Doris M. Schönemann (Switzerland )
Vice-Chairperson - Swiss Federal Social Security Fund AVS/AI/APG
Today's Social Pension Funds Must Change Radically and Soon - The Need to Implement New Demographics, Good Governance and Transparency
Doris M. Schönemann, Vice-Chairperson of the Board of Directors of the Swiss Federal Social Security Fund AVS/AI/APG.
In Switzerland, as in many European countries, like in Japan and other Asian countries, the next two decades require major changes in pension fund investment policies in order to cope with a bleak and "unsustainable" outlook.
In Switzerland, as in Japan, major problems to solve will be a.o. a drastic improvement of transparency in pension fund governance, practical implementation of new guidelines and policy changes, as well as finding an answer to major demographic changes. For instance, an increase of female participation in the national work force is a major and pressing issue in both countries (and Asia and Europe as such), otherwise pension funds will be soon exhausted.
Nobody is agains "sustainability". However, "doing good" should be also be "done well". Here lies the real challenge. The ESG or sustainability issue is more than a fad for the Swiss Board of Directors - it is a continuous learning and innovation process. It calls for heated and at times controversial discussions among Board Members, followed by a critical scrutiny of results and, finally, implementation of adjustments and improvements.
Sustainable investments will only pay off based on a coherent, structured and transparent basis.
The Swiss Social Security Funds AVS/AI/APG have more than a decade of experience in ESG Investing. Sustainable investments account for 60%, or about CHF 2,7 bn. of the funds' equity investments. (DJSI Stoxx Europe, DJSI North America). The sustainable share of the funds' total assets of CHF 25.2 bn. is about 11%.
(Text partly based on SAM Sustainability Yearbook 2011 entry).