Approximately four fifths or 81%, of pension funds in the Netherlands and the Nordics currently have established allocations to green bonds according to new research by Consultancy Kirstein A/S with Dutch asset manager NN Investment Partners
They found that more than two thirds of Dutch and Nordic investors have an established allocation to green bonds, while only one fifth of Nordic investors do not plan to invest in the asset class.
Bram Bos, Lead Portfolio Manager Green Bonds at NN IP, said in a statement: “Against a backdrop of market growth and improved regulation, it is great to see the broad-based and still rapidly growing interest in green bonds in these countries, which are ahead of the pack when it comes to green bond investing. The explosive growth in issuance – with the global market projected to exceed the €1 trillion threshold by end-2021 – and further diversification of the issuer base will further enhance the green bond market’s appeal.”
NN IP also said increased regulation and improved transparency from the implementation of the EU Taxonomy and EU Green Bond Standard are expected to boost the green bond market, with 87% of the research panel predicting that these developments will stimulate growth. As a result, NN IP has raised its forecast for full year 2021 green bond issuance to €400m.
Approximately one quarter, 26%, of investors in the survey plan to increase allocations to green bonds in the next 12 months, with being first time investors in the asset class.
Swedish investors and Dutch fiduciaries have the largest allocation to green bonds as a percentage of their total fixed income allocation at 12% and 10% respectively. The survey found that the Dutch market intends to maintain current allocations, but Danish investors expect to increase allocations by more than €5bn in the next 12 months. In Denmark, mid-sized pension funds have become interested in green bonds and expect to increase allocations by 85% from just under €3bn.
The report said,“Given that green bonds investing is still at an early stage, if these plans materialise, then European investors (in particular Danish, Swedish and Dutch investors) will bring significant new capital to work on making an impact through green bonds.”
The survey was based on interviews and quantitative data from 38 investors based in five European countries (Denmark, Sweden, Norway, Finland, and the Netherlands) with total assets of €786bn. The research panel was constructed to ensure a representative sample of the retail and institutional markets in both the Nordic region and the Netherlands.
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