The Swiss pension fund-backed Ethos Foundation has said it “strongly” recommends its members support the revision of the CO2 Act, Switzerland’s main instrument at national level for achieving its emissions objectives.
Ethos’s appeal comes ahead of a referendum on the revision of the Federal Act on the Reduction of Greenhouse Gas Emissions, dubbed the CO2 Act, on 13 June.
The CO2 Act is an essential element of a broader climate strategy set out by the Swiss government to achieve net-zero greenhouse emissions by 2050.
The federal parliament approved revisions to the law during the last autumn session with the goal to establish a climate policy framework until 2030. The revised CO2 Act is due to enter into force in 2022.
Switzerland aims to halve the greenhouse gas emissions overall by 2030 and reduce them by at least 37.5% domestically through the reform of the CO2 Act, according to the government’s climate strategy.
The Act also requires the government to submit on time proposals to the parliament to cut greenhouse gas emissions for the period after 2030.
Ethos is in favour of establishing a set of rules to promote sustainable and responsible investments, it said.
The reform of the CO2 Act is “an essential step to encourage economic transformation” and protect the second pillar of the pension system, it added.
It was commenting in connection with an opinion paper it published about climate risks facing pension funds. Pensionskassen are exposed to climate risks, with $11.3bn in the equity portfolio invested in the coal and gas production sector, according to a study of the Federal Office for the Environment (FOEN) mentioned in Ethos’s report.
To reduce climate risks, pension funds should invest in companies setting credible targets for reducing CO2 emissions or whose products and services contribute to the fight against climate change, the report said.
Pension investors could opt to exit CO2-intensive sectors on the equity markets, choose to finance the energy transition through thematic equity strategies in the field of renewable energies or through bond strategies with a focus on green bonds, or engage in a dialogue with companies, the report added.
“However”, Ethos said, “the establishment of a regulatory framework is still necessary to promote sustainable and responsible investments”.
Ethos is composed of 226 Swiss pension funds and public utility foundations.