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Aegon Asset Management embraces Impact Investing

The Hague, The Netherlands, March 31, 2014

This month, Aegon Asset Management once again participated in a new “green” bond issued by the World Bank. The 550 million euro three-year fixed rate global green bond, was the first green bond to be issued in euros by the World Bank.

The proceeds of green bonds are typically used to finance projects and investments offering clear environmental or social benefits. The majority of green bonds are issued by agencies and development banks such as the World Bank and the European Investment Bank, to meet their considerable funding requirements.

Green bonds growth

Aegon Asset Management (AAM) expects the market for green bonds to develop quickly in the coming years, as demand from investors continues to grow and issuers decide to use this appetite for green bonds to finance their environmentally responsible investments.

 

Green Bonds Trending

 

For AAM, investments in green bonds form part of its portfolio of 'impact investments'. AAM's Responsible Investment Team defines impact investments as: "Direct or indirect investments in businesses, organizations and projects, that meet our existing risk and return requirements, but also have the intent to create a measurable social or environmental impact."

Green bond requirements

For AAM green bonds have to meet specific investment criteria; the yield and the rating of the green bond must be similar to a regular bond and the projects financed by the green bond have to have sufficient environmental or social impact.

Impact investment policy meets client requirements

According to Hendrik-Jan Tuch, Senior Portfolio Manager, AAM, there is a growing interest amongst clients in the use of environmental and social indicators for their investments: "AAM's impact investment approach meets clients' requirements, without them having to adjust their investment mandates, and with no negative impact on the risk or return characteristics of their portfolios.

"This has already enabled us to investment in green bonds for a large part of our fixed income portfolios. As more investors adopt a similar approach to our impact investments policy, funding for the global transition to cleaner energy and other environmental and social improvements will increase considerably."

Written by: Aegon