SWITZERLAND - The latest Swisscanto pension fund survey reveals only 6% of Pensionskassen assets are invested according to sustainable criteria - but the funds themselves beg to differ.

This year's annual survey questioned 247 Pensionskassen, both company and multi-employer, with combined assets of CHF386bn (€230bn) or approximately 60% of the country's pension fund asset total, and focussed on sustainable investments - a topic of increasing importance, according to Swisscanto.

Looking at the results or at figures issued by INA, the interest group for sustainable investments, only one percent of the whole of Swiss pension fund assets is invested according to SRI criteria, suggesting funds are not that keen on sustainable investment after all.

However, Dieter Stohler, CEO of the Pensionskasse of the city of Basle, pointed out the flaw in the statistics.

"These figures include investments in designated SRI products but do not comprise sustainable strategies applied by pension funds to the whole of their portfolio," said Stohler.

Although no allocation is made to an SRI fund product, Basle's CHF6.7bn pensionskasse is said to be almost 100% sustainably invested .

"We apply negative screening of certain sectors, we use active proxy voting, we engage in dialogue with companies together with other pension funds and we apply sustainable criteria to any building or restauration projects in our real estate portfolio," he explained.

He also stressed a full investment in sustainable fund products was almost impossible because it would go against regulations of a diversified portfolio and, particularly for smaller funds, would expose them to a huge risk by putting all their eggs in one basket.

At the same time, however, the Swisscanto survey also revealed public pension funds and larger institutions generally made more committments to SRI than other funds as public funds invest around 12% of their assets sustainably.

"Maybe it is because these funds feel more exposed in public and therefore more under pressure," commented Gérard Fischer, CEO of the Swisscanto group.

"The low exposure to SRI did not surprise us but the topic is being discussed," he added and noted the same thing happened with shareholder rights which were not mentioned 10 years ago but are now being used.

According to the survey, almost 30% of the combined assets of participating funds are now used to exert shareholder rights and another 19% are used to engage in dialogue with companies.

Dominique Biedermann, director of Ethos, noted this is a growing trend as the shareholder rights group, founded in 2004 by two pension funds, now has 15 members and its latest success was to get UBS to disclose details on their subprime losses in full.

When it comes to SRI investments, public pension funds are much more engaged in shareholder activism as around 95% making use of their votes, Biedermann explained to IPE.

"With private pension funds, there often is a conflict of interest between the company which is the plan sponsor and shareholdings in other companies. So even if they make use of their votes they do not disclose it to their members and I think pension fund members have a right to know how their Pensionskasse voted."

He also pointed out "a vote as a shareholder has as much economic value as a dividend. Therefore, it should be every pension fund's duty to use it. Not doing so is just like rejecting the dividend from a shareholding," claimed Biedermann.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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