Pension funds have been the main reason why Switzerland’s socially responsible investment (SRI) volume has more than doubled since 2001, a new study claims.
According to the study, SRI volume at the end of 2005 totalled CHF10.6bn (€6.72bn), up 240% from five years before then.
“This growth has chiefly been driven by big pension funds, particularly those from the public sector,” the study said.
“In increasing their exposure to SRI, these investors have typically integrated an SRI approach instead of awarding dedicated SRI mandates.”
As an example, the study said the investors used their voting powers and communication skills to persuade firms to espouse SRI criteria. A breakdown of the total SRI volume reflects that CHF5.8bn was in pooled vehicles and structured products, while CHF4.8bn was in dedicated SRI mandates.
Moreover, 77% of the CHF10.6bn in SRI assets were invested in equities, 12% in bonds and another 4% in private equity and other alternative asset classes.
Yet as impressive as the growth in SRI volume has been in Switzerland, the study noted that the figure represented just 1% of the total investment fund market.
“The prospects (for SRI) don’t look all that rosy, but an encouraging sign is that an increasing number of firms are respecting environmental and social standards,” said Erol Bicelen, a marketing manager from private bank Sarasin.
The study was compiled by the Zurich SRI consultancy onValues on behalf of Sarasin and four other asset managers including SAM, Swisscanto, UBS and Zürcher Kantonalbank.
The European Business School near Frankfurt estimates that there are more than 400 SRI funds in Europe with a volume of CHF37.5bn. Germany is the biggest market, accounting for CHF14bn of the total SRI volume, according to EBS.
In a related development, SAM, a Swiss asset manager specialising in SRI, said its assets under management jumped 72% in 2005 to reach CHF3.1bn.