NN Investment Partners (NN IP) has launched a social bond fund in Europe targeting 10 Sustainable Development Goals.
The fund primarily invests in global social bonds and money market instruments of high quality (AAA to BBB-) denominated in Euro, but can also include sustainability bonds that allocate at least half of the proceeds to social projects. Specifically, the fund is focused on investments in social bonds and sustainability bonds that allocate proceeds of social projects that promote affordable basic infrastructure such as water and sanitation, access to essential services in education and health, affordable housing, employment, food security, and socioeconomic advancement and empowerment.
Social bond issuance picked up in 2020 and 2021, especially in financing social projects that focus on dealing with the long-term effects of the pandemic, Bram Bos, lead portfolio manager of green, social and impact bonds at NN IP said.
During this time, the social bond market caught up with other impact bonds and now has a capitalisation of more than €400bn.
Roel van Broekhuizen, portfolio manager green, social and impact bonds, NN IP, added: “Only bonds that finance projects aligned with the Social Bond Principles will be selected, but we look beyond the standard labelling. All investments will be subject to a detailed issuer-level ESG screening and a rigorous social bond assessment which covers the use of proceeds, project evaluation, management of proceeds, and the reporting of the estimated social impact.
“Furthermore, we actively engage with issuers on a continuous basis in order to prevent social washing, and we leverage our experience in the green bond market to do this effectively. This ensures investors can be confident that only bonds matching our strict criteria will be included in the portfolio.”