Green bond issuance around the world will hit €300bn next year, with the amount of the environmentally-linked debt coming onto the market rising by 50% from this year, Dutch firm NN Investment Partners (NN IP) has predicted.

The firm said several developments coming up next year would support the market for green bonds, including the publication of the final version of the EU’s Green Bond Standard; the bloc’s planned green bond issuance debut from Q2 onwards and first-time issuance from several national governments.

The EU’s upcoming green bond issuance is estimated to be around €225bn, NN IP said, which is equivalent to a third of its COVID-19 recovery package.

The Dutch asset manager said it estimated the global green bond market would expand by €300bn in 2021 to €1trn.

By comparison, green bond issuance totalled €200bn in 2019 and was on track to be around that this year too, the firm said.

NN IP also said the EU taxonomy – the Union’s system for classifying sustainable economic activities – and the EU Green Bond Standard would curb the trend towards a wider range of green assets becoming eligible for financing from the borrowing.

Jovita Razauskaite, portfolio manager green bonds at NN IP, said: “These new regulations herald what could be a watershed decade for climate change mitigation, with Europe leading the way via its target to be carbon-neutral by 2050.”

GPIF allocates €10bn against ESG foreign equity indices

Japan’s Government Pension Investment Fund (GPIF) has selected two ESG-themed foreign equity indices to use as bases for more than €10bn of passive management, including a gender-diversity index.

The indices chosen by the ¥172.5trn (€1.4trn) sovereign wealth fund – the world’s largest – are the MSCI ACWI ESG Universal Index and the Morningstar Gender Diversity Index, according to an announcement from the fund. 

Masataka Miyazona, president of the GPIF, said: “By selecting a new general ESG index for foreign equities, GPIF has embarked on passive equity investment that incorporates all elements of ESG (environmental, social and governance) in both our domestic and foreign portfolios.”

He said a significant body of empirical research indicated that strong gender diversity had the potential to boost corporate performance.

“We consider these two indexes to be firmly in line with our objective of improving long-term returns through enhanced sustainability of individual issuers and the market as a whole,” he said.

The fund has allocated a combined total of ¥1.3trn (€10.3bn) of assets against these two benchmarks, Miyazona said.

Ron Bundy, president of Morningstar Indexes, said his firm was “thrilled” to be working with the GPIF and the data provider Equileap on “a meaningful endeavour that we believe will have the potential to not only act as a catalyst to shape corporate behaviour but also help investors achieve their financial goals.”

Sampension blacklists 70 more stocks on coal, energy grounds

Danish pension fund Sampension said it had put a further 79 companies on its exclusion list, with most having fallen foul of its investment criteria due to involvement in coal or tar sands activities.

Seventy of the the new companies on the list operate in the extraction of coal and tar sands, or electricity supply with coal as an energy source, Sampension said.

Jesper Nørgaard, deputy investment director at Sampension, said: “The list has grown by such a relatively large number because we have obtained better data on companies working with coal and tar sands, but also because we have lowered the limit for the companies’ turnover from coal-related activities from 30% to 25% with effect from the turn of the year.”

The exclusion list, which applies to investment by Sampension’s Sampension Liv pensions subsidiary as well as the pension funds it manages separately – Arkitekternes Pensionskasse, ISP Pension, Pensionskassen for Jordbrugsakademikere & Dyrlæger – has increased to a total of 258 companies, the provider said.

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