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ESG roundup: PGGM backs airport group’s green bond

The €215bn Dutch asset manager PGGM has invested €10m in a green bond issued by Dutch airport operator Royal Schiphol Group. 

The investment – on behalf of the €206bn healthcare scheme PFZW and its other clients – contributed to the state-owned transport group raising €500m for a programme to make its operations energy-neutral by 2040.

The bond was reportedly the first green-labelled public debt issue from a European airport operator.

PGGM said the Schiphol Group – which runs Amsterdam Schiphol, the Netherlands biggest airport – needed €1.2bn by 2023 for the electrification of all its ground transport as well as setting up an energy supply from geothermal and biofuel sources.

It added that it also wanted to construct a new terminal and pier in accordance with a high sustainability standard.

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The 12-year green bond was considered by PFZW to be an investment in climate solutions, in which the scheme has already invested €7bn in total.

PGGM said green bonds were fully fledged impact investments “as they comply with strict international standards on sustainability and reporting”.

Bob Rädecker, PGGM’s chief investment officer for public markets, highlighted that the aviation industry was facing a huge challenge to become sustainable during the coming decades, and said that “greening” of its infrastructure was a first and important step.

Peter Borgdorff, director of PFZW, said the investment “would go well with the scheme’s participants, as it would contribute to a decent pension as well as to a liveable world”.

“Many of them use the airports of Royal Schiphol Group, and it would be good if they are aware that their pension capital contributed to making the airports’ activities sustainable.”

As well as Amsterdam’s airport, the Schiphol group owns or has stakes in three other Dutch airports and one in Australia. It also runs Terminal 4 at JFK International Airport in New York.

IIGCC offers pension funds ‘how to’ guide on climate and investment

The Institutional Investors Group on Climate Change (IIGCC) has produced a guide to support pension fund trustees and board members in their deliberations on taking account of climate-related risks and opportunities.

The IIGCC said it had produced the guide in response to changes in regulation as European policymakers and regulators increasingly acted to ensure pension funds were taking account of financially material considerations posed by climate change.

Citing a survey from Mercer and a study carried out by the Environmental Audit Committee in the UK’s lower house of parliament, the IIGCC said “the majority of pension funds have been shown to be unprepared” for the regulatory changes. The guide was intended to be a practical tool, providing a series of questions and answers, examples of best practice, and useful resources.

“We’ve reached the point at which both the science and the policy requires more urgent action from trustees to understand how climate change will impact their scheme’s assets and liabilities,” said Jennifer Anderson, investment manager at £10bn (€11.3bn) TPT Retirement Solutions.

“That is not a straightforward exercise but acting on climate change is about the investment opportunities it brings as much as it is about understanding the risks and broader regulatory requirements.”

The guide was produced with the support of TPT, Legal and General Investment Management and Finance Dialogue, and can be found here .

UK public pension fund selects new smart beta climate index 

The £9bn Merseyside Pension Fund has opted to use a climate and multi-factor global equity index to be launched by FTSE Russell next month.

The index provider said Merseyside – part of the UK’s Local Government Pension Scheme (LGPS) – had selected it to support the implementation of its climate risk strategy within its listed equity portfolio.

Owen Thorne, investment manager at Merseyside, said the index provided the pension fund with “an investable, risk-efficient means of achieving our decarbonisation goals”.

Merseyside was one of a group of LGPS investors to announce investment pledges linked to the 2015 Paris climate change agreement. Its chair said the scheme would shift a third of its passive UK and US equity allocation to low carbon benchmarks by the end of the year.

The new FTSE Russell index provides multi-factor exposure to the FTSE All-World index and combines these with climate change “considerations”, including carbon efficiency, fossil fuel reserves and the green revenues of index constituents. 

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