to establish common standards and transparency in the industry,” he continued.
“In this regard, we think it would be helpful to implement the proposal [of the green supplementary pension] on a voluntary basis,” he added.
Returns from sustainable investments have been competitive compared to traditional investments, he said.
“We think it could be in the interest of pension funds to increase their allocation in this segment,” he concluded.