Japan’s massive Government Pension Investment Fund (GPIF) has been a keen proponent of investing in sustainable assets. In 2019, it committed to investing a sizeable tranche of its US$1.6 trillion assets under management into green and socially responsible investments.
And by making asset managers accountable with this strategy, the GPIF is strongly pushing the boundaries of sustainability investing, not only in Japan, but in the global asset management industry as well.
In its latest move towards a lower-carbon economy, the GPIF and the German state-owned development bank, Kreditanstalt für Wiederaufbau (KfW) have formed a partnership to promote the development of sustainable capital markets through a focus on green bonds and the incorporation of environmental, social and governance (ESG) assessments into fixed-income investments.
KfW, Germany's flagship promotional bank, is one of the largest issuers of green bonds globally. Its "Green Bonds - Made by KfW" are issued in alignment with the Green Bond Principles administered by the International Capital Market Association (ICMA). From now on, "Green Bonds - Made by KfW" will be integrated into the GPIF's universe of ESG investment opportunities.
The GPIF requires all asset managers to integrate ESG into their investment analysis and decision-making, and regards the purchase of green, social and sustainability bonds as a direct method of integrating ESG elements into fixed-income investments.
“This is our first partnership with a government finance agency,” says Hiro Mizuno, the fund’s executive managing director and chief investment officer. “We would like to leverage the success with multinational development banks in green, social and sustainability bonds partnerships in hopes of expanding this to other platforms.
“As one of the largest issuers globally, KfW has played a key role in making green bonds more mainstream and attractive. GPIF values KfW's expertise as an issuer and green bond investor.”