Just 14% of Swiss pension funds taking ESG into account

Just 14 per cent of Swiss pension funds take environmental, social and governance (ESG) risks into account when making investment decisions, according to Mercer.

Its European Asset Allocation Study 2021 also found that the funds that do consider ESG risks are mostly focused on environmental risks rather than social or governance risks. However, it should be noted here that the majority of Mercer study participants were small funds (75 per cent have assets below USD 500m), which are often slower to act on strategic issues.

It follows specific figures published for Ireland by Mercer, which showed 69 per cent of pension funds consider ESG issues in investments; although Ireland is lagging other European counterparts, the figure is significantly higher than that for Switzerland.

"The study clearly shows that there is still room for improvement in terms of sustainable investments, especially among small institutions. ESG should not become an issue only from a moral, social and social perspective. Politics: It also shows that sustainable and impact investments can also be good for hedging portfolio risks and, ultimately, for returns,” Mercer Switzerland head advisory, Tobias Wolf.

"However, small funds often have insufficient resources for such strategic matters. It is then important to obtain external support, for example for the development of a holistic ESG strategy and the monitoring of its implementation until the selection of suitable investments. "

He said that in Switzerland, very large funds and foundations often play a “pioneering role”.

"This was recently highlighted in our ' Transformational Investments ' study, on the basis of which we have created a transformation framework in cooperation with Swiss pension funds. It can help other investors to better assess their own efforts. on ESG and, if necessary, to steer them on the right track,” Wolf said.

The number of European investors using low carbon or climate-linked indexation has increased significantly compared to last year (26 per cent vs. 6 per cent). The survey shows that a large majority of investors integrate ESG into all aspects of their operations, including the selection of investment managers (83 per cent), monitoring of investment managers (88 per cent), reports (79 per cent) and asset allocation (64 per cent).

The survey also shows that investors are moving from a more reactive to a proactive position, with regulatory factors becoming less important as a motivation to take ESG risks into account (67 per cent cited this as the main reason, compared with 85 per cent the last year).

    Share Story:

Recent Stories

Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Podcast - The power of three: Using Common Contractual Funds to improve tax outcomes for investors
Large asset owners are still investing in equities in a way where they are taxed on their income. The implication is that they get a poorer return. They need to, and can, improve this, but how?

In this podcast, AMX Head of Client and Manager Development, Aaron Overy, and AMX Product Tax Specialist, Kevin Duggan, discuss with European Pensions Editor, Natalie Tuck, about three options to help ensure good withholding tax outcomes for institutional investors.
Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows

Europe’s pensions challenges
Francesca Fabrizi meets Matti Leppälä, Secretary General and CEO of PensionsEurope, to discuss the key aims and objectives of the association today.