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Japan's GPIF partners with Dutch bank for green bond investment

By Asia Asset Management  
June 1, 2020

Japan’s Government Pension Investment Fund (GPIF) is partnering with Dutch lender Nederlandse Waterschapsbank (NWB Bank) to open the door for more green bond investment opportunities to the fund’s asset managers.

It says green bonds issued by NWB Bank align with the Green Bond Principles and Sustainability Bond Guidelines of the International Capital Market Association.

The partnership will help GPIF incorporate environmental, social and governance (ESG) assessments into its investments, and provides its asset managers with investment opportunities that “contribute to make a sustainable society”, the pension fund says in a statement on May 28.

NWB Bank Chief Commercial Officer Frenk van der Vliet says in the statement that ESG bonds have become an “indispensable part” of the lender’s business.

GPIF has formed partnerships for sustainability and green bond investments with 14 multilateral development banks and financial institutions, a spokesperson for the pension fund tells Asia Asset Management (AAM).

“GPIF does not directly invest in the green bonds issued by these institutions. Since we outsource all foreign bonds investing to external asset managers, it means these institutions provide investment opportunities to our external bond managers,” she says.

GPIF President Miyazono Masataka says the pension fund requires all its asset managers to integrate ESG into their investment analysis and decision making.

“We regard purchase of green, social and sustainability bonds as one of the direct methods of ESG integration in the fixed income investment,” he says in the statement.

GPIF is one of the first pension funds in Asia to embrace sustainable investing.

“GPIF is shifting its holdings in domestic bonds to foreign bonds in search of better yield…The pension is expected to be more active in overseas green bond investments,” according to an investment consultant based in Hong Kong.

The fund is also likely to form more partnerships for different asset classes such as equities and alternatives, he tells AAM, speaking on condition of anonymity.

GPIF, the world’s largest pension fund, had approximately 168.9 trillion yen (US$1.57 trillion) of total assets under management as of end-March 2020.