Caisse de prévoyance de l’Etat de Genève (CPEG), the pension fund for the canton of Geneva in Switzerland, has invested CHF100m (€102m) in green bonds, as announced in its latest financial statement for 2021.
The scheme has also bought its first social bond issued by the canton of Geneva for CHF50m to finance projects with a positive social impact.
CPEG has moved forward with its ESG policy by publishing a charter for responsible investments and a climate strategy.
Last month it was also looking to federate commitments from fellow institutional investors for a venture capital-focused impact investing programme leveraging the European Investment Fund (EIF).
The scheme is committing to decarbonise its investment portfolio and achieve carbon neutrality by 2050, gradually exiting fossil fuel investments and aligning its portfolio with Paris Agreement’s goal to limit global warming.
The four pillars of the fund’s responsible investment policy include the integration of ESG aspects in its investment process, engagement, exclusion and impact investing, according to the charter.
CPEG will report annually on the progress made on ESG objectives from 2023, and on its responsible investment practices.
Last year, CPEG returned 6.7% net on assets worth CHF21.8bn, according to the statement. The pension fund has to reach a long-term goal in terms of funding ratio of 80% by 1 January 2052.
The scheme allocated 4.5% of its assets to cash and short-term receivables, 20% to loans, 3.6% to bonds denominated in Swiss francs, 16.9% to bonds denominated in foreign currency, 7.9% to Swiss equities, 17.9% to foreign equities, 0.6% to Swiss mortgages, 25.6% to Swiss real estate, 4.5% to private equity and infrastructure, and 2.1% to other investments, according to the statement.
CPEG’s strategic asset allocation foresees 25.6% of its assets invested in Swiss real estate, seeking a stable and predictable return over the long term, diversifying investments through its real estate investments and the management of its real estate portfolio, it said in the statement.
Equities returned 16.9% in 2021, private equity and infrastructure 24.5%, real estate 6.5%, including 2.3% linked to the increase in the value of buildings, while bonds recorded a -2.2% loss, and cash -0.7%.
At the end of 2021, the gross exposure of the pension fund to foreign currencies was 40.7%. Taking into account exchange risk hedging, net exposure stood at 23.4%, below the limit of 30%.
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