SWITZERLAND - The trustee board of the pension fund for the city of Zurich (PKZH) has agreed to sign the UN Principles for Responsible Investment (UNPRI).

The CHF13.5bn (€10.5bn) scheme is set to become the third Swiss pension fund to sign this commitment to ESG investment after the pension fund for the Swiss canton of Geneva and the Pensionskasse of the Zürcher Kantonalbank.

The PKZH said it was already fulfilling the UN's principles with its sustainability strategy and its role as an active shareholder.

The PKZH is also a founding member of the Ethos Foundation's Engagement Pool, currently comprising 60 Swiss pension funds, which aims to engage with companies to get them to apply ESG and CSR criteria. The Foundation itself is also an UNPRI signatory.

The PKZH said it was exercising its voting rights with the 100 largest companies in the SPI index, adding that the 300 largest European companies were included in the active shareholder policy and that the proxy voting was outsourced to Hermes Equity Ownership Services.

The pension fund also said it was engaging with all companies in which it is invested.
Additionally, the fund's investment committee is currently drawing up an exclusion policy according to which companies can be excluded from the PKZH's portfolio for violating international regulations.

"The exclusion criteria will be narrowed down and implemented together with Hermes in the course of this year," the scheme said in a statement.

Last year, the PKZH returned 4.6%. In the first quarter of 2011, it posted a 1.4% return, bringing the funding level to 114.4%.

The first-quarter result is almost double both averages calculated independently by Swisscanto and Credit Suisse for various samples.

Despite the comfortable funding situation, the fund will hike rates from next year to counterbalance low interest rates and the effects of the financial crisis.