BVV, the pension provider for the German financial sector, has extended its partnership with climate tech company Right to assess the climate impact of its sovereign bond portfolio, according to statement by Right.

BVV uses Right’s X-Degree-Compatibility (XDC) model to analyse climate risks related to its sovereign bonds portfolio, pursuing a transparent investment strategy in the asset class, Right noted.

Pension funds could increasingly shift to government bonds, given the expected subdued global economic growth in 2024, it added.

BVV is strategically changing its investment targets this year, boosting investments in directly held bonds by 10%, according to a report of the scheme’s annual general meeting (AGM).

Right’s model calculates the temperature of government bonds based on emissions per inhabitants, while for companies the emissions intensity is calculated as tCO2e per €1m of gross value added, it said.

“The partnership with Right has already made a significant contribution to improving the transparency and understanding of the climate-related impacts of our investments,” said Frank Egermann, BVV’s chief investment officer.

He added: “The science-based methodology of the XDC model and the broad coverage of asset classes support the BVV’s course of offering long-term, stable benefits with a focus on sustainability focus for company pension provisions.”

Right’s XDC technology can be used to calculate the climate impact of portfolio consisting of different asset classes. This enables BVV to develop its own efficient reporting and control processes, with the company’s internal data warehouse, according to Right.

“For us, extending the collaboration means a clear commitment from BVV to develop the solutions of tomorrow in partnership with young companies,” said Sebastian Müller, co-founder of Right.

BVV has been using Right’s XDC model since 2020, with the aim to improve portfolio and risk management, looking closely to climate risks.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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