The Swiss pension fund of the canton of Geneva, CPEG, has started to exclude companies in the energy sector whose carbon emissions will lead to global warming temperatures higher than 2.25°C, the scheme said in its first sustainable investments report.

The scheme is excluding companies in the energy sector to progressively disengage from the fossil fuels sector, in line with the climate goals set by the Paris Agreement, it added.

The new exclusion criteria, calculated by Lombard Odier using the Lombard Odier Portfolio Temperature Alignment (LOPTA) tool, has led the scheme to disinvest from 91 companies in the MSCI All Countries World Index this year, it said.

The LOPTA tool is based on the scenarios drafted by the Intergovernmental Panel on Climate Change.

With the metric, the scheme identifies companies with a significant carbon footprint but which, due to their temperature aligned with the Paris Agreement goals, will adequately reduce its carbon footprint, having a real impact on climate, it said.

CPEG intends to keep in its investment portfolio from the end of 2025 only companies whose emissions align with a global warming scenario of below 1.5°C, it added.

Therefore, to reach 1.5°C by the end of 2025, the so-called temperature level in its investment portfolio should decrease by 0.25°C per year, it said.

The pension fund has also started to exclude companies according to the Global Industry Classification Standard (GICS) Energy, developed by MSCI and S&P, listing companies involved in drilling, producing, or refining oil.

It also excludes firms involved in major ESG-related controversies, or having more than 20% of its turnover generated through the production of arms, nuclear power, gambling, pornography, the production of cigarettes, cigars and tobacco, the production or distribution of products linked to non-therapeutic GMOs, and the extraction and production of coal, it said.

The scheme has blacklisted 119 securities from its investment universe, as of the end of 2022, with the largest share being traded in North America (5.5%), followed by Europe, excluding Switzerland, with 4.7%, and emerging markets with 3.3%, according to the report.

CPEG cut more than 13,700 tonnes of greenhouse gases through green bond investments last year.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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