Ircantec, the €9.2bn French public sector pension scheme, is to launch a dedicated green bond fund as part of its plan to help finance the transition to a low-carbon economy.
Ircantec plans to launch the fund at the end of 2016, after a call for tenders this autumn.
The fund will have a mandate to invest in green bonds from issuers in OECD countries and will be structured as a Fonds commun de placement (FCP), an unincorporated open-ended fund.
Ircantec already invests in Green bonds, but, until now, these investments had been made as part of its general bond portfolio.
However, based on its own experience and the evolution of the market for green bonds, the pension provider has decided to treat green bonds as a separate asset class, to be managed in the framework of a standalone fund.
This, according to the scheme, will allow it to better monitor and steer its green bond activity.
It said this would, in turn, enable it to achieve its return objectives, as well as the ambitions it has to contribute to what in France is known as “la transition énergétique et écologique” (TEE) – the shift to a more environmentally sustainable social and economic system, in particular with a view to mitigating climate change.
Ircantec has made some €300m of green bond investments since 2013, representing 7% of its overall bond holdings, according to a statement.
The scheme noted that this compares with a market average of less than 1%.
Jean-Pierre Costes, president of the board of directors at Ircantec, said the scheme had decided on a step-change with respect to green bonds and that this was part of Ircantec’s putting into practice its recently launched energy transition roadmap.
Virginie Chapron-du Jeu, investment director at Caisse des Dépôts, the fiduciary manager for Ircantec, said it had progressively increased the share of green bonds in the bond portfolio, allowing the scheme to familiarise itself with the emerging asset class.
“The market for green bonds has now reached a level of maturity and size to justify a distinct investment strategy and their being defined as an individual asset class,” she said.
Ircantec’s move is similar to that of AP2, Sweden’s second buffer fund, which earlier this year announced it would establish a standalone Green bond portfolio.
AP3 in January said it planned to treble its green bond holdings over the next three years.
According to the Climate Bonds Initiative, the global market for “climate-aligned” bonds, which includes labelled green bonds and others that do not carry such a label, stands at $694bn (€828bn).
This comprises 3,590 bonds from 780 issuers around the world across a range of “climate themes”, according to the not-for-profit organisation’s recently launched ‘State of the Market’ report.
Some $120bn of the bonds are labelled green bonds.
This compares with a total global bond market of $90trn, according to the report.