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Frequently asked questions

How is norm-based screening implemented in practice?

An example might be a European textile firm that manufactures clothes in an emerging nation using child labour. The company is rated critical during the review, because child labour is prohibited in Switzerland under the Convention on the Rights of the Child (SR 0.107). Once the information relating to the violation of this norm has been checked and verified, the company is contacted and its attention is drawn to the violation. During the dialogue, PUBLICA succeeds in convincing the company of the importance of this issue, and the company takes effective measures to improve production conditions. The process has now been successfully completed and the company remains in the securities portfolio.

On what basis are companies excluded?

Firms where there is no prospect of a positive change following a dialogue, or whose primary business renders them unable to cease their controversial activities, are placed on an exclusion list.

The exclusion list is reviewed and updated periodically, and at least once a year. Decisions on the exclusion of a company from the portfolio are taken by PUBLICA. They depend partly on whether exclusion can be implemented technically. Firms may be excluded from the portfolio as a result of the annual ESG risk analysis. For example, following an analysis of the possible impact of climate change and the potential taxing of carbon emitters, all coal producers were excluded from the equity portfolios.

On what basis does PUBLICA seek dialogue with companies?

A process of dialogue is considered for companies identified as problematic during the analysis.
Generally, the dialogue process is only initiated where there is a sufficiently strong prospect of a positive change in the company’s conduct.
Specialised external providers are entrusted with the task of conducting the dialogues. They have the networks and experience necessary to undertake discussions with the companies.
For large Swiss firms held by PUBLICA, the external company Inrate AG initiates the dialogue on PUBLICA’s behalf. For international companies PUBLICA works with the Swiss Association for Responsible Investments SVVK-ASIR.

Why doesn’t PUBLICA conduct member surveys on sustainability issues?
  • There is no bar to conducting member surveys, but they cannot be considered binding. Occupational pensions law unambiguously states that defining the strategic asset allocation and investment policy is the task of the pension institution’s supreme governing body (see Art. 51a BVG), which is also responsible for the decisions taken. This responsibility cannot be shifted to the beneficiaries as a whole, even if the entire membership has been balloted on the issue concerned. It should be noted that the supreme governing body is required to act in the interest of the insured members. The interpretation of what constitutes that interest is not a matter for surveys of sustainability preferences: it is a task that must be carried out by the supreme governing body in light of the overall context. For example, it is possible that a supreme governing body would be held liable for an incorrect action even if that action were based on the wishes of the insured members.
  • A demand for member surveys in one area would immediately raise the question of where to draw the line: after all, why should members only be consulted about their sustainability preferences? There would be equally good reasons to survey them on the level of employee contributions, the interest rate on retirement assets, the choice of pension plan, the level of the conversion rate, the structuring of recovery measures and so on, since these ultimately affect insured members directly. The current Pillar 2 system does not incorporate these elements of direct democracy; that is why the members elect their representatives. For as long as that remains the case, we believe it would be misguided to introduce elements that are foreign (and even inimical) to the system through the back door in the form of a publicly accessible rating.
How transparent are PUBLICA’s investments?

All mandates and their investment styles are disclosed in PUBLICA’s Annual Report. Since the majority of the mandates are invested in line with or close to an index, the investments in the equity portfolio are virtually identical to the composition of the corresponding indices. The equity benchmarks are the six MSCI regional and country indexes. PUBLICA does not involve itself in non-transparent investments such as structured products, hedge funds or private equity.

What does PUBLICA mean by “sustainability”?

A globally accepted definition of sustainability was formulated by the Brundtland Commission. It states that sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

PUBLICA’s main task is to protect against or mitigate the economic consequences of old age, disability and death for its insured members, having due regard to the legal and economic environment (Federal Act of 25 June 1982 on Occupational Old Age, Survivors’ and Invalidity Pension Provision BVG/OPA, minimum interest rate, conversion rate, performance of the financial markets). Because it adheres to the Brundtland approach to sustainability, PUBLICA integrates ESG criteria into its investment process, meaning that it explicitly takes account of environmental, social and corporate governance risks when implementing its strategic asset allocations. PUBLICA’s approach to sustainability within its investment activities falls under what it terms «responsible investment».

What sustainability approach does PUBLICA follow?

PUBLICA defines its responsible investment approaches in line with its legal mandate and the normative basis. They comply with the following principles:

  1. They are formulated in a holistic fashion, so that as far as possible all asset classes can be taken into account.
  2. They are integrated into and thus form part of the investment process.
  3. They are guided by the normative basis.
  4. They are transparent and comprehensible.

PUBLICA takes account of the approaches to responsible investment set out in the following diagram:

More information can be found in PUBLICA’s Responsible Investment Policy (PDF, 150 KB).

How are voting rights exercised?

Inrate AG submits its recommendations to the members of the Investment Committee. Voting rights are exercised on the basis of a majority decision and published on the PUBLICA website following the company general meetings concerned.

For companies based abroad, Minerva Analytics exercises voting rights on the basis of the Voting Guideline drawn up in collaboration with Inrate.

What procedures are used to analyse companies?

PUBLICA’s entire equity and corporate bond universe is analysed by an external partner in accordance with defined criteria and evaluated on a half-yearly basis. The chosen criteria are as objective as possible. Problematic companies are subjected to more detailed scrutiny. Based on the results, recommendations for action are submitted to the Investment Committee for approval.

What is the normative basis for defining the criteria?

PUBLICA does not define or employ its own politically motivated or moral criteria, and is instead guided by the will of the Swiss electorate. In principle, this also reflects the will of PUBLICA’s more than 100,000 active members and pension recipients in their capacity as voters. The Swiss electorate expresses its will in the outcomes of federal votes on mandatory and optional referendums as well as popular initiatives. The political will also manifests itself in the parliamentary procedural requests forwarded by the Federal Assembly. The criteria for PUBLICA’s responsible investment activity are dictated in part by the Swiss Federal Constitution and the legislation derived from it, as well as the international conventions ratified by Switzerland, which largely coincide with the 10 principles of the UN Global Compact.

In December 2015 PUBLICA, together with six other large investors, founded the Swiss Association for Responsible Investments, SVVK-ASIR. What is its purpose?

Implementing norm-based screening is a complex and labour-intensive activity. The Association’s main purpose is to minimise the workload of its individual members by performing as many tasks as possible collectively. Another of its key aims is knowledge transfer between the members, and between the Association and other large investors in Switzerland and abroad.

Where can I obtain further information?

Questions and comments concerning responsible investment should be addressed to PUBLICA Asset Management: Patrick Uelfeti (tel. +41 58 485 23 30, will be pleased to assist you.

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