The CPV/CAP Pensionskasse, the pension fund for the Swiss retail and wholesale company Coop-Gruppe, is looking for venture capital investments in start-ups developing solutions linked to environmental issues through innovative technologies.
It is also looking at the social aspect of investments by focusing on young companies that develop solutions for health care, education and access to technology, it said, outlining its current investment strategy in the newsletter Transparent.
The Pensionskasse allocates 12% of its total assets, or CHF1.2bn (€1.09bn), to alternative investments including infrastructure, renewable energy, private equity, private debt and venture capital.
Its asset portfolio includes allocations in Swiss real estate (23%), in foreign real estate (5%), in Swiss equities (7%), in foreign equities (18%), in foreign bonds (12%), in Swiss bonds (18%) with the remainder in a liquidity portfolio.
Allocations in Swiss real estate amount to CHF2.3bn. CPV/CAP is working on a concept to gradually retrofit parking spaces with connections to charging electric vehicles in rental housing complexes, it said, adding that it currently operates 24 photovoltaic plants producing 3.4 GWh of electricity annually.
Its goal is to continue investing in technologies, solar, wind and hydropower plants to produce electricity. It has built in recent years a portfolio of solar, wind and hydro power plants with investments of CHF250m.
CPV/CAP has also developed a model to classify companies according to environmental, social and corporate governance (ESG) criteria that excludes firms with poor ESG scores. It also excludes companies that violate the UN Global Compact.
As a shareholder, the pension fund plans to start a dialogue with the corporate management of the firms it holds and exercise influence on foreign equities to change the approach of said companies towards ESG policies. It already exercises voting rights for Swiss equities.
For private equity, the scheme’s investment committee has decided to halt investments through fund-of-funds to reduce costs, it said.
CPV/CAP has instead reinforced its in-house team while investing to improve IT infrastructure to further digitise asset management also in home offices.
It expects to achieve annual returns of 2.7% with the existing investment strategy. With negative interest rates, expected returns are strongly dependent on equity markets, it said, stressing that challenges lie ahead to achieve returns, as the current crisis is not over yet.
Returns dropped to -0.13% in 2020 ending in October, from 9.08% in 2019, according to its latest financial statement.
CPV/CAP manages assets worth CHF10.4bn, with 57,754 insured including 20,488 retirees.