Swiss Pensionskassen will have to face a popular vote on 29 November on curbing the financing of companies producing arms used in global conflicts.
The referendum is the result of an initiative by Young Greens, the younger faction of the Swiss Green Party, and the group Switzerland without arms (GSoA).
The initiative wants to prevent the Swiss National Bank (SNB), foundations and state institutions and occupational pension schemes from investing in companies generating over 5% of their annual turnover by manufacturing war materials.
The ban would affect activities of first pillar basic pension insurance (AVH/IV) and 1,562 occupational pensions schemes.
“A ban on financing war material producers means that global manufacturers have less money to produce products that kill, oppress or force people to flee,” Julia Küng, co-president of Young Green Switzerland told IPE.
The ban should apply to manufacturers of all kinds of war materials worldwide, including tanks, air defence systems, pistols and other components.
Ownership of shares in companies producing war materials or in funds that invest in such entities would be prohibited, according to the proposal. Devices for humanitarian demining, hunting and sporting weapons would be excluded from the ban.
It is difficult to estimate how many companies would be affected, the Federal Council said. The government and the parliament have rejected the proposals.
The proposed funding, the Federal Council argued, is “not realistic” and would hardly affect the global demand of war materials, while it would have a negative impact on the SNB, foundations, the AHV/IV and pension funds.
Asip, the Swiss pension fund association, has also rejected the proposal to be submitted at the referendum, noting that it does not clearly define the limits of the ban.
“It would include companies that do not produce weapons at all, but rather products that are important for civil purposes, such as passenger aircraft, navigation devices, products of the IT industry, and so on,” Hanspeter Konrad, the director of the association, told IPE.
Konrad added that the idea behind the initiative is already being put in place “voluntarily” by an “increasing number of pension funds.”
The Young Greens hope that Switzerland will send a signal to other countries and financial institutions by voting in favour of the ban, but it acknowledged the difficulties.
“The victory of the ‘yes’ [for a ban] in the referendum will be a very big challenge, as the opposing side falsely claims the initiative harms local businesses or leads to poor returns. It is clear to us that even if we do not win the referendum, we still want to raise awareness of the serious problems of the business with wars for Switzerland,” Küng said.
For Konrad, the referendum will fail if the population understands that the initiative will not change what really causes wars and armed conflicts, that pension funds already today voluntarily avoid or withdraw from investments in companies that really produce arms, and that it will be more difficult to achieve “good returns.”