Swiss pension funds are making progress ‘cleaning up’ their investment portfolios and contributing to the transition to a greener economy, through impact investing, engagement, and the use of sustainability indexes.
Climate Alliance, a league of civil society organisations, has seen in the past year an increase in pension funds’ impact investments, ranging from 1% up to more than 10% of assets under management of schemes, which include green and social bonds, and infrastructure for the transition to a greener economy, it said.
The Pensionskasse of the city of Zurich (PKZH) holds impact investments in renewable energy and green bonds amounting to 1.9% of its total assets, excluding coal and electricity producers in its bonds and equities portfolios, according to an update on climate rating published by Climate Alliance.
The pension fund’s CO2 intensity in its equity portfolio is 31% lower than the global average, targeting 50% decarbonisation in bonds and equities by 2024, it added.
The pension fund of the canton of Lucerne (LUPK) holds 3% of its assets in impact Investments, mainly in renewable energies. The scheme is also using an ESG index that has helped to cut CO2 intensity in its bonds and equities portfolios by over 40% than the global average, according to Climate Alliance.
The organisation’s research also showed that the pension scheme of the city of St. Gallen invests 3.5% of its assets in energy transition companies and renewable energy infrastructure. Its CO2 footprint is 12% lower now than in 2020, it added.
Additionally, multi-employer pension fund Asga Pensionskasse invests 0.6% of its assets in green, social, sustainability bonds, integrating ESG standards to reach its 50% decarbonisation target by 2025, compared with 2020.
PKBS, the Pensionskasse of the city of Basel, has cut CO2 emissions in its equity and corporate bonds portfolios by 68% last year, compared with the end of 2019, Climate Alliance disclosed.
The pension fund for the reformed regional church of Aargau, Aldi Suisse Pensionskasse and Bayer Pensionskasse are all investing in sustainable equity and bond funds managed by Zürcher Kantonalbank (ZKB). This has led to cuts in CO2 emissions in their portfolios by a quarter in the case of the reformed regional church of Aargau scheme.
Zürcher Kantonalbank also conducts engagement and proxy voting on behalf of its investors, a cost effective advantage for small pension funds refraining from picking engagement service providers, said Sandro Leuenberger, responsible for finance and climate at Climate Alliance.
Swiss pension funds also engage with companies through Ethos’ engagement pool, the Climate Action 100+ initiative, and Federate Hermes EOS.
Migros Pensionskasse recently switched to a Paris-aligned index that has led to a 45% reduction of CO2 emissions in its investment portfolio. The scheme invests 1.7% of its assets through impact investment in renewable energy and green bonds, Climate Alliance added.
The pension fund for the employees of the city of Lausanne (CPCL) is using a low carbon index which, combined with exclusion policies, has led to a 47% cut to its CO2 emissions in its equity portfolio.
Furthermore, the pension fund for the employees of the Aargau canton is also using a Low Carbon Index, with CO2 intensity in the equity portfolio estimated to be at least 40% lower than global average, according to Climate Alliance.
Publica has also cut its CO2 emissions in its equity portfolio by 60%, and by 48% in its corporate bonds portfolio.
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