CPEG, the CHF21.3bn pension fund of the canton of Geneva in Switzerland, has handed a CHF200m (€211m) mandate to Lombard Odier Investment Managers (LOIM), as it exits the energy and fossil fuels sectors.

LOIM’s brief invests in global equities (ex Swiss) with a lower carbon footprint and is more closely aligned to the goals set by the Paris Agreement on global warming, the scheme said in its 2023 responsible investment report.

The manager will invest the scheme’s assets in equities aligned with a 2°C global warming temperature and with a carbon footprint that is 30% lower than its benchmark, it added.

The mandate will be based on the Lombard Odier Portfolio Temperature Alignment (LOPTA) tool, which uses climate scenarios set by the Intergovernmental Panel on Climate Change (IPCC), looking at 160 sub-sectors to gauge companies’ temperature alignments, it said.

With the mandate, the pension fund aims to cut the carbon footprint of its equity investments by 2025, targeting carbon neutrality by 2050, according to its sustainable investment strategy.

The next steps of its sustainable investment strategy roadmap include, on the one hand, implementing the new asset allocation approved at the end of 2023, which takes into account ESG aspects, and on the other hand assessing methodologies to calculate the first climate value at risk (VaR), CPEG added in the report.

The scheme started to gradually disengage from the energy sector late last year, excluding fossil fuels companies whose emissions were not in line with the goals set by the Paris Agreement.

The temperature level of CPEG’s fossil fuel investments decreases each year by 0.25°C, expected to reach 1.5°C at the end of 2025. The pension fund has now moved to exclude the energy and fossil fuel sectors entirely from its investment pool, according to the report.

The scheme was investing only in companies in the energy sector whose carbon emissions’ trajectory will lead to global warming temperatures lower than 2°C, compared with 2.25°C set previously, according to its plan.

There aren’t companies meeting the 2°C temperature trajectory requirement, the scheme added in the report, to explain the reasons for exiting the sector.

The latest digital edition of IPE’s magazine is now available

Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

More from Luigi Serenelli

Topics