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Risky investments Zurich scientists urge state pension fund to divest from fossil fuels

Coal power plant

Coal-fired power plants are key contributors to global warming.

(Keystone)

Professors and researchers from Zurich’s Federal Institute of Technology (ETH Zurich) have joined the chorus of civil society actorsexternal link calling for the Swiss state pension fund to divest from fossil fuels.

In a letterexternal link to Publica, one of the largest pension funds in Switzerland, 166 experts from ETH Zurich, including 128 professors, demanded it stop investing in climate-damaging companies within five years.

Publica currently invests around 2% or CHF800 million ($807 million) of the CHF40 billion on its balance sheet in companies operating in the fossil fuel sector, the primary source of CO2 emissionsexternal link.

The letter, dated June 15, 2018 and released publicly on Tuesday, highlighted ETH Zurich experts’ concerns not only about the ecological risks of investments in high carbon-emitting industries but also about the "considerable financial" danger.

The Paris Climate Agreementexternal link, signed by 190 countries in 2016, is expected to accelerate the development of renewable energy technologies and increase regulatory pressure on high polluting industries, which could lower demand for fossil fuels and lead to a high depreciation rate for companies in the sector, according to the letter. It called global warming “one of the biggest threats of our time” and said that a shift to a sustainable economy is both “necessary and urgent”.

The experts called on the pension fund to limit the companies in its portfolio to those that, by 2023, align their business strategy with the goals of the Paris Climate Agreement’s target to hold the global average temperature to below two degrees Celsius above pre-industrial levels.

Continued pressure

This follows other calls for Swiss pension funds to stop investing in highly polluting industries. A studyexternal link commissioned by the Federal Office for the Environment in 2015 warned of a so-called "carbon bubble", which could endanger pension assets. The Swiss Climate Alliance – a group of 70 non-profit organisations – launched a campaignexternal link in 2016 calling on Swiss pension funds to divest from fossil fuels.

Publica has taken some initial steps in this direction. In 2015, it co-founded the Swiss Association for Responsible Investment and in 2016, it banned coal producers from their portfolio, which ETH Zurich experts welcomed as an encouraging sign. However, ETH Zurich experts argue the pension fund could do more to act as a “role model” for the Swiss financial sector.

More than 400 major institutional investors have signed the Global Investor Statement on Climate Change inexternal link recognition of the importance of the financial sector to achieving the targets set out in the Paris Climate Agreement.

Publica is expected to provide an official response to the researchers’ letter this fall.

Tages-Anzeiger/jdp

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