Netherlands-based asset manager NN Investment Partners (NN IP) announced today the launch of the NN (L) Social Bond fund, expanding the firm’s impact bond offerings with a fund focused on investments in social and sustainability bonds that allocate proceeds to social projects with clear social benefits to specific target populations.
Social bonds have been one of the fastest growing segments of the sustainable finance market over the past few years as investors’ sustainable investment goals expand from a primarily environmental focus to also encompass social impact. Projects funded by social bonds can positively contribute to ten of the UN Sustainable Development Goals (SDGs), ranging from poverty reduction, hunger and gender inequality to boosting good-quality education and work.
Bram Bos, Lead Portfolio Manager Green, Social and Impact Bonds, NN Investment Partners, added:
“Social bond issuance picked up in 2020 and 2021, especially in financing social projects that focus on dealing with the long-term effects of the pandemic. During this time, the social bond market caught up with other impact bonds and now has a capitalization of more than EUR 400 billion, offering investment opportunities for a well-diversified social bond portfolio. In 2022, we expect an issuance of EUR 250 billion.”
The new fund mainly invests in high-quality global social bonds and money market instruments, but it can also include sustainability bonds that allocate at least half of the proceeds to social projects. It focuses on investments that support affordable basic infrastructure, including water and sanitation, access to essential services in education and health, affordable housing, employment, food security, and socioeconomic advancement and empowerment.
According to NN IP, the new launch complements the company’s existing range of impact bond funds and applies a similar disciplined investment process as its flagship green bond strategies.
Roel van Broekhuizen, Portfolio Manager Green, Social and Impact Bonds, NN Investment Partners, said:
“All investments will be subject to a detailed issuer-level ESG screening and a rigorous social bond assessment which covers the use of proceeds, project evaluation, management of proceeds, and the reporting of the estimated social impact. Furthermore, we actively engage with issuers on a continuous basis in order to prevent social washing, and we leverage our experience in the green bond market to do this effectively.”