The Responsible Asset Allocator Initiative (RAAI) has analyzed how 25 leaders in responsible investing are responding to the COVID-19 crisis. Topping the list is APG, which scores 100% on the criteria examined.
The Responsible Asset Allocator Initiative (RAAI), a US initiative focused on mobilizing capital from the world’s largest institutions to responsible investing and the Sustainable Development Goals, examined the role of the 25 investors they consider to be the leaders in responsible investing. APG was awarded maximum scores on all criteria, such as supporting companies to take socially responsible actions even if that could affect short-term performance, joining forces with other investors and investing in Covid-19 solutions. PGGM also received maximum scores on all criteria.
Prompt action
APG played an active role in combatting the consequences of the Covid-19 crisis right from the start. In March, APG and other institutional investors urged companies to take what steps they can to mitigate the social impact of the corona crisis, and make employee health and safety their number one priority. APG demanded, for example, that Amazon account for worker safety measures during the pandemic, following reports that sick Amazon employees were being pressured to come to work. Addressing the economic consequences as well, the investors stressed that companies should aim to prevent workers, suppliers and customers from being faced with financial problems.
Investing in Covid-19 response bonds
APG, on behalf of its pension fund clients ABP, bpfBOUW, SPW and PPF APG, invested in the first Covid-19 bond – issued by the Nordic Investment Bank – and many more after that. “To date we have invested over half a billion euros in Covid-19 response bonds,” says Oscar Jansen, Credit Portfolio Manager at APG Asset Management. “The proceeds of these bonds are used to support both health care and the economy. They help fund emergency health measures such as expanding test capacity, training medical personnel and procuring protective medical equipment, as well as support packages for small and medium-sized enterprises in Europe and elsewhere.”
The bonds offer an attractive return as well. “In most cases,” Jansen explains, “APG invests in Covid-19 bonds issued by reputable institutions with solid credit ratings (AA or AAA). The credit risk of AAA-bonds is comparable to the risk of Dutch sovereign bonds, while the interest rate is slightly higher than that of similar bonds.”
Guidance
To boost the issuance of Covid-19 bonds, APG has published a guidance document that outlines its criteria for bonds to be qualified as social or sustainable bonds. It has been shared with bond issuers, encouraging them to step up issuance of high-quality Covid-19 bonds. “As one of the world’s largest investors in green, social and sustainable bonds,” Jansen concludes, “we want to take our responsibility to continue supporting Covid-19 response funding in a responsible way.“
More about the RAAI ranking:
https://www.top1000funds.com/2020/08/asset-owners-adapt-and-respond-to-covid/