APG has invested € 170 million in social bonds to help European Union (EU) member states protect employment and avoid layoffs in sectors shaken by the Covid-19 pandemic. The investment - on behalf of our pension fund clients - is made through a new instrument for temporary financial assistance to member states.
The instrument for temporary Support to Mitigate Unemployment Risks in an Emergency (SURE) is designed to help protect people in work and jobs affected by the Covid-19 pandemic. It provides financial assistance - in the form of loans granted on favorable terms by the EU to member states - of up to €100 billion in total. These loans help member states cover the costs for the creation or expansion of national short-time work schemes and similar measures for the self-employed.
Commitment
“This investment shows APG’s strong commitment to support Europe’s sustainable recovery as well as affected workers and their families,” says Sandor Steverink, Head of Treasuries at APG Asset Management. “At the same time, it offers a good risk-return perspective for our clients’ end beneficiaries.”
Short-time work schemes allow firms experiencing economic difficulties to temporarily reduce the hours worked by their employees, which are then provided with public income support for the hours not worked. By avoiding wasteful redundancies, short-time work schemes prevent a temporary shock from having severe and long-lasting negative consequences on the economy and the labor market. This helps to sustain families’ incomes and preserve productive capacity.
Sustainable recovery
SURE is of a temporary nature; its duration and scope are limited to tackling the consequences of the Covid-19 pandemic. Next year, the EU will start with the financing of the €750 billion recovery fund to soften the economic impact of the Covid-19 outbreak and to make the European economy structurally more sustainable.
The issue of hundreds of billions of green and social bonds by the EU will provide a boost to the further development of this market. “APG is already one of the world’s largest sustainable investors and the EU will become one of the largest green and social issuers in the coming years”, says Oscar Jansen, Credit Specialist at APG Asset Management. “We encourage the efforts made by the EU and want to further stimulate sustainable investing.”
APG recently hosted a webinar on EU sustainable recovery, which included an update on the EU’s plans by Gert Jan Koopman, Director-General Budget of the European Commission. To encourage expansion of the market, APG has published the Guidelines for green and social bonds, which outline our expectations for companies, governments and agencies issuing such bonds.