Nordea Asset Management has been awarded a mandate to manage 1.25 billion euros on behalf of the German pension giant VBL, equivalent to over 14.5 billion Swedish kronor. With 5.2 million policyholders, VBL manages capital with a market value of 60 billion euros, making it one of Germany’s largest pension funds. The goal of Nordea’s assignment is to design a European portfolio aimed at reducing carbon emissions, in line with the pension fund’s target to achieve its climate goal by the end of 2025.
Eric Pederson, head of responsible investments at Nordea Asset Management, explains that one approach to these investments is to select companies that are already green and have low emissions to immediately reduce the pension fund’s overall carbon footprint. However, Nordea has chosen a more forward-looking approach by investing in companies that may have a significant carbon footprint today but have clear announced goals and ambitious plans to reduce them in the future.
This deal with VBL marks the second major transaction Nordea has made with a large pension fund this year. In September, the bank secured 4.6 billion kronor from the California State Teachers’ Retirement System (CalSTRS) to make sustainable investments. The capital from the German and Californian pension funds will be managed in a similar manner, focusing not only on ESG-labeled companies but also on those with aspirations to meet such criteria in the future.
Nordea will closely monitor how companies are reducing their emissions over time to ensure there is no greenwashing. Eric Pedersen emphasizes the importance of determining which scope – whether it’s scope 1, 2, or 3 emissions – is relevant for each company and other essential ESG parameters.
The billions from VBL will be managed largely like Nordea’s largest ESG fund, European Stars. When asked why these pension funds choose Nordea, Eric Pedersen attributes it to having one of the largest ESG teams in Europe. Looking ahead, he hints at the possibility of more sustainable billion-dollar deals in the future but remains cryptic about specifics.
In conclusion, Nordea’s partnership with VBL represents a significant step towards sustainable investing in Europe, aligning with the growing focus on ESG factors and climate goals. The collaboration showcases Nordea’s expertise in responsible investments and its commitment to driving positive change in the financial industry.