Japan’s Government Pension Investment Fund (GPIF) has announced a partnership with Inter-American Development Bank (IDB) promote and develop sustainable capital markets through a focus on social bonds.
IDB’s social bonds are issued in alignment with Social Bond Principles, which are administered by the International Capital Market Association (ICMA), a statement said.
GPIF last year invested in green, social and sustainability bonds totalling more than $3bn (€2.7bn).
The fund tweeted this week that to further promote environmental, social and governance (ESG) integration in fixed income investments, it had over the past year entered into partnerships with 10 multilateral development banks, IDB being the latest..
It had inked partnerships with key institutions that include the Washington-based World Bank, its subsidiary, International Finance Corporation (IFC), the Asian Development Bank, Nordic Investment Bank and the European Investment Bank.
GPIF said its arrangements with the various banks opened the door to asset managers investing on behalf of GPIF to access ESG bonds.
These bonds provided investment opportunities for GPIF asset managers to contribute to a more sustainable society.
Announcing its partnership with IDB, Hiro Mizuno, GPIF’s executive managing director and chief investment officer, spoke of IDB’s “life cycle” approach towards solving the challenges of poverty and inequality in Latin America and the Caribbean through commitments to improve the quality of child education and the provision of greater employment opportunities.
Claudia Bock-Valotta, vice president for finance and administration at IDB, said the arrangement with the bank followed its initiative with the Council of Europe Development Bank (CEB).
In addition to conventional bonds, GPIF has formed a partnership with the Islamic Development Bank (IsDB) to promote and develop sustainable capital markets through a focus on green and sustainable sukuk.
Sukuk are the Islamic equivalent to bonds. However, unlike conventional bonds, which simply confer ownership of a debt, sukuk grant the investor a share of an asset, along with commensurate cash flows and risk.
The financial instrument adheres to Islamic laws, sometimes referred to as Shariah principles.
Zamir Iqbal, vice president and chief financial officer of IsDB, said at the signing of the agreement with GPIF last month that IsDB was a natural partner for GPIF in an initiative that would catalyse investments into the ESG fixed-income space and further develop socially resposible investment markets.