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ESG roundup: Publica, North Rhine-Westphalia, AP2

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The largest Swiss Pensionskasse, the CHF38bn (€34.9bn) Publica, is to divest from five unnamed arms manufacturers.

Patrick Uelfeti, CIO at Publica, confirmed the decision on Swiss national radio.

It follows the recommendations by the SVVK-ASIR sustainable investment platform that Publica co-founded in 2015.

In March, the analysts issued a list of 15 arms companies producing either cluster ammunition, nuclear weapons in countries without a nuclear weapons arsenal, or anti-personnel-mines.

One conservative MP criticized the step, saying only the return should be considered for investments of pension money. He said he wanted to put forward a motion banning Swiss Pensionskassen from becoming members of SVVK-ASIR and applying ethical or sustainable criteria to their investments.

German civil servants’ scheme to exit energy firms

Meanwhile in Germany, the local government pension fund for the civil servants of North Rhine-Westphalia announced it would divest from energy producers EDF and ENGIE.

This is part of a new sustainability strategy for the €10.4bn portfolio, which was created last year.

Beginning this month, investments are to be screened under a new set of criteria. These have not been published in detail, but include a ‘best-in-class’ approach. Where necessary, divestments are made.

The regional finance ministry confirmed in a statement the ENGIE corporate bonds had been sold the same day the divestment decision was made.  

ENGIE runs nuclear power plants via its Belgium subsidiary. These plants have been criticized for security failures and other potential risks. One of the largest critics was the German province of North Rhine-Westphalia, which borders Belgium. 

AP2 invests in Dutch-issued affordable housing bond

Swedish national pensions buffer fund AP2 has invested an undisclosed amount in a social bond issued by NWB Bank in the Netherlands to finance affordable housing in the country.

In a statement, the Swedish fund said: “Social bonds fit well into the AP2’s global interest rate portfolio as it broadens the fund’s ESG work and provides opportunities for further diversification and is a way to combine good return on capital with allocation of investments in important and good social project.”

The pension fund said it made its first social bond investment in 2014, and has put money into a number of such bonds since.

“The return needs to be similar to other fixed income investments with similar credit risk,” it said.

NWB Bank launched the Affordable Housing Bond at the beginning of this month in two tranches, a seven-year €1.5bn issue and a 15-year €500m issue.

The proceeds are to finance lending to social housing associations in the Netherlands in accordance with the bank’s Affordable Housing Bond Framework, the bank said. 

The seven-year bond carries a 0.25% annual coupon, and the re-offer price is 99.799%, while the 15-year bond has a 1.25% annual coupon and a re-offer price of 99.946%. 

The notes will be listed on the Luxembourg Stock Exchange, NWB Bank said.

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