360°Benefits | News: WTW SLI Pension Benchmarking Study
Swiss pension funds are at a turning point when it comes to sustainable investment. With environmental, social and governance (ESG) concerns on the rise, these institutions are increasingly adopting investment strategies that include sustainability factors. This trend is not only a response to the growing expectations of stakeholders, but also a necessity to ensure the sustainability of long-term returns through more enveloping risk management.
Our latest SLI® Pension Benchmarking 2023 survey shows that over 60% of SLI pension funds have incorporated ASIP ESG reporting recommendations into their annual reports. This marks a significant step towards greater transparency and better management of ESG-related risks. Pension funds are increasingly recognising that responsible investment can lead to more stable returns and reduced risk over the long term. However, almost 40% of the pension funds in the study are still at the beginning of the process and have yet to take a more concrete look at the subject.
Swiss pension funds are diversifying their portfolios to include sustainable assets. This includes investments in renewable energies, clean technologies and companies with governance practices that are considered leaders in their industry. These strategies aim to align financial objectives with societal values, while meeting the expectations of insured members who are increasingly concerned about the impact of their investments. In fact, according to our latest Global Benefits Attitudes Survey (GBAS), now 34% of employees think that investments should also promote better ESG practices rather than just maximising returns. The recognition of ESG factors can be a good measure of portfolio risk management (for example, failure to comply with recognised environmental practices can lead to a sudden fall in share prices).
Pension funds are increasingly mentioning in their documentation that integrating ESG criteria into their investment decisions will enable them to be better positioned to generate sustainable and stable returns over the long term. In this respect, our latest GBAS survey* also shows that almost half of employees (43%) think that ESG-supported investments will outperform those who think they will underperform.
The integration of ESG criteria into the investment strategies of Swiss pension funds is a growing trend. This approach appears to be convincing, not only in terms of meeting stakeholder expectations, but also in terms of managing risk and ensuring stable returns. By doing so, Swiss pension funds are showing that they can also lead the way in responsible investment, contributing to the Confederation's long-term climate goals, as an example.
Read the full SLI report SLI® Pension Benchmarking Study 2023.
WTW’s Pension Index decreased by 0.5% during Q3/2023.
