The asset manager, led by head of distribution Christophe Girondel, has been awarded a €1.25 billion mandate by Germany’s Federal and State Government Pension Fund.
The Federal and State Pension Fund in Germany (Versorgungsanstalt des Bundes und der Länder, VBL) supports the global climate goals of the Paris Agreement. As part of its sustainability strategy, VBL entrusted Nordea Asset Management (NAM) with a mandate of 1.25 billion euros, with effect from 1 November 2024. This European equity portfolio is aligned with the MSCI Europe Climate Paris-aligned benchmark.
Climate change, with its many negative impacts on nature, society and the economy, is one of the biggest global risks. CO2 emissions are the main cause and must be reduced. VBL adopts a sustainability strategy that takes this reality into account and considers it a fiduciary responsibility to combine financial aspects and climate protection in its investments.
Currently, emissions from VBL’s portfolio of stocks and corporate bonds are below the target set for 2025. The aim is to fall below 92 tonnes of CO2 equivalent per million euros of turnover by the end of 2025. “The mandate to Nordea Asset Management will allow us to make significant progress in this direction. In addition, it will allow us to reduce our carbon footprint in the long term,” says Leinwand.
During a rigorous selection process, NAM exceeded VBL’s expectations. “Nordea Asset Management stood out with its responsible and committed investment team, efficient investment processes and risk control, as well as a clear climate strategy,” explains Jan Obländer, who is responsible for the selection of active asset managers at VBL. With the “Nordea European Stars Equity” strategy, NAM has recognized expertise in selecting leading companies in reducing CO2 emissions and offering innovative products that contribute to a less polluting economic system. This approach allows us to expect an attractive return compared to the MSCI Europe Climate Paris-aligned benchmark index, while at the same time contributing to a more sustainable economy.
Christophe Girondel, Head of Distribution at NAM, is delighted about the collaboration with VBL: “Our approach, which combines climate goals and investment success, is a recognition for us to be able to support VBL in implementing its sustainability strategy at scale so significant.”
How can other pension funds adopt similar sustainability practices as VBL?
Interview Between Time.news Editor and Christophe Girondel, Head of Distribution, Nordea Asset Management
Editor: Welcome, Christophe! We’re thrilled to have you with us today to discuss the recent €1.25 billion mandate awarded to Nordea Asset Management by Germany’s Federal and State Government Pension Fund. This is quite a significant achievement for your team.
Christophe Girondel: Thank you for having me! We’re indeed excited about this mandate, as it aligns perfectly with our commitment to sustainability and responsible investing.
Editor: The pension fund, known as VBL, emphasizes its strategy in support of global climate goals. Can you elaborate on how this mandate specifically aligns with those goals?
Christophe Girondel: Absolutely. VBL has a clear mandate to support the global climate goals outlined in the Paris Agreement. By entrusting Nordea Asset Management with this €1.25 billion, they are committing to an investment strategy that aligns with the MSCI Europe Climate Paris-aligned benchmark. This ensures that the portfolio will focus on companies transitioning towards sustainable practices and reducing CO2 emissions, which is vital for combating climate change.
Editor: It’s fascinating to see how finance is increasingly intertwined with sustainability. In your view, what makes VBL’s approach a model for other pension funds?
Christophe Girondel: What sets VBL apart is its recognition of sustainability as a fiduciary duty. They understand that climate change poses significant risks—not just for the environment, but for economic stability and social well-being as well. By integrating climate considerations into their investment strategy, they are not only acting responsibly but also potentially enhancing long-term financial returns, which is a critical aspect for any pension fund.
Editor: That makes a lot of sense! Given the urgency of the climate crisis, how do you see the role of asset management companies evolving in the next few years in response to these challenges?
Christophe Girondel: The role of asset management firms will increasingly shift toward being stewards of sustainability. We need to focus on active engagement with our portfolio companies to encourage them to adopt greener practices. Additionally, more institutions will demand transparency in sustainability metrics and performance. Ultimately, the future of asset management will be defined by how well we can integrate environmental, social, and governance (ESG) factors into investment decisions.
Editor: Speaking of ESG factors, could you provide some insight into the criteria Nordea uses to select companies for this climate-focused portfolio?
Christophe Girondel: Certainly! We utilize a comprehensive ESG framework that assesses various criteria, including carbon emissions, resource management, and social impact. We look for companies that not only comply with sustainability regulations but are also proactively working to reduce their carbon footprints and engage in sustainable practices. Our goal is to invest in firms that are genuinely committed to transformation.
Editor: It sounds like a rigorous process! As we approach the implementation date of this mandate in November 2024, what are the next steps for Nordea Asset Management?
Christophe Girondel: Our primary focus will be on building the portfolio in alignment with VBL’s sustainability criteria while also ensuring that we maintain strong financial performance. We will engage with our analysts and sustainability teams to conduct thorough research, select the right companies, and also measure our impact regularly.
Editor: Exciting times ahead, Christophe! Before we wrap up, what message would you like to share with other investors and stakeholders about the importance of investing in climate-aligned strategies?
Christophe Girondel: I encourage all investors to consider the broader impacts of their investments. Investing with a sustainability lens is not just about combating climate change—it’s about securing a better future for generations to come. By aligning our financial interests with environmental responsibilities, we can help drive the change the planet urgently needs. Together, we can create a resilient economy that benefits us all.
Editor: Thank you, Christophe, for sharing your insights today! We look forward to seeing how Nordea Asset Management shapes the future of responsible investing.
Christophe Girondel: Thank you for having me! I’m excited about the future and the role we can play in it.
