SNS Reaal shifts entire corporate bond portfolio to green bonds
Pensioenfonds SNS Reaal, a Dutch pension scheme, is making significant strides in sustainable investing by increasing its allocation to green bonds within its corporate bond portfolio from 20% to 100%. This move, a first for a Dutch pension fund, aligns with their ambition to become a leader in sustainable investment practices.
The €3.1 billion pension fund of Volksbank and insurance firm Athora has converted its entire €300 million corporate bond portfolio into a green bond mandate, managed by Goldman Sachs Asset Management (GSAM). This mandate closely resembles GSAM’s existing green bond fund and also includes investments in corporate social bonds.
Pensioenfonds SNS Reaal’s leaders express confidence that the shift towards green bonds will not compromise future returns, as the premium once associated with green bonds has diminished. This aligns with their determination to be at the forefront of sustainable investing, aiming to set trends rather than follow them. The fund has already taken steps to exclude fossil fuel companies in emerging markets and employ a climate transition benchmark for equity investments, which has contributed to its improved ranking for sustainable investing.
In their pursuit of sustainability, the pension fund also maintains a minimum allocation of 20% green bonds in their government bond portfolio. While they are not considering increasing this allocation due to its restrictive nature, the fund plans to transition its high-yield bond portfolio to 100% green bonds. This new fund, managed by Robeco, will adhere to European sustainability regulations and exclusively invest in green bonds.
Additionally, the fund has revised its country policy, expanding the list of excluded countries from nine to 36, based on their Freedom in the World Index score. This criterion has led to exclusions including China, Vietnam, and Egypt. The fund’s new country policy currently applies to government bonds and may also extend to exclude companies majority-owned by governments, following the lead of other Dutch pension funds.
Despite their commitment to these sustainable investment strategies, the pension fund is still refining the details of certain policies, such as the inclusion of state-owned enterprises (SOEs) in their country policy. Decisions on the thresholds for government stakes in companies are still under consideration.