APG has called on governments to encourage the growth of the green bond market, arguing that a clear regulatory framework would allow it to meet its obligations to beneficiaries.
The €402bn Dutch pension manager joined 26 other investors worth a total of $11.2trn (€12.1trn) in signing the Paris Green Bonds Statement, which calls for a “large and robust market that makes a real contribution to climate change”.
Coordinated by the Climate Bonds Initiative, the statement is identical to one backed by Sweden’s AP funds published last year.
Released as the UN climate change conference in Paris (COP21) nears its end, the statement has attracted the support of 10 new institutions, resulting in a $9trn growth in signatory assets.
In addition to APG, new signatories include BlackRock and Legal & General Investment Management, Europe’s two largest institutional managers, according to IPE’s Top 400 Asset Managers 2015.
Several of the signatories – including AP4, APG and the California State Teachers’ Retirement System – recently participated in a $1bn green bond issuance by the Kreditanstalt für Wiederaufbau, Germany’s state-owned development bank.
As of the end of 2014, APG’s green bond portfolio accounted for 0.5% of its corporate bond holdings, or €356m, comprising bonds issued by the European Investment Bank and GDF Suez, among others.
Sean Kidney, chief executive of the Climate Bonds Initiative, said there was “enormous opportunity” to deploy green bond financing and cited financing needs arising from individual countries’ pledges to reduce carbon emissions.
The organisation also launched a guide in conjunction with the UN Environment Programme (UNEP), detailing how the public sector could grow the green bond market.
The guide, ‘Scaling up green bond markets for sustainable development’, urged governments to develop green project pipelines to allow investors to better plan for issuances, and for participation in the Green Infrastructure Investment Coalition – an association launched this year that aims to bring together investors, governments and development banks to discuss projects.
Nick Robins, co-director of the UNEP Inquiry, added that the opportunities presented by green bonds had caught the attention of policymakers.
“At COP21, many discussions have centred around climate finance and the level of investment needed to bring about low carbon outcomes,” he added.
“Green bond market development is seen as a real option. This report can only assist governments, policymakers and ultimately institutional investors in developing sustainable climate finance outcomes.”
According to the Climate Bonds Initiative, green bond issuances so far this year have exceeded $41bn.
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