Swiss pension funds struggle with sustainability

Pension funds treat sustainability with distance, says Greenpeace Switzerland. They hardly integrate climate protection and biodiversity into their investment processes and do not exert enough influence on the companies.

Swiss pension funds have been criticized for not consistently integrating the protection of the climate and biodiversity into their investment processes and decisions, and for not making sufficient use of their influence on the companies they invest in. This is said to be confirmed by an analysis of corresponding documents, which Greenpeace Switzerland was able to view thanks to committed insured persons. Greenpeace Switzerland is therefore calling for a ban from 2030 on investments in companies whose business activities are not compatible with the goals of the Paris Climate Agreement and the protection of biodiversity.

Only a few pension funds provide transparent information

According to Greenpeace Switzerland, only a few pension funds provide transparent and public information about their sustainability strategy. That is why Greenpeace Switzerland launched the online tool «PensionWatch» at the beginning of February. It allows insured persons to ask their pension fund specific questions about its sustainability. In the past few weeks, around 1'200 insured persons have contacted over 130 pension funds in this way. However, this does not mean all pension funds responded: in the end, only 46 funds submitted their answers. In summary, Greenpeace Switzerland concludes after reviewing the responses it received: «The willingness to provide transparent and comprehensive information about the sustainability strategy to its own insured is small.» Even public-law institutions such as the pension funds of the cantons of Zug, Schaffhausen, Jura and Geneva had not responded to their insureds' requests for contact. Nor did large pension funds such as Complan, the pension fund of Swisscom, and the collective foundation Helvetia.

Few funds tackle systematic decarbonization of the portfolio

Only a few pension funds are tackling the systematic decarbonization of their investment portfolio, Greenpeace Switzerland continues. In addition, interim targets are often missing. A long-term 2050 climate target is worthless if no interim targets set the pace of emissions reductions. The examples of the Migros pension fund and Publica show that it is possible.

Too little use is made of opportunities to influence the companies invested in

The vast majority of pension funds still make far too little use of their opportunities to influence the companies they invest in via voting rights and engagement processes in favor of sustainability goals, Greenpeace Switzerland criticizes. If pension funds use their voting rights at all, they usually leave the decision to their asset managers, who mainly act in the interest of short-term returns. Few positive exceptions such as Retraites Populaires, Abendrot and Previs would indicate to use their voting rights in favor of sustainability goals by following the recommendations of service providers such as ETHOS, EOS at Federated Hermes, ISS-ESG or Inrate.

Pools influence too few companies

Greenpeace explains that sustainable cash registers organized themselves into engagement pools in order to exert influence by means of engagement dialogs. In principle, this is positive. However, the number of companies over which the pools exert influence is limited and needs to be expanded. The pension funds in their pools should also be more active in promoting shareholder resolutions in favor of greater sustainability at the companies they invest in.

There is an unclear understanding about impact investments

Greenpeace Switzerland further criticizes that when it comes to investments in sustainability solutions by means of impact investments, there is an unclear and inconsistent understanding of what is actually meant by this. It is not possible to classify and evaluate the statements on this topic, it says. «It seems that pension funds shy away from terms such as impact investing because there is no universally accepted definition for it, and therefore greenwashing accusations could quickly arise or conversely, this could even be considered contrary to their legal mandate,» says Niki Vischer, an expert on sustainable finance at Greenpeace Switzerland. And she continues: «Lack of definitions and agreement regarding sustainable investments is fundamentally a big problem in the financial world. There is an urgent need for binding minimum requirements for so-called sustainable investments.»

Greenpeace calls for ban on climate-damaging investments

Peter Haberstich, an expert on sustainable finance at Greenpeace Switzerland, draws a sobering conclusion: «Most of the pension funds that were contacted shied away from responding. For this reason, we probably evaluated the majority of responses from pension funds, some of which are already committed to protecting the climate and biodiversity, and thus to preserving our livelihoods. But even with these institutions there is still a lot of room for improvement. That doesn't bode well for the industry as a whole.»

Pension funds to be obligated

Greenpeace Switzerland is therefore calling for pension funds to be required to immediately establish transparency about their sustainability strategy, to align their portfolios with the Paris climate goals and biodiversity restoration before the end of this year, and to work as committed co-owners to ensure that all invested companies are required to act sustainably.

From 2030, pension funds will also be prohibited from investing in companies whose business activities are not compatible with the goals of the Paris Climate Agreement and the protection of biodiversity. «Preserving the natural foundations of life is the basis of prosperity and is therefore part of the core mission of every pension fund - in the interests of its insured,» Haberstich said.

Over 19'000 people call for sustainable pension funds

Last year, Greenpeace Switzerland calculated and revealed in a report the average investments of Swiss pension funds in rainforest-destroying companies: Pension funds are invested with at least 60 billion Swiss francs in companies that are particularly responsible for tropical deforestation. To date, more than 19'000 people have signed a petition to the pension funds, the Swiss Pension Fund Association ASIP and politicians. They all demand that pension funds must align all their actions with the goals of sustainable development. This applies in particular to climate, biodiversity and socially responsible transition. They should provide the greatest possible transparency about their strategy and progress.

Greenpeace Switzerland has submitted the petition for sustainable pension funds to around 750 pension funds, to the Swiss Pension Fund Association ASIP, to the Federal Department of Home Affairs (FDHA) and to Parliament.