SWITZERLAND - Nest, a CHF600m (€361m) Swiss corporate pension fund, is outperforming competitors with its strict socially responsible investment (SRI) approach, according to Nest chief executive Felix Pfeifer.
For the last five years, the pension fund has invested more than 90% of its assets in sustainable investments, with a screening that is more stringent than average.
According to Nest's investment guidelines, its negative investment criteria include nuclear energy, genetic engineering in farming, "disputed" medical genetic engineering, links to the arms trade, money laundering, support of violent regimes, corruption, child labour, alcohol, tobacco, pornography and gambling, violation of fundamental labour and human rights, and insufficient remuneration for indigenous populations.
Speaking at the International Sustainability Leadership Symposium in Zurich on Friday, Pfeifer said this approach has helped the fund grow and reach more attractive returns in the past five years.
"We have had this approach in the last five years, when we were small," said Pfeifer, adding: "If we compare performance with other pension funds we are always at the top."
In 2006, the fund reached a return of 6.9%, outperforming its benchmark, the Pictet BVG-Index 93, by 3%.
One of the factors for the fund's success is the size companies in which Nest invests - firms that fit Nest's criteria are generally smaller.
"These firms in the last five years they outperformed the larger ones," said Pfeifer.
He also explained his fund follows the so-called INrate approach, whereby it analyses and rates the ethical, ecological and social sustainability of companies, institutions and countries world wide, following a methodological approach of "best in service" as opposed to best in class.
"For instance, we don't compare auto to auto, but we compare transport," he said.
Pfeifer is confident that the fund will continue to outperform, arguing that Nest is in "a very comfortable position".
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