Swiss pension funds shall assume their status of major financial institution and take sustainability into account in their investments. The new ESG reporting standard of the ASIP (Association of Swiss Pension Funds) is only a recommendation, but it sets out a clear framework for better comparability.
Global climate risks are increasing and the importance of ESG issues (environmental, social and governance issues) is growing at all levels, from international organisations to governments, from companies to their employees, customers, and shareholders. Regulations are being put in place in a growing number of countries around the world, including Switzerland. This is why there is no longer a debate that from now on, investment principles shall also take into account sustainable objectives.
In December 2022, the ASIP (Association of Swiss Pension Funds) published a norm recommending to Swiss pension funds reporting on the sustainability of their investments (either as an independent report or as part of the regular annual report). ASIP recommends that such a report be drawn up for the first time for the financial year 2023. This standard will make it easier to compare the efforts made by each individual Swiss pension funds in the area of sustainable investments.
It is therefore essential that discussions be started rapidly within Swiss pension funds in order to determine their convictions regarding sustainable investments so that their long-term investment strategy shall fall in line with these convictions by being gradually implemented.
The subject is often new for some Board members or investment committee members, and it is not a simple task to define an efficient framework for decision making. External support is recommended to get such a project off the ground and off to a good start. In the end, Swiss pension funds will need to take more ownership on the matter, adapt their processes and eventually their investment portfolio and partners.
WTW advises its clients throughout the entire investment management process, from learning about sustainable investment, to the development of investment beliefs and principles, to their concrete implementation in the portfolio and the regular monitoring of the fund's sustainable investment objectives.
Another concrete example of how WTW supports its clients is to assist a pension fund in the implementation of the desired decarbonisation strategy independently decided by the company (at its operational level).
In addition, the WTW Group's proprietary tools make it possible to assess the impact of climate scenarios on a pension fund, both on the investment and liability sides.