A senior portfolio manager at NN Investment Partner Annemieke Coldeweijer said that label bonds are less necessarily for sustainable investment. The most recent research from ABN AMRO presents that many ESG bond funds have relatively ESG bonds. A key dark green in the sector, NN Investment Partner argues that the holdings are often very low. Coldeweijer reflected that it should really depend on the investment objective.
He added that when investors are looking for tangible impact then they must look for labeled bonds.
But if investors are looking to invest in sustainability projects, they do not necessarily have to get labeled bonds. NN Investment Partner manages over €5bn green bond funds label as impact funds. These have the non-labeled ESG bonds. Their holdings withdraw from this labeled asset class. Coldeweijer even argued that the firm is very unlikely to deviate from this approach.
As a result, Coldeweijer manages far greater freedom from the €700m Sustainable Credit Fund. This is under the classification of Article 9 fund’s sustainable investment objective in EU’s Sustainable Finance Disclosure Regulation. This scheme becomes an interesting target for issuers pursuing sustainable development. This is even beyond the tracked universe by the Bloomberg Euro Aggregate Corporate benchmark, said IFR Asia.
Currently, the funds cover around 8% of its assets in the labeled bonds. This is linear to ABN AMRO’s funding that light green Article 8 funds average is around 7% in ESG bonds. Thus, the five largest holdings comprise Volkswagen, Autoliv, Takeda Pharmaceutical, Kerry Group, and Coca-Cola European Partners. Meanwhile, NN IP said that no major oil and gas company meets the 1.5 warming degree as in the Paris agreement. Small companies willing to invest in the sector find it comfortable to increase sustainable effort further.