Pensioenfonds SNS Reaal has increased its allocation to green bonds within its corporate bond portfolio from 20% to 100%. The move, a first for a Dutch pension scheme, fits its new ambition to become a frontrunner in sustainable investment.

At the start of 2023, the €3.1bn pension fund of Volksbank and insurance firm Athora fully converted its €300m corporate bond portfolio into a green bond mandate. The fund already invested partly in green corporate bonds, but had instructed its fiduciary manager Goldman Sachs Asset Management (GSAM) last year to convert the existing mandate to green bonds only.

The new mandate is also managed by GSAM, which runs a large green bond fund. The new mandate bears “many similarities” to GSAM’s existing fund, according to Benno Honsdrecht, a trustee at Pensioenfonds SNS Reaal. The new mandate also allows investments in corporate social bonds, although the availability of such bonds is still limited. With the exception of a few banks, no European company has yet issued social bonds, GSAM portfolio manager Bram Bos told IPE earlier this year. 

Pensioenfonds SNS Reaal expects that the greenification of its corporate bond portfolio will not affect future returns. Honsdrecht says: “Investors are no longer willing to pay a premium for green bonds, so the ‘greenium’ has all but disappeared. As a result, green bond yields are now just as high as those on regular bonds.”


The move towards green bonds fits with the pension scheme’s newly formulated ambition to be a “frontrunner” in sustainable investing, according to Honsdrecht and investment officer Haitse Hoos.

“We don’t want to be middle of the road when it comes to sustainable investing. We don’t want to be a follower but a trendsetter,” he said.

Last year, the SNS Reaal fund decided to exclude fossil fuel companies in emerging markets. It also started using a climate transition benchmark for its equity investments.

The fund saw these steps rewarded last year as it finally received a higher position in the coveted ranking for sustainable investing of VBDO, the Dutch association for sustainable investing. The fund is now the best-performing small pension fund in the Netherlands, according to VBDO. In the most recent overall ranking of 2022, which includes the 50 largest pension funds, it is in ninth place.

Pensioenfonds SNS Reaal also has a minimum allocation of 20% green bonds in its government bond portfolio. The fund has not considered increasing this share, according to Hoos.

“To be able to invest only in green government bonds would be too restrictive,” he said. “Green government bonds only form a small part of total debt issuance.”

Pensioenfonds SNS Reaal only invests in ‘higher-rated European government bonds’, from the Netherlands, Germany and France, among others.

The fund will soon also switch its high-yield bond portfolio to 100% green bonds. “Our investments will be converted by next autumn from a standard high-yield bond fund to a new fund to be set up by the same manager Robeco,” said Honsdrecht. This fund will be classified as ‘Article 9’ under the European sustainability regulation SFDR and will invest only in green bonds, he added.

Country policy

Finally, the pension fund has also reviewed its country policy this year, prompted in part by the war in Ukraine. The number of excluded countries has increased from nine to 36 because a minimum score of 20 on the Freedom in the World Index (0-100) of research institute Freedom House has been set as an additional inclusion criterion. The newly excluded countries include China, Vietnam and Egypt.

To implement the new policy, the fund had to look for another manager for its emerging market government bond portfolio. “Our manager did not have a specific country policy. Now we invest via a Neuberger Berman fund that exactly follows our country policy,” Honsdrecht said.

The fund’s new country policy currently only relates to government bonds. Other Dutch pension funds that recently reviewed their country policies, such as Pensioenfonds PostNL and Pensioenfonds Rabobank, also exclude companies majority-owned by the governments of the countries in question. Pensioenfonds SNS Reaal will follow their example, but is still figuring out how to exactly implement this intention.

“Including SOEs in our country policy is still under construction. We’ve still got to decide where to draw the line. Is a firm an SOE once the government has a stake of 25%, or only once its stake has passed the 50% threshold? We still need to decide on this,” Hoos added.

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