Hessen, which includes the city of Frankfurt, has become the first of Germany’s 16 federal states to sign the UN’s Principles on Responsible Investment (PRI).
The state has joined the initiative for its €3.7bn pension reserve fund, which was established in 1999 to build a funded supplementary retirement provision for its civil servants.
The region’s minister for economy, Tarek Al-Wazir, noted in a press release that signing the UNPRI was another step towards enhancing Frankfurt’s and Hessen’s standing in green finance.
“By now almost all financial locations worldwide have recognised the significance of green finance and the regional government of Hessen wants Frankfurt to take a leading role in this field,” Al-Wazir said.
The pension reserve fund has applied an ESG benchmark to its equity investments since 2007.
For several years, the fund’s criteria have been sharpened and adjusted to include ecological and social standards, according to a ‘best-in-class’ approach.
At the beginning of 2019, Hessen became the first German province to make it legally binding for the pension reserve fund to invest according to sustainable criteria.
Since then companies producing nuclear energy and fossil fuels have “virtually been excluded” from the fund’s universe, Hessen’s government said in the press release.
The fund’s investments are managed by the German Bundesbank according to the sustainability criteria set by the province of Hessen.
De Nederlandsche Bank, the Netherlands’ central bank and financial regulator, became the first central bank to sign up to the PRI in March this year.
PRI signatories must report climate change risks from 2020
Earlier this year the PRI said it would require its entire book of 2,250 signatories – including asset owners, investment managers and service providers – to report how they have considered specific climate change risks in their portfolios