AIIB and Amundi launch innovative US$500 million climate bond portfolio
First-of-its-kind climate change investment framework developed which takes into account three variables to analyze issuers’ ability to cope with climate change
The Asian Infrastructure Investment Bank (AIIB) and Amundi, Europe’s largest asset manager, have announced a US$500 million Asia climate bond portfolio which aims to accelerate climate action in the bank’s members and address the underdevelopment of the climate bond market.
Through a managed fixed income portfolio of an initial US$500 million, the joint project expects to mobilize another US$500 million from climate change-focused institutional investors. A portion of the investment proceeds will be allocated to market education, engagement and issuer support.
Amundi and AIIB have developed a first-of-its-kind climate change investment framework, which takes into account three variables, portion of green business activities, climate mitigation and resilience to climate change, to analyze issuers’ ability to cope with climate change.
The Asia climate bond portfolio will invest in labelled green bonds and unlabelled climate bonds and engage with issuing companies to help them transition their business models to increase climate resilience and green leadership. The portfolio will seek performance by identifying, analyzing and selecting tomorrow’s climate champions based on this framework.
“This portfolio is another example of how AIIB works with leading partners to develop innovative financial products to deepen capital markets for infrastructure,” said AIIB vice president and chief investment officer D.J. Pandian.
“We expect this investment will demonstrate how international financial institutions can approach development finance differently to support the Paris Agreement and adoption of climate finance principles,” Pandian added.
“We are honoured to work with AIIB on their first capital market initiative focused on climate action,” said Amundi CEO Yves Perrier.
“Supporting climate champions and the Paris Agreement in Asia is in line with Amundi’s commitment to ESG investing and reflects our extensive commitment to the region. We are proud to launch this new initiative in the field of climate finance,” Perrier added.
This project will also entail an ambitious engagement policy to support the emergence of climate champions in infrastructure and other productive sectors.
“I am glad to see that a new financial innovation will help support the emergence of green leaders in Asia,” said economist and policymaker Nicholas Stern who also sits on AIIB’s international advisory panel.
“This comprehensive approach favoured by a new public-private partnership between AIIB and Amundi, focusing on the various dimensions through which climate change can impact businesses could help a great deal in mobilizing very large amounts of money for climate action and the energy transition in critical regions of the world,” he continued.
"We should expect strong performance - more responsible investment and more modern techniques offer better returns,” Stern added.
The emerging market corporate debt strategy will be managed by Amundi’s global emerging market debt portfolio management team, based in London and whose members each have an average of over 17 years’ professional experience. This team is part of the broader emerging markets investment platform, which manages US$50.5 billionin dedicated EM equity, fixed-income and cross-assets strategies and totals 69 investment professionals.
In July, AIIB announced a US$500 million portfolio that aims to develop debt capital markets for infrastructure, drive responsible investing in fixed income and build a sustainable ESG ecosystem in emerging markets in Asia.
The Asia climate bond portfolio will begin investing in January 2020 and will progressively deploy the committed capital in eligible assets.
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10 Sep 2019