Switzerland’s largest pension fund, Publica, has joined four organisations active in the field of sustainable investments internationally.
The organisations include the Principles for Responsible Investment, the Institutional Investor Group on Climate Change, Climate Action 100+ and the Montréal Carbon Pledge.
With the new memberships, Publica plans to step up its efforts on the use of environmental, social and corporate governance (ESG) through the access to international best practices.
Stefan Beiner, head of asset management at Publica, said: “The goal to take long-term investment trends into account takes an important step [through the new memberships]”.
Publica is a founding member of the Swiss Association for Responsible Investments (SVVK-ASIR), alongside SBB, the pension fund for the federal railways, and the scheme for the canton of Zurich, BVK, among others.
According to its report on climate-related opportunities and risks for 2019, Publica excluded investments in the coal sector, while preferring renewable energies, wind farms or photovoltaic systems, through a strategic asset allocation worth 3.5% of its total assets.
The deputy chief investment officer, Patrick Uelfeti told IPE that the fund plans in the future to overweight its portfolio in companies with “promising and high-quality patents” in the renewable energy sector against other companies, based on its climate efficient equity index.
Publica’s approach to sustainability in relation to investment activities is based on a statutory mandate and normative basis, it added. Its financial analysis explicitly integrates ESG in the investment process and it uses an array of tactics to reiterate the importance of ESG criteria and put pressure on invested companies.
It has also decided to exclude from its portfolio companies that develop, manufacture, sell or store products that violate international conventions ratified by Switzerland or that violate Swiss law.
In addition, the scheme exercises voting rights for listed companies in Switzerland and engages in dialogue with domestic and foreign companies to identify “problematic investments”.
The disposal of holdings is considered as a last resort if, despite engagement, a company does not show the intention to carry out positive change.
Publica also exercises a veto right on investment in infrastructure to avoid financing projects that lead to risks, including climate risks.
In the next few years, Publica will build up a database with further climate-specific indicators as a decision-making basis for investments, it said.
It also wants to measure the carbon footprint in buildings to apply sustainability criteria for direct real estate investments in Switzerland.