Green bonds meet the need for a transition towards a more sustainable world
Since the launch of its first green bond fund in 2016, NN Investment Partners (NN IP) has seen the market transform, shifting its focus from conventional fixed income counterparts to meeting net zero goals and tackling climate change. Muriel D’Ambrosio, Sales Director for Institutional Clients at NN Investment Partners (NN IP), one of the leaders in responsible investment, part of Goldman Sachs Asset Management, discusses current challenges of the green bond market.
Despite more volatile market conditions, green bonds still have the wind at their back?
The global green bond market extended the growth trend of previous years in 2021. Issuance more than doubled to 440 billion euros from 200 billion euros a year earlier. The figures include all categories of issuers (sovereigns, supranational agencies, companies, etc.) We expect record issuance of 600 billion euros in 2022. This development is spurred by recently adopted regulations, such as the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy. Indeed, the commitments made by states and companies towards decarbonizing the economy point to an ever-greater use of green bonds in the medium to long term. Green bonds are now a separate segment of the bond market, with investors appreciating their financial performance while being less exposed to climate and ESG risks.
However, criticisms of greenwashing remain persistent. How does NN IP fight against this risk?
To avoid this risk, it is necessary to carry out an in-depth qualitative analysis, not only at the level of the impact of the projects financed, but also of the quality of the issuers on all the E/S/G dimensions, with a special attention to the environmental factor. For this, we rely on a team of four people, exclusively responsible for analyzing the projects. NNIP screens all securities stamped green, according to a proprietary grid of eligibility criteria.
What benefit for investors in green bonds?
We launched our green bond strategy in 2016, and now have four funds and manage more than 6 billion euros of assets under management. All the funds have obtained the stringent GreenFin label. Impact studies have quantified that the investments made over the past six years have avoided more than 300,000 tonnes of CO2! This is all the more satisfying given that this very significant positive impact is combined with solid financial performance, with our various vehicles having regularly outperformed their benchmark index.
This observation encourages us to go ever further in enriching our range of impact solutions. We recently launched a social bond fund. this instrument is fully in line with our impact investment strategy since the projects it aims to finance are intended to contribute positively to ten of the Sustainable Development Goals (SDGs) defined by the United Nations, which range from the fight against poverty, famine or gender-related inequalities, action in favor of quality education and decent work.
Muriel D’Ambrosio (H.94), Commercial Director of NN IP.
Muriel D’Ambrosio has acquired a solid experience in the asset management industry, as well as an in-depth knowledge of the investment issues faced by French institutional clients, with a strong focus on responsible investment. A graduate of HEC, she holds a master’s degree from Bocconi University in Milan and a master’s degree from the College of Europe in Bruges. She is also a member of the SFAF (French Society of Financial Analysts).
NN Investment Partners
The Hague-based asset management company manages €252 billion across all asset classes for both institutional investors and distributors, with a strong and recognized SRI approach. NN IP employs over 900 people in 15 countries in Europe, North America, Latin America, Asia and the Middle East. NN Investment Partners is part of Goldman Sachs Asset Management.
60% average increase per year in the green bond market since 2015. Today this market is worth 1,100 billion euros, of which 495 billion are issued by companies
4 green bond funds in our range, and dedicated mandates, for total of €6 billion** asset under management
Our green bond portfolios helped generate 407 MW of additional renewable energy capacity for annual production of 856 GWh
Our proprietary “Green bonds” database lists and rates 1,140 bonds covering 10 sectors in 51 countries/regions*
In 2021: 87 dialogues with issuers operating in 10 sectors around the world ( 8 sovereign issuers, 21 linked to government entities and 58 companies). Engaging with issuers encourages them to improve their green bond frameworks and align with EU taxonomy to provide more information to investors
This report shows how NN IP is helping investors seize opportunities in the green bond market
Bram Bos – Principal Fund Manager Green, Social and Impact Bonds at NNIP
Financing the transition to a more sustainable world
At €1.1 trillion, the green bond market is deep and diverse enough to offer all investors the opportunity to have a positive environmental impact with attractive returns. This market allows bond investors, who wish to fight against climate change, to help advance urgent global efforts to reduce greenhouse gas emissions in accordance with the Paris Agreement and to participate in the achievement of the objectives United Nations Sustainable Development Goals (SDGs) by 2030.
Data as of December 31, 2021 l * Data as of March 31, 2022 l ** Data as of August 31, 2022