Luxembourg pension reserve fund awards €1bn in active ESG mandates

Move takes Fonds De Compensation’s ESG mandates to more than €4bn

Luxembourg’s €17bn pension reserve fund, Fonds De Compensation (FDC), has awarded over €1bn in active ESG mandates to Robeco, BNP Paribas and Allianz.

The latest appointments, announced today, take the fund’s allocation to ESG to over €4bn since it strengthened its Socially Responsible Investment policy in January 2017 to include the stipulation that “socially responsible investment” be a requirement in all its active tenders.

And it comes as a government-backed report said last month that the Grand Duchy should consider tax incentives to promote sustainable investment as part of a sustainable finance roadmap.

Dutch based institutional asset manager Robeco will manage the fund’s €750m active Global Equities Sustainable Approach, which, according to the tender document, must include “sustainable principles or socially responsible investment in its investment strategy and decision‐making processes”. The benchmark chosen for the strategy is the MSCI World Net Total Return Index.

France’s BNP Paribas Asset Management will run the €200m Global Equities Sustainable Impact strategy, which seeks to “generate, alongside performance…a measurable sustainable impact” by investing in companies that are aligned with the United Nations’ Sustainable Development Goals (SDGs).It will be benchmarked against the MSCI World IMI Net Total Return Index.

Allianz Global Investors will oversee FDC’s €100m active Euro-denominated green bond portfolio, which is exclusively dedicated to green bonds included in the Bloomberg Barclays MSCI Euro Green Bond Total Return Index.

London based AQR Capital Management, French SRI investor Mirova, and Dutch based NN Investment Partners were named as “standbys” for the Global Equities Sustainable Approach, Global Equities Sustainable Impact, and Green Bonds mandate, respectively.

Last December, FDC appointed Amundi AM, Allianz GI, AXA IM and HSBC to manage five sub-funds worth a combined €3bn with the stipulation that socially responsible investment be considered.

In June, the Luxembourg fund also published its updated exclusion lists, excluding companies on the basis of human rights violations, impacts on the environment, and their involvement in the production of “inhumane weapons”. It includes the likes of Energy Transfer Partners, the US firm behind the controversial Dakota Access Pipeline and UK technology firm BAE Systems.