Denmark’s Pensionskassernes Administration (PKA) says it has invested another DKK370m (€49.6m) in green bonds issued recently by the Nordic Investment Bank (NIB) and Bank of America (BofA), bringing its total allocation to the asset class to DKK1.05bn.
The BofA green bond has a maturity of three years and pays a coupon, or interest rate, of 1.95% per annum. NIB’s green bond has a maturity of five years and, due to a AAA rating, pays less interest than the BofA bond – namely 0.15% annually. According to PKA, the banks will use the proceeds to finance energy efficiency and renewable projects.
“As long as we can, with green bonds, combine climate-friendly investments with good returns for our members, we will continue to subscribe to them,” PKA Chief Executive Peter Damgaard Jensen said in a statement. “It’s a simple equation and something that our members expect us to do.”
The latest investments are on top of the DKK685m PKA has already spent on green bonds from German development bank KfW and the European Investment Bank (EIB), though the lion’s share, or DKK535m, went to the KfW. The KfW’s green bonds, which debuted last year, have been assured as such by Norwegian climate think-tank CICERO.The EIB pioneered green bonds in 2007 and has sold around €6bn worth of the debt since.
PKA looks after DKK215bn in assets from five Danish health care and social services schemes. Almost all (90%) of its 268,000 beneficiaries are women. Its responsible investment strategy was adopted in 2005 when delegates for these beneficiaries demanded that the administrator do so.
“It’s something that our members expect us to do.”
As a result, PKA excludes outright controversial weapons (e.g. cluster bombs), nuclear weapons and tobacco. It also avoids companies that it considers in violation of the UN’s Global Compact – but only if engagement should fail. One example is UK mining firm Vedanta, which was ultimately excluded for environmental damage and human rights violations.
Since last March, 31 coal companies have also been added to PKA’s exclusion list. The administrator said it was now using the money from the divestment to invest more in green bonds. Link (Danish)