The pension fund for the Swiss canton of Vaud (CPEV) expects to complete its coal exclusion plan from its bond portfolio between this and next year, it said in a document on its responsible investment policy.
The scheme will also assess, and if necessary adjust, the indices it adopts with regards to ESG and its climate strategy in the equity portfolio. It has already excluded coal companies from its equity investments.
CPEV will expand its allocation to infrastructure, and overall investments promoting climate transition. The pension fund has already started to invest in projects or companies promoting climate transition, allocating 20% of its infrastructure portfolio as of December last year, it said.
Last year CPEV joined a consortium of institutional investors in French-speaking Switzerland that included Retraites Populaires, Caisse intercommunale de pensions (CIP), Profelia, Caisse cantonale d’assurance populaire (CCAP), Caisse de prévoyance de l’Etat de Genève (CPEG), CAP Prévoyance and Vaudoise Assurances, to invest in AIP Management’s infrastructure fund for energy transition (AIP Infrastructure II).
According to CPEV’s financial statement at the end of June, the pension fund allocates only 0.8% to alternative investments, while 4.2% of total assets are invested in convertible bonds, 14.4% in bonds denominated in foreign currencies, 5.8% in bonds denominated in Swiss francs, 5.8% in private placements, 23.5% in Swiss real estate, 5.0% in real estate pledged securities, 18.4% in stocks of foreign companies, 13.6% in stocks of Swiss companies, 2.8% in cash, and the remainder in other investments including indirect foreign real estate, commodities, microfinance, currency and equity hedging.
Its AUM totalled CHF14.3bn (€13bn), as of last year.
CPEV has continued the dialogue with companies by extending voting rights with regards to foreign firms. It will design a strategy in case engagement proves to be unsuccessful, it said.
The scheme will also continue to put in place its climate strategy for 2021 and 2022 to achieve carbon neutrality for its investments in securities by 2050, and a significant reduction in CO2 emissions for its real estate assets.
CPEV aims to cut CO2 emission by 80% in developed market equities and by 35% in direct real estate investments by 2030. Its climate strategy is an extension of its responsible investment policy, which is in line with the goals set by the Paris Agreement.