Pedro Guazo, Representative of the Secretary-General for the investment of the UNJSPF assets, participated in a virtual panel discussion last month hosted by the International Monetary Fund (IMF) Sustainability Club.

The discussion centered around the importance of integrating sustainability into investment decisions. Given that as part of the United Nations family, the UN Pension Fund is also a steward of the Sustainable Development Goals, Mr. Guazo shared the journey to establish the UN Pension Fund’s sustainable investment strategy: “In 2020, we set the objective to integrate ESG and reach net zero by 2050. We did this by setting ambitious goals and targets to decarbonize our portfolio, including divesting USD $2 billion from fossil fuels in 2021. When we compared our customized benchmark (with exclusions) vis-à-vis the plain benchmark, our return was 1.5 percentage points higher than the plain benchmark,” he said.

“To provide an example, the cumulative return of our public equities customized benchmark since June 1, 2022, was 22.3%, while the corresponding MSCI benchmark’s return was 20.8.%. “We clearly see that investing sustainably and responsibly adds value,” he noted.

Key takeaways from the panel discussion included the evolution of fiduciary duty in responsible investing, the importance of setting intermediate targets to reduce carbon footprint and achieve net zero emissions by 2050, and the need for greater transparency and accountability in the financial system.

Other speakers highlighted the importance of clarifying the values of the organization and aligning the investment strategies with these values.

The panel concluded with a reflection on the importance of engagement with other asset managers and the weight that it may carry on other investors to incorporate sustainability factors in their strategies.