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Amundi joins forces with Asian infrastructure bank to create $500 million climate bond plan

News Team, 11/09/2019

The Asian Infrastructure Investment Bank (AIIB) has partnered with asset manager Amundi to create a $500 million Asia Climate Bond Portfolio to encourage investment into green projects, particularly in emerging markets.

The Asia Climate Bond will aim to spread an environmentally conscious message and will support accelerated climate action committed by the bank’s members and the further development of climate bond market. It will begin investing in January 2020 and will progressively deploy committed capital in eligible assets. Investment will focus labelled green bonds and unlabelled climate bonds, while the portfolio will also engage with issuing companies to help transition business models in order to increase climate resilience and green leadership. 

The portfolio will be managed by Amundi’s global emerging market debt portfolio management team, which is based in London. Its members each have an average of 17 years of professional experiences and are part of the broader emerging markets investment platform which manages $50.5 billion in dedicated emerging market equity, fixed-income and cross-assets strategies.

Alongside a managed fixed income portfolio of an initial $500 million, the joint project expects to mobilise an additional $500 million from institutional investors focused on climate change. A segment of the investment proceeds will be allocated to market education and issuer support.

As part of the partnership, Amundi and AIIB have created a climate change investment framework to enhance the selection process of the portfolio. It will assess performance through three variables: portion of green business activities, climate mitigation and resilience to climate change. This criteria will act as an analytical framework through which the two partners can determine whether issuers will be able to cope with the effects of the climate change. The project will also include an engagement policy to support the emergence of climate-conscious successes in infrastructure and additional productive sectors.

D.J. PandianAIIB vice president and chief investment officer said: “This portfolio is another example of how AIIB works with leading partners to develop innovative financial products to deepen capital markets for infrastructure. We expect this investment will demonstrate how international financial institutions can approach development finance differently to support the Paris Agreement and adoption of climate finance principles.”

Amundi's chief executive officer Yves Perrier added: “Supporting Climate Champions and the Paris Agreement in Asia is in line with Amundi’s commitment to ESG investing and reflects our extensive commitment to the region. We are proud to launch this new initiative in the field of climate finance.”

The portfolio has also gained the support of Lord Nicholas Stern, a policy maker and professor at the London School of Economics, who sits on AIIB’s international advisory panel.

He said: “I am glad to see that a new financial innovation will help support the emergence of green leaders in Asia.  This comprehensive approach favored by a new public-private partnership between AIIB and Amundi, focusing on the various dimensions through which climate change can impact businesses (including transition risks and physical risks) could help a great deal in mobilizing very large amounts of money for climate action and the energy transition in critical regions of the world. We should expect strong performance—more responsible investment and more modern techniques offer better returns.”

The launch follows AIIB's announcement in July of $500 million portfolio that will target debt capital market development for infrastructure and responsible investing in fixed income. It is part of wider efforts to build a sustainable ESG ecosystem across emerging markets in Asia.


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