VBV-Pensionskasse, the largest occupational pension fund in Austria, has switched its entire passive equity exposure to MSCI Low Carbon Indices at the beginning of the year, which reduced the carbon intensity of the portfolio by 55%.
The pension fund switched its core investment – the VBV Passive World Equities Fund – to MSCI Low Carbon indexes at the beginning of the year. This has enabled VBV-Pensionskasse to reduce the carbon intensity of its portfolio by 55% (or some 100,000 tons) of CO2 per year.
Commenting on the move, the fund’s head of investments, Guenther Schiendl, said that as the market leader, the fund believed that appropriate decarbonisation strategies for capital investments were landmark issues that reached far beyond the pension fund sector.
‘In the interest of our customers we have decided to send out a signal and hope there will be a knock-on effect among the companies we share the market with,’ he said.
Christine Chardonnens, executive director ESG Indexes at MSCI, said: ‘The MSCI Low Carbon Target indexes are optimized to achieve the highest reduction in portfolio carbon exposure with minimal tracking error, and strict country and sector controls.’
The VBV Passive World Equities Fund currently encompasses around €850 million invested in about 1,600 stocks, and constitutes 40% of the pension fund’s entire equity portfolio.
In the coming months, VBV-Pensionskasse plans to roll out an environmental management system across all areas.
VBV-Pensionskasse is the largest Austrian pension fund, specialising in occupational pension schemes. It provides services to large and medium-sized companies as well as employers from the public sector, including provinces, municipalities and universities. The company's shareholders include Erste Bank and Sparkasse, Wiener Städtische Versicherung and Bank Austria, among others.
Among the large institutions that use MSCI ESG indices are Swedish pension fund AP4 and the French Reserve Fund. Modern Investor has written about the two asset owners who helped to co-design the MSCI Global Low Carbon Leaders Indexes in 2014.
Recently, MSCI has launched a new family of ESG benchmarks called the ESG Universal Equity Indexes for Long-Term Global Investors.