PUBLICA moves forward with responsible investment
The Swiss Federal Pension Fund PUBLICA attaches great importance to investing its members’ pension assets responsibly. It has now taken two key steps along that path: committing to net zero emissions, and excluding manufacturers of nuclear weapons from its investment portfolio.
PUBLICA invests the pension assets of its active members and pension recipients responsibly, and is constantly working to move forward in this area.
PUBLICA joins commitment to net zero emissions
PUBLICA has set a target of net zero emissions for its portfolio by 2050 at the latest. This undertaking is in line with the Paris Agreement, which has been ratified by Switzerland. It supports the measures already taken to manage the opportunities and risks associated with climate change, and also commits PUBLICA to address the climate issue on an ongoing basis.
PUBLICA has adopted the following measures to support its net zero target:
- a climate-efficient equity index to systematically steer climate-related opportunities and risks
- a reduction in the CO2 intensities of corporate bonds to reduce climate risks
- a defined path to reduce the CO2 emissions of directly held real estate in Switzerland
- engagement with CO2-intensive companies to help them move into more responsible areas of business
- exclusion of coal-producing companies from its portfolio
- investment in renewable energies such as wind farms and photovoltaic installations in the private markets category
The Paris Agreement aims to limit global warming to well below 2°C, and cutting emissions to net zero by 2050 is necessary in order to meet that target. Net zero means that no more greenhouse gas emissions may be released into the atmosphere than can be removed from it. Technology, along with changes to the conduct of companies and individuals, can substantially reduce emissions. Those that remain must then be compensated for by natural or artificial reduction measures.
UN Nuclear Weapon Ban Treaty implemented
PUBLICA has excluded manufacturers of nuclear weapons (including those based in the five nuclear weapon states) from its portfolio. This is in line with the UN Nuclear Weapon Ban Treaty, which came into force in January 2021. As part of its portfolio rebalancing at the end of November 2021, PUBLICA sold all shares and corporate bonds of companies that manufacture nuclear weapons, replacing them with additional securities from firms in which it already invests. This means that the investments remain within the same asset classes. PUBLICA has excluded manufacturers of cluster munitions, anti-personnel mines, and nuclear weapons from non-nuclear weapon states from its portfolio since 2017.
Greater exercise of shareholder rights
PUBLICA has a comprehensive responsible investment policy which is continually updated. One current issue is the exercise of shareholder rights: since 2020, PUBLICA has also exercised its voting rights in 150–200 foreign companies whose business activities potentially conflict with the normative basis. The basis allows PUBLICA to reflect the will of the Swiss electorate and procedural requests forwarded by the Federal Assembly.
What does PUBLICA mean by “responsible investment”?
PUBLICA uses the term “responsible investment” rather than referring to “sustainability”. The Swiss Federal Pension Fund invests responsibly by taking account of environmental, social and governance issues when investing its members’ assets. This allows it to improve the risk/return ratio over the long term.