Patrick Uelfeti is Deputy Chief Investment Officer at PUBLICA, the CHF38bn (€35bn) Swiss federal employee pension fund and – as of this month – President of the country’s new responsible investment body SVVK–ASIR.
SVVK–ASIR stands for Schweizer Verein für verantwortungsbewusste Kapitalanlagen – Association Suisse pour des investissements responsables (the Swiss Responsible Investment Association). It’s taken a while, but Swiss institutional investors are starting to embrace responsible investing in a big way.
While there are just eight Swiss asset owner signatories to the PRI (in a market with over 2,000 pension schemes), in early December seven of the country’s biggest institutions, including PUBLICA, the Swiss pension scheme for federal government workers, the AHV state pensions buffer scheme, and BVK, the pension fund for the Canton of Zurich, came together to form their own responsible investment ‘club.’
According to its members, which also include the pension funds for the Swiss railway and postal system and which have CHF150bn in combined assets, the club’s aim is to agree on and implement common ESG (environmental, social and governance) criteria. To find out more, Responsible Investor interviewed Uelfeti.
Which ESG criteria will investee companies have to fulfil to satisfy the SVVK–ASIR’s members?
The criteria will be based on three pillars, including Swiss law and our Constitution, the UN Global Compact and other international treaties that Switzerland has signed. Examples of the latter are the UN’s ban on cluster bombs or the Anti-Nuclear Proliferation Treaty. So as a starting point, our members will exclude cluster bombs and nuclear weapons outright. Other red lines are taken from the Global Compact, for example reliance on slave or child labour, union suppression, corruption and violations of human rights.For almost 20 years, Swiss proxy firm Ethos has fought for good governance at Swiss companies. It also provides access to sustainable funds. Why don’t your members just rely on Ethos’ services?
The purpose of our organisation is to foster responsible investing among like-minded Swiss institutions, and we are open to new members. The organisation endeavours to implement common ESG criteria and to monitor the portfolios of our members to ensure the criteria are respected. If they are not, we will engage with the companies to effect progress. If no progress is made, we will recommend to our members exclusion of those companies and publish those exclusion on SVVK–ASIR’s website. Indeed, our members may even choose to use the likes of Ethos for engagement or proxy voting at Swiss companies. That’s up to them as is deciding their own investment strategy.
So SVVK–ASIR is not to be seen as competition to Ethos?
Not in the least. Let me clear on the point of SVVK–ASIR: We feel that Swiss investors should get together to ensure that, in particular, companies outside of Switzerland abide by our ESG criteria. Ethos also differs from us in that it is focused on Swiss companies.
Do you feel that other organisations like the new lobby Swiss Sustainable Finance (SSF) or even Swiss pension fund association ASIP are doing enough to promote responsible investing?
Yes we do. But let’s not compare apples with oranges. Unlike the SSF or ASIP, we do not plan to be a lobby for sustainable investment but instead restrict ourselves to the task already mentioned.
How have investee companies responded to your organisation and its ambition?
It’s too early to tell, as we will formally begin our work in 2016. I also would like to stress that we will not confront companies but engage in a dialogue with them if there are issues. Indeed, from 4,000 to 5,000 companies in the portfolios of our seven members, we estimate that 99% fulfil our ESG criteria and pose no issues. Regarding those companies where issues arise, we hope to achieve progress through dialogue.
Download the RI Insight Switzerland report from September 2015