Most of the 20 largest Swiss pension funds do not systematically consider sustainability criteria in their investment decisions, instead seeming to see responsible investment as an add-on rather than integral part of the investment process, according to ShareAction and WWF Switzerland.
The conclusions are based on a survey of the 20 largest* pension funds in Switzerland, representing CHF281bn (€253bn) in assets, or around 36% of all Swiss occupational pension funds.
Sixteen of the pension funds participated in the survey by filling out a questionnaire, while the other four were assessed only on the basis of publicly available information.
WWF and ShareAction then grouped the pension funds into quintiles, ranging from “best practice” to “underpeformers/no scoring possible”.
None of the pension funds obtained the “best practice” score or were classed as “underperformers”.
There were five that scored the highest overall, being classed as demonstrating “good practice” : BVK Kanton Zurich, Pensionskasse Post, Pensionskasse Stadt Zurich, Bernische Pensionskasse and CPEG-État de Genève.
Sonia Hierzig, research officer at ShareAction and author of the survey report, said: “The results demonstrate that, whilst the 20 funds we looked at do consider responsible investment, there’s a long way to go to adopt international best practice, particularly when it comes to transparency and climate risk management.”
Overall, according to the report, “the industry still seems to understand Responsible Investment mainly as an activity separate from other aspects of the investment process, rather than fully integrating environmental, social and corporate governance (ESG) considerations into investment decisions”.
Only one pension fund has developed a strategy on the financial risks related to climate change, the groups said.
The survey found that nine of the 16 participating funds have a detailed responsible investment policy, four have a general policy and the remainder none.
All of the participating pension funds outsource some or all investment management, and nine said they took the responsible investment capabilities of all asset managers and consultants into account when choosing which to hire.
Only two of the 20 pension funds have signed up to the UN-supported Principles for Responsible Investment, according to the survey report.
It noted that five of the pension funds surveyed were founding members of SVVK-ASIR, the Swiss association for responsible investment, “which indicates that Swiss pension funds are increasingly taking up responsible investment activities”.
SVVK-ASIR could not be reached for comment by the time of publication.
*Based on AUM in 2014. The euro conversion is based on current exchange rates.