Clever retirement provision with green investments (2024)

April 7, 2022

Smart retirement provision pays off either way. Those who are looking for optimal financial retirement provision while, at the same time, wanting to do their part for an intact environment, invest their pension funds in a sustainable way. Green investments are effective instruments when it comes to climate protection, and they also stand out with attractive returns.

High time to rethink our own actions, because the topic of sustainability is here to stay. Climate protection is one of the greatest challenges of our time. If the entire population of the world were to live according to the standard of living and resource consumption of the USA, it would require a total of five Earths, according to the "National Footprint and Biocapacity Accounts 2021". Other countries with a high ecological footprint in global comparisons are: Australia, Russia, France and Germany. What about Switzerland? Currently, our standard of living consumes about 2.8 Earths. What is an ecological footprint though, anyway? Every human being leaves one behind. This provides information on how many greenhouse gases a person emits through their lifestyle. How large one's own ecological footprint is therefore depends on one's behavior: from the diet and consumer behavior to the way we get around and live.

Sustainability starts in everyday life

By adapting our investment behavior, we help to keep the earth livable for the next generations. Because investments also cause CO₂ emissions: If investments continue to be made as before, this will result in 68 tons of CO₂ per million US dollars invested. Sustainable investments are effective instruments when it comes to climate protection. If more money flows into environmentally aware companies, this will have a positive effect on our climate. So, if you want to optimize your ecological footprint, you can invest your pension fund assets in a climate-friendly way. The money will then be invested in companies that care for the environment. The demand for such sustainable investments and retirement products is increasing. According to recent surveys, two thirds of the Swiss want to invest their pension fund assets sustainably. With sustainable retirement provision, you are not only investing in your own future, but also in the future of the Earth.

Retirement provision with a clear conscience

You attach importance to your retirement provision and want to continue to do so in the future with a focus on sustainability: With the two new investment vehicles, the "ZIF Green Bond Global" and "Zurich Carbon Neutral World Equity Fund", your pension fund assets are invested in a sustainable way. The investment vehicles, which are consistently geared towards sustainability, are used in the Target Investment Funds (TIF) in all Zurich Invest investment solutionsand in most investment plans for single life insurance policies. Depending on the investment strategy, your funds are invested with different weightings in green bonds and carbon neutral equity:

with your unit-linked life insurance, which combines investing with the protection of an insurance policy.
with your unit-linked 3a retirement provision account, which combines self-determined investments with sustainability and tax benefits.

With the new "ZIF Green Bond Global" and "Zurich Carbon Neutral World Equity Fund" investment vehicles, the next step towards sustainability is taken. These are intended to make a tangible contribution towards the Paris Climate Agreement. Step by step, an even stronger focus is being placed on sustainability when choosing the range of funds on offer. Over the next months and years, the individual funds will be looked at in detail and reviewed for their climate risks. The declared goal of the Zurich Insurance Group is to have emission-free equity, bond and real estate portfolios by 2050. To this end, ESG criteria are consistently integrated during the investment process. And impact-oriented investments are made; in projects that have a positive impact on sustainable development, for example, in the area of renewable energies. And what about the return on investments? According to various studies that have been carried out, security and returns are even improved in some cases when attention ESG criteria are taken into consideration. So green investments have some interesting aspects, they are effective instruments in climate protection and stand out thanks to attractive returns.

"Zurich Carbon Neutral World Equity Fund"

With the "Zurich Carbon Neutral World Equity Fund", you invest in forward-looking companies that are bringing about change in the field of clean technologies, for example, in electromobility. The fund actively targets companies that are reducing fossil fuel consumption, such as Apple, Tesla or Schneider Electric. The "Zurich Carbon Neutral World Equity Fund" consists of two components - it combines a low-carbon investment strategy with carbon offsetting. The ESG benchmark index, the MSCI World Climate Paris Aligned Index (parent index), focuses on climate protection and is aligned with the goals of the Paris Climate Agreement. This benchmark index change alone will achieve an 80% reduction in CO₂ emissions. This corresponds to a CO₂ reduction of approximately 68 tons to around 9 tons. The remaining 9 tons up to climate neutrality will be offset using emission reduction certificates: With these certificates we are supporting the Rimba Raya Project, an ecologically sustainable rainforest project in Borneo to rebuild the ecosystem.

"ZIF Green Bond Global"

Green bonds are regular bonds that are used to finance sustainable projects. They therefore belong to the category of impact investing. The goal of such bonds is to promote the transition to a climate-neutral economy and society and, at the same time, generate attractive returns.

I'm an enthusiast deeply immersed in the world of sustainable investments and climate-conscious financial planning. Over the years, I've delved into the intricacies of green investments and their impact on both the environment and financial returns. My expertise extends to understanding the importance of aligning investment strategies with environmental goals, particularly in the context of retirement provision.

Now, let's dissect the key concepts presented in the article from April 7, 2022, on smart retirement provision and sustainable investments:

Introduction to Sustainable Retirement Provision: The article emphasizes the importance of optimizing financial retirement provision while contributing to environmental sustainability. It suggests that individuals can invest their pension funds in a sustainable way to achieve both financial returns and positive outcomes for the environment.
Environmental Impact and Standard of Living: The piece highlights the environmental challenges we face, stating that if the entire world lived at the U.S. standard of living, it would require five Earths. It provides ecological footprint comparisons for various countries, including Switzerland, where the current standard of living consumes about 2.8 Earths.
Understanding Ecological Footprint: The concept of an ecological footprint is introduced, explaining that it measures the greenhouse gases emitted by an individual through their lifestyle choices. The size of one's ecological footprint depends on behaviors such as diet, consumer choices, transportation, and living habits.
Role of Sustainable Investments in Climate Protection: The article advocates for adapting investment behavior to contribute to climate protection. It highlights that traditional investments can lead to CO2 emissions and encourages investing in environmentally conscious companies. Sustainable investments are presented as effective instruments in climate protection.
Increasing Demand for Sustainable Investments: Surveys indicate that a significant portion of the Swiss population (two-thirds) expresses a desire to invest their pension fund assets sustainably. This reflects a growing awareness and demand for financial products that align with sustainability goals.
Introduction of Investment Vehicles: Two new investment vehicles, the "ZIF Green Bond Global" and "Zurich Carbon Neutral World Equity Fund," are introduced as options for sustainable retirement provision. These funds are designed to align with sustainability goals and contribute to the Paris Climate Agreement.
Zurich Insurance Group's Sustainability Goals: The Zurich Insurance Group aims to achieve emission-free equity, bond, and real estate portfolios by 2050. The integration of ESG (Environmental, Social, and Governance) criteria during the investment process is highlighted, along with impact-oriented investments in sustainable development projects.
Performance and Returns of Green Investments: Various studies suggest that considering ESG criteria in investment decisions can enhance both security and returns. The article indicates that green investments not only contribute to climate protection but also offer attractive returns.
Details on "Zurich Carbon Neutral World Equity Fund" and "ZIF Green Bond Global":
- The "Zurich Carbon Neutral World Equity Fund" focuses on forward-looking companies involved in clean technologies, such as electromobility. It actively targets companies reducing fossil fuel consumption.
- The "ZIF Green Bond Global" represents bonds used to finance sustainable projects. It falls under the category of impact investing, aiming to promote the transition to a climate-neutral economy while generating returns.

In summary, the article underscores the dual benefits of smart retirement provision – financial optimization and environmental sustainability. It advocates for a shift towards sustainable investments, introducing specific investment vehicles and aligning with global climate goals.