CHF28.5bn pension fund heavyweight BVK boosts PRI Swiss signatory growth

It has emerged that along with helping to launch a new responsible investment club this month, BVK, a CHF28.5bn (€26.4bn) pension scheme for employees of the canton of Zurich, has become the eighth asset owner from Switzerland to sign the Principles for Responsible Investment (PRI). BVK’s embrace of the PRI is significant for PRI’s growth in Switzerland as the fund is the country’s second biggest occupational scheme after PUBLICA. Other PRI asset owner signatories include three of Switzerland’s biggest insurers, namely Swiss Re, Zurich and Suva.
The BVK is also cooperating with Suva and PUBLICA on the new responsible investment club SVVK–ASIR. The club stated aim is to agree on and implement common ESG (environmental, social and governance) criteria (see article in this issue).
Asked about its responsible investment move, BVK Chief Executive Thomas Schönbächler said the fund had actually been investing this way for some time but only now decided to go public. For example, Schönbächler said that since 2009 the BVK had been voting all its shares and engaging with investee companies to get them to be more sustainable. He added that amid the BVK’s commodity investments, it excluded foodstuffs like corn or wheat for ethical reasons.The BVK’s commodity exposure is around 4% of total assets. It also has 32% in equities, 37% in bonds and 18.7% in real estate. Private equity (2%) and cash (6%) round out the portfolio. It has around 113,000 members and returned 6.3% last year. This was almost twice its target of 3.25% per annum.
Within its portfolio, the BVK has exposure to the fossil fuel industry. Asked about the risk of stranded assets in the wake of the Paris climate talks, Schönbächler said the BVK was unsure that there truly was a risk: “One the one hand, there is a scenario where CO2 emissions come down considerably to counteract global warming. That depends on the politicians,” he said.
“On the other hand, however, analysts expect worldwide energy demand to increase sharply, and if that’s the case, it’s unclear how that demand can be met without fossil fuels. We at the BVK have not yet made our investments dependent on the one or other scenario,” Schönbächler added.
Regarding green investments, Schönbächler said that as the BVK was a heavy index investor, any exposure would arise via those benchmarks. The scheme also placed a big emphasis on energy efficiency when investing in real estate.
Download the RI Insight Switzerland report from September 2015