Swiss pension fund association ASIP has denied claims by a local campaign group that its members have as much as CHF8bn (€7.3bn) – or 1% of their total assets – invested in arms manufacturers.
“When looking at the statistics, we think the number given by the NGO is too high,” ASIP told Responsible Investor. The Zurich-based association did not, however, provide another figure.
ASIP was responding to claims by the NGO ‘Group for a Switzerland Without an Army (GSoA).’ Switzerland has more than 2,000 pension funds, but GSoA says that on the basis of the responses it got from “several dozen” big schemes, it arrived at the CHF8bn figure.
Among those that responded to GSoA’s query were Publica, the CHF38bn giant for Swiss federal employees, as well as schemes for city employees in Berne and Zurich (BPK and PKZH, respectively). Publica put its exposure to arms manufacturers at CHF110m (0.28% of assets); PKZH said it was CHF80m (0.5%); and BPK put the exposure at CHF41m (0.35%).
More controversially, the NGO claimed that the CHF8bn figure included investments in companies that make nuclear weapon components. Examples cited were BAE Systems of the UK and Safran of France. Swiss law forbids financial institutions like pension schemes from funding companies involved in nuclear or cluster bomb manufacture. The ban covers both direct and indirect funding.
But according to GSoA, there is a huge loophole in the law.“The law states that a financial institution is in violation if it deliberately provides the finance indirectly instead of doing so directly,” GSoA says on its website. “As there is no way of knowing what the institution’s intentions are, the law is nothing but a paper tiger.” Publica, BPK and PKZH declined to comment on their specific holdings, saying only that they did not “directly” finance nuclear weapons.
Patrick Uelfeti, Deputy Chief Investment Officer at Publica, told RI: “War is not conducted by arms manufacturers but by countries. War is also financed through many channels… That said, if Switzerland decides to impose international sanctions in times of war, we will of course adhere to them when investing.”
Uelfeti’s remarks were echoed by Jürg Tobler, CIO at PKZH, who added: “Pension funds would be quite overchallenged if, through their business, they were forced to fight all the evil in this world.”
But GSoA Secretary Lewin Lempert said the schemes were missing the point. “Of course, there will always be war, but what we’re simply saying is that Switzerland could lead by example.” The GSoA hopes to gather 100,000 signatures from Swiss citizens to prompt a referendum on whether Swiss pension funds should invest in the arms sector.
Late last year, Uelfeti was named President of SVVK–ASIR, a new responsible investment alliance including Publica and several other big Swiss pension schemes (see interview). PKZH is also one of eight asset owner signatories to the Principles for Responsible Investment (PRI) in the country.