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South African government pension fund backs green bond

Giant fund makes R1bn (€97m) investment

South Africa’s R914bn (€89bn) Government Employees’ Pension Fund (GEPF) has invested R1bn in a green bond issued by state-owned development finance institution the Industrial Development Corporation.

It will be used to finance green economy projects, according to local media reports.
Arthur Moloto, chair of the GEPF Board of Trustees, was quoted as saying by Business Day that the Public Investment Corporation, the state asset manager, was still working on the contracting details. He added the expected return would be around 9%.
It would be made “at balance sheet level” and not through a special purpose vehicle Moloto said.
The GEPF, with over 1.2m active members and 318,000pensioners and beneficiaries, is Africa’s largest pension fund. It is among the leaders in socially responsible investment in South Africa and was a founding signatory to the United Nations Principles for Responsible Investment (UN PRI). It integrates environmental, social and governance (ESG) issues into its investment decisions and ownership practices.
The fund has a 36.1% allocation to domestic fixed income and the return on the green bond will be benchmarked against that.
Among its investments is a R5.5bn allocation to the Isibaya Fund, which provides finance for projects supporting positive economic, social and environmental outcomes for South Africa.