The Swiss Government assessed the country’s financial sector to see how it is planning to align with net zero.
Nearly 150 institutions, including 71 pension funds and 26 asset managers, participated voluntarily in the evaluation, with most saying they wanted to better understand how their climate performance stacked-up against peers.
The aggregated, anonymised results were published by the Swiss Environment Ministry and non-profits Fahrländer Partner Raumentwicklung and the Rocky Mountain Institute.
They are based on the Paris-Agreement Capital Transition Assessment (PACTA), a well-known methodology developed by think-tank 2° Investing Initiative (2DII) to see how investment portfolios align with the goals of the Paris Agreement.
Results
Most pension funds (63) submitted their global public equities and corporate bonds portfolios for evaluation, with 49 also including their Swiss real estate and mortgages portfolios and 48 taking part in a qualitative survey.
For the asset manager participants, only half submitted their portfolios for assessment, with most opting to take part in the qualitative survey.
More than 60% of all respondents had at least partially integrated an entity-level net zero target into their internal strategy.
“However, only just under a third have publicly committed to the net zero target,” the report noted.
Those who uploaded their equity and corporate bond portfolios were asked to indicate whether those portfolios sought to have a positive impact on decarbonisation efforts.
“If – as mentioned above – around 60% of all participants are committed to the net zero target, one would expect this to be reflected in the targets for the portfolios,” said the authors. “However, only 14% of the uploaded portfolios state a climate-friendly focus as a goal.”
For asset managers, the figure was around 40%, but it was “significantly lower” for pension funds and other sectors.
Transition plans
The Swiss government currently has the world’s most ambitious requirements around climate transition plans for the finance sector, with a law calling for the publication of entity-level strategies that align with the country’s net zero goals.
Around 40 major banks and 20 insurance companies have been required to publish such a net zero transition plan so far.
However, most of the insurers, pension funds and asset managers participating in the assessment have yet to develop a climate plan, and only 13% of all participants had a comprehensive, publicly available one.
“This is once again a significantly lower number of financial institutions than the number that publicly commit to the net-zero target,” noted the report, adding that it falls to 15% for pension funds that expect to publish a transition plan as part of their commitment to the recommendations of the Taskforce on Climate-related Financial Disclosures.
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