ASIP ESG reporting guidelines lay obstacle course for Swiss pension funds

The first analysis of investment portfolios conducted by Swiss pension schemes according to ESG reporting standards set by the country’s pension funds association ASIP are mined with obstacles that, however, are not considered a deterrent to apply non-binding guidelines.

So far, according to consultancy PPCmetrics, an above-average number of government pension funds, collective foundations and pension schemes of large corporations in Switzerland are using the standards.

Pension funds have taken the ASIP ESG reporting standards, which apply to the fiscal year 2023, as an opportunity to start or expand public ESG reporting, and other pension funds report on ESG for purely internal purposes, Luzius Neubert, partner and member of PPCmetrics’ management team, told IPE.

“Reasons for this include the additional effort and costs, the limited interest in ESG issues among plan members, and the fact that financial ESG risks are often addressed through broad diversification rather than active management,” he added.

ASIP’s standards help pension funds to report on ESG in a standardised way throughout Switzerland, touching on proxy voting and engagement.

PPCmetrics has noted that, as expected, particularly comparability and portfolio coverage are challenging, with providers of climate metrics not covering the entire, typical pension fund portfolio, and specific methodologies that have been used depending on the asset class – for example, real estate and equities are usually assessed through different metrics.

“As a consequence, it is currently not possible to aggregate all metrics and give a standardised overview of a portfolio. In addition, some providers scale the applicable portfolio to 100%, while others use a value of zero for assets to which the metric does not apply,” Neubert said, adding that to improve comparability such questions will need to be clarified in future.

The pension fund for the employees of the canton of Aargau, Aargauische Pensionskasse (APK), has reported on key figures, in line with ASIP ESG reporting standards.

ASIP splits key figures for quantitative reporting into ‘Basic’, considered as minimum standards for beginners, and ‘Advanced’ (in addition to Basic), for a more comprehensive and detailed ESG reporting.

APK has not gone that far to report on Advanced figures because the data is not yet fully available, chief investment officer Adriano Sbriglio told IPE.

“Obtaining and consolidating the data was a challenge. The results could vary depending on the data provider and the time of analysis. This required careful review of data and data providers. This also showed the limits of comparability and interpretation,” Sbriglio added.

“Obtaining and consolidating the data was a challenge”

Adriano Sbriglio, CIO of APK

The Pensionskasse SRG SSR (PKS), the pension fund for the employees of the Swiss Broadcasting Corporation, expects to finalise its 2023 sustainability report by the end of this year. Key figures for Basic and Advanced reporting are not always easy to obtain, as many players are involved, PKS said.

A first analysis of the portfolio shows a 70% coverage of the required key figures, with scopes used, methods, intensities, terminologies, and specified levels of coverage that are challenging, a spokeswoman added.

“In principle, every provider/manager states ESG [aspects] of their offerings, but comparability is only possible to a limited extent. It is then up to each pension fund to decide which key figures it monitors and publishes, to what depth and breadth,” the spokeswoman added.

Determining ESG scores is a challenge, especially in the real estate sector, she added.

ASIP believes that a standardisation in the real estate industry is crucial to compare reported intensity figures. Its guidelines are, however, representing an incentive for pension funds to approach ESG reporting.

At Roche pension fund, for example, beneficiaries will receive a separate sustainability report for the first time this year, following the ASIP ESG reporting standards, a spokesperson said. This report details the sustainability strategy, its implementation and associated key metrics.

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