APG views the issue of the first Dutch sovereign green bond as indication of the market’s increasing maturity. As a leading long-term responsible investor, we actively contribute to initiatives aimed at expanding the size and scope of this market.
Today, APG announced that it has invested € nearly 250 million in the green Dutch sovereign bond on behalf of its pension fund clients. The investment contributes to our clients’ ambitions in the area of sustainable investment, in particular the aim of ABP and bpfBOUW to double investments aligned with the UN Sustainable Development Goals (SDGs) by 2020.
Three focus areas
APG’s approach to investing in green, social, and sustainable bonds (‘green bonds’) focuses on quantity, quality and engagement, says Oscar Jansen, senior portfolio manager Credits. “We think about how to grow our allocation in the context of risk/return requirements and limited supply, we establish clear internal guidelines to ensure we uphold the ESG quality of our investments, and we promote greater issuance and enhanced market standards.”
Concurrently with the Dutch sovereign green bond issuance, APG today published its Guidelines for Green, Social and Sustainable Bonds. Jansen: “Issuers ask for guidance on what meets investor green and social standards and requirements. Clearly communicating our expectations can help alleviate issuer concerns about the market’s response to a potential green bond program and thereby serve as a further market stimulus.”
Developing the sovereign market
The growth of sovereign issuance of green bonds represents another potential avenue for growing our green bond allocation. In addition to our engagements with corporate green bond issuers, APG also articulates its expectations on green finance in dialogue with sovereign issuers. On this theme, APG together with the World Bank recently organized a workshop in Washington DC. We enter into dialogue with sovereigns about progress on the UN Sustainable Development Goals and Paris Climate Agreement and the potential role of green bonds in financing these transitions.
Leading green bond investor
APG is one of the world’s largest green bond investors. By the end of 2018, we had invested over € 6.8 billion in 142 green, sustainable and social bonds on behalf of our clients ABP, bpfBOUW, SPW and PPF. APG is a member of the Climate Bond Initiative and is a key contributor to several industry initiatives. We also give feedback to rating agencies on their green bond assessment methodologies and have actively contributed to the proposed EU Green Bond Standard.
Investor demand for corporate green and social bonds continues to be high, but the US market remains constrained by limited supply compared to Europe. In March, APG’s New York office for the second time hosted a group of institutional investors and underwriters to exchange views on the obstacles to corporate issuance of green bonds and ways to overcome them, this time with a specific focus on the food and beverage sectors.