One of Sweden’s major institutional investors – the AP4 pension fund – has built a portfolio of green bonds that totalled 4.1 billion Swedish krona (€401 million) at the end of 2017.
The fund – which manages a portion of the Swedish national pension system’s buffer capital – said it intended to help make the green bond asset class “attractive and grow” and that it would contribute more capital to new green bond issues.
Green bonds are like ordinary corporate or government bonds but capital is used for environment-related projects.
A strong appetite for the asset class was seen when Amundi recently raised the equivalent of €1 billion in a few weeks for its Amundi Planet Emerging Green One Fund.
AP4, which has invested in green bonds since 2013, intends to help make the secondary market in green bonds become more liquid. The fund applies liquidity and profitability targets to the green bonds it invests in.
AP4 released the figure for its green bond portfolio in its ‘AP4 Climate report 2017’ recently and said that its asset management organisation had allocated “time to share its knowledge and experience” about low-carbon strategies and green bonds with other institutional investors, including a presentation at the United Nations in New York City last year.
Investments with sustainability themes are made with investment horizons of up to ten years, the fund said.
The fund, which has 357 billion Swedish krona in assets under management, also said that 31% of its global equity investments were now targeted at lowering climate risk.
AP4’s climate report was released in line with recommendations of the Task Force on Climate-related Financial Disclosures, which advocates uniform and transparent climate reporting for the public.
“AP4 believes that transparent reporting of climate-related risks and opportunities contributes to a faster transition to a low fossil fuel society,” Niklas Ekvall, chief executive of the fund, said in the report.
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