VBL picks Nordea to invest €1.25bn in Paris-aligned equities

Germany’s supplementary pension provider for public sector employees – Versorgungsanstalt des Bundes und der Länder (VBL) – has picked Nordea Asset Management to invest €1.25bn held in its European equities portfolio in line with MSCI’s Climate Paris-aligned benchmark.

Nordea’s mandate to switch the fund’s European equities portfolio to the MSCI benchmark is part of VBL’s wider sustainability strategy, which is pursuing an ambitious CO₂ reduction target to cut greenhouse gas emissions by 7% per year.

VBL considers climate change, with its negative impacts on nature, society and the economy, one of the greatest risks globally, meaning that CO₂ emissions, largely responsible for rising temperatures, must be reduced.

Last year, the pension scheme reworked its responsible investment strategy to cut CO₂ intensity in its investment portfolio, and its exposure to coal companies. VBL aims to reduce the CO₂ intensity in its equity and corporate bonds portfolios by 25% by the end of 2025, compared with the level recorded at the end of 2021.

The scheme combines exclusion criteria, the integration of ESG standards in its investment strategy, engagement and impact investments to achieve the goal, it added.

Amundi Deutschland has been investing over €1bn in green, social and sustainable bonds on behalf of VBL.

Michael Leinwand, VBL’s chief investment officer, said: “Over the last three years, we have already reduced the CO₂ intensity for our equities, and corporate bonds, by more than 25%. Now it’s about continuing on this CO₂ reduction path.”

Emission values of VBL’s equities and corporate bonds portfolios are currently below the target defined for 2025.

“The mandate with Nordea Asset Management will decisively make us progress in this regard, and it also enables us to reduce our CO₂ footprint in the long term,” Leinwald added.

Nordea expects attractive returns for the pension fund by switching to the MSCI Europe Climate Paris-aligned benchmark, selecting companies that are on the path to CO₂ reduction and offer innovative products contributing to a greener economy, it said.

Christophe Girondel, head of distribution at Nordea, added: “The fact that we can support VBL in implementing its sustainability strategy to such a significant extent confirms that our approach combining climate goals in the investment success is right.”

He added: “The portfolio will have a positive impact on the climate footprint of VBL’s investments right from the start. With the strategic alignment of the mandate to the Paris-aligned benchmark, VBL is pursuing an ambitious CO₂ reduction path in which greenhouse gas emissions are reduced by 7% annually.”

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