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).

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