Swiss pension funds almost triple assets invested to cut CO2 emissions

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Swiss schemes have this year invested 22% of their assets based on active strategies leading to a reduction of CO₂ emissions, up from 8% last year, according to the latest rating published by Klima-Allianz, a league of civil society organisations.

This amounts to CHF281bn (€267bn) of the pension assets analysed in the rating. The share of assets invested sustainably stood at 15% in September, it added.

One year ago, Klima-Allianz calculated that only 8% of pension assets in Switzerland were invested based on strategies that lead to a reduction of CO₂ emissions, expecting the number to double this year.

In 2021 the amount of total assets of pension institutions taking the first step towards decarbonising their portfolios amounted to 23%, or CHF229.6bn, while 55% of the pension capital, equalling to CHF633.4bn, is instead still invested with a lack of transparency, or pension funds have not taken initial steps towards decarbonisation.

Among the pension institutions with a high climate rating, according to Klima-Allianz, the collective foundation NEST Sammelstiftung, foundation Abendrot, CoOpera, GEPABU, Helvetas and Metron Pensionskassen have a long history of ESG integration, long-term sustainable investments with a strong reduction of investable securities.

Publica has showed progress in the period 2018-2021 by excluding coal producers from its portfolio, using an effective equity index based on Climate Value at Risk leading to a reduction of CO₂ intensity. It is also decarbonising its corporate bonds portfolio with 40% less CO₂ intensity, it added.

Migros Penssionskasse, Asga, the pension fund for the city of Zurich (PKZH) and the Pensionskasse of the city of Basel (PKBS) have systematically integrated ESG in their investment processes with specifications of CO₂ intensity and climate risk to build their portfolios, it said.

PKZH has recently reshaped its investment strategy to allocate 2% of its assets in renewable energy infrastructure for the first time, setting climate strategy goals.

PKBS plans to align equity and bond investments to ESG indices in the future, while the Pensionskasse Swiss Re, the Pensionskasse of the City of Zug and for the canton of Lucerne all require best-in-class ESG indices such as MSCI ESG Leaders or climate indices such as MSCI Low Carbon Target for asset managers and fund selection.

Moreover, the majority of the pension funds making progress in terms of sustainable investing practice impact investing in renewable energies and look at energy efficiency in infrastructure, private equity, green bonds and microfinance, Klima-Allianz said.

They also engage in shareholder dialogue through the Ethos Engagement Pool International or equivalent, in particular as part of Climate Action 100+.