The board of directors of the Pensionskasse of the city of Basel, PKBS, has decided to exclude companies active in fossil fuel sectors, or that generate revenues from fossil fuels “of unconventional origin” from its pool of investments.
The pension fund refers to the Global Industry Classification Standard Methodology to define companies operating in the fossil fuel sector.
PKBS applies Ethos’ exclusion criteria with regards to companies that generate revenues from unconventional fossil fuels including oil sands, shale oil and gas, drilling in the Arctic, pipelines to transport unconventional oil and gas.
PKBS allocates a small part of its assets to companies in this sector. For this reason, it is not in a position to “influence” their business activities through dialogue, it said. However, the core element of the pension fund’s sustainable investment strategy with regards to climate is the engagement with invested companies.
PKBS has already taken action on climate by participating in collective initiatives and engaging in active dialogue with companies in cooperation with the Ethos Engagement Pool Switzerland and Ethos Engagement Pool International.
The fund also excluded the coal industry from its investments and banned weapons in general and nuclear weapons in particular.
2020 annual returns for Solothurn and Vaud cantons
The Pensionskasse of the Canton of Solothurn has recorded returns of 4.8% in 2020, against its 12.4% in 2019, while CPEV, the pension fund for the canton of Vaud, recorded a 5% return in 2020 compared with 13.6% in 2019.
Investment in currency hedged global equities drove positive results with a 12.6% return. Global equities (not currency hedged) returned 6.3%, while emerging market equities 9.2%.
The performance of Swiss equities ranged from 10.9% for small and mid-caps to 2.7% for large-caps. Bonds in foreign currency returned 5.2%, while direct real estate investments returned 4.4% in 2020.
The Solothurn pension fund recovered from a -8.4% in the first quarter of 2020 to add 14.5% in terms of performance in the remaining three quarters of the year, according to a financial statement
It had total assets worth CHF5.77bn (€5.2bn) last year, up from CHF5.52bn in 2019.
The largest share of its assets is invested in Swiss bonds (21.8%), followed by Swiss real estate (15.5%), currency hedged foreign equities (15.1%), Swiss equities (13.7%), foreign currency hedged bonds (13.1%), foreign real estate (5.2%), unhedged foreign equities (5.1%), unhedged emerging market equities (4.5%), unhedged foreign small-cap equities (3%), emerging market bonds (1.8%) and liquidity and loans (1.2%).
The Solothurn scheme’s funding ratio exceeded for the first time 110% last year to reach 111.5%, compared to 109.2% in 2019. The number of insured rose to 18,574 in 2020 compared with 18,181 the prior year.
As for CPEV, the fund said it had navigated a “very volatile equity market in 2020” that saw a sharp drop in connection with the pandemic to recover mostly towards the end of the year.
Financial markets continued to recover in the fourth quarter of 2020, particularly in equities, riskier bonds and indirect Swiss real estate, it said.
The fund allocates the largest share of its assets to Swiss real estate (24.7%), foreign equities (17.9%) and foreign currency denominated bonds (13.4%).
Reform for the first pillar system approved
The Council of States, the upper house of the Swiss parliament, has approved the reform of the country’s first pillar system (AHV).
The Parliament’s upper chamber voted to increase the retirement age for women to 65 years old with 31 votes for and 13 against.
The Council of States also decided in favour of compensatory measures for women who will retire after the reform comes into force. The upper house proposed to finance the reform of the AHV with an increase in the VAT tax by 0.3 percentage points at the normal rate, 0.1 percentage points at the reduced rate and a special rate for the hotel industry.