Dutch asset managers APG and ACTIAM help develop independent standards for green bonds

APG, the €375bn Dutch pension investor, and ACTIAM, the Dutch asset manager with €44bn in assets, have decided to join an industry working group created by the Climate Bonds Initiative (CBI) that is developing standards for “green bonds”, a separate kitemark initiative to the Green Bond Principles created by over 50 banks, insurers and asset managers. ACTIAM, the new name for SNS Asset Management as of July 1, says Manuel Adamini, its Head of ESG Research, will represent the firm in the 16-member group, which already includes experts from US rating agency Standard & Poor’s, UK asset manager Aviva Investors and business consultancy KMPG. Last month, the CBI unveiled minimum standards for green bonds in the property sector, including a requirement that commercial buildings rank in the top 15% of their markets with respect to greenhouse gas emissions: link to earlier report. Responsible Investor understands that a representative from APG, which last week was one of the buyers of an inaugural €1.5bn green bond from German development bank KfW, has also joined the group. ACTIAM is known for its responsible investment approach and has several hundred million euros worth of green bonds in its client portfolios, according to the firm, and was also a buyer of the KfW bond. Erik Jan van Bergen, ACTIAM’s Chief Investment Officer, was quoted by the CBI blog as saying: “We think that protecting green integrity is key to further growth of the climate bond market…it will help bring mainstream investors into the market and with that the vast amounts capital necessary to mitigate and adapt to climate change.”
ACTIAM’s move coincided with the release of Climate Bonds’ latest report on the state of the green bonds market.The report says that in mid-June, there were $35.8bn (€26.5bn) worth of bonds that the NGO considers green issued by companies and development banks. This compares with just €7bn in June 2013. Amid such robust growth, Kidney has already told RI that the green bond market could grow to $100bn by the end of 2015 and to $300bn by 2018. “Mobilising capital in this market is not a problem. The question will be whether there will be enough deal flow,” Kidney said during an event in Frankfurt yesterday. At the event, the conversation turned to the Green Bond Principles, the voluntary guidelines for green bonds issuance now signed by more than big banks and investors. Asked by RI why the guidelines did not include an assurance by the banks themselves regarding the integrity of the green bonds they underwrite, Kidney said there were two good reasons for it as far as he could tell: “One is that some of these banks would have a credibility problem, as they still provide loans to dirty industries like coal,” he said. The second reason, he said, was that underwriting banks lack the internal capacity to evaluate the integrity of green bonds. “The bottom line is that we don’t want the banks to decide what’s green and what’s not. That should be left up to the experts,” said Kidney. Two players are currently leading the market for green bond certification, the Oslo-based Center for International Climate and Environmental Research (Cicero) and French ESG firm, Vigeo. Climate Bonds’ report for 2014 also estimated the current universe for “climate-themed bonds” at $502.6bn in June 2014, up from $346bn in March 2013. Bonds issued to finance transport projections accounted for the bulk ($358.4bn) of the volume. They were followed by bonds for energy ($74.7bn), finance ($50.1bn) and buildings ($13.5bn).