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Not considering ESG could mean failing fiduciary duty: Compenswiss

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Investors that do not consider environmental, social or corporate governance (ESG) risks in their portfolios risk breaching their fiduciary duty to members, according to the investment chief of one of Switzerland’s biggest asset owners.

At the Swiss Sustainable Finance (SSF) conference in Berne on Tuesday, Frank Juliano, head of asset management at the CHF37.6bn (€32.7bn) Swiss buffer fund Compenswiss, said investors should “at least take it into consideration” even if ESG investments did not make it into portfolios.

Authorities in Switzerland – in line with peers in the European Union – are considering making it mandatory for institutional investors to include ESG as part of their fiduciary duty.

“We are managing assets for all Swiss people and we have to make sure our decisions are in their best interest,” Juliano said.

“The outcome of an ESG assessment may be that it is not suitable for the portfolio, but without such an assessment you face possible drawdowns for insured people.”

He emphasised, however, that there was “no one-size-fits-all approach”.

Compenswiss runs the assets for the Swiss first pillar provider AHV/AVS, as well as for funds backing state healthcare and military service payments.

Elsewhere at the SSF conference, delegates agreed that the issue of climate change should not be considered in isolation from other ESG factors.

Remy Briand, head of ESG and real estate at MSCI, told delegates: “There is globally a lot more focus and interest in ESG and especially climate segment but how that questioning translates into strategies and targets to reduce risk still remains relatively coarse.”

However, he said there had been “quite a bit of improvement”.

Briand called on investors to be more informed in their decision to include, for example, low-carbon indices in their investment strategies.

“A first step for investors should be to measure risk in their portfolio to see whether it is less or more exposed to carbon than the benchmark,” he said. “That is not something most institutions are doing right now.”

Conference organiser the SSF Association was founded four years ago to promote ESG topics in Switzerland.

Related images

  • Night view of Bern and Aare River, Switzerland

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