NN Investment Partners (NN IP) has launched the NN Social Bond fund as an addition to its impact bond offerings.
The Social Bond fund aims to achieve positive social impact and contribution to specific social Sustainable Development Goals (SDGs), while providing investors with attractive financial returns.
The fund will invest in global social bonds and sustainability bonds that allocate proceeds to projects that promote affordable basic infrastructure, such as water and sanitation, or access to essential services, including education, health, affordable housing, employment and food security.
To be selected, bonds must allocate at least half of proceeds to social projects.
The fund will also invest in money market instruments of high quality, determined as AAA to BBB-, denominated in Euro.
On the timing of the fund, NN IP lead portfolio manager (green, social and impact bonds) Bram Bos said: “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 capitalisation of more than €400 billion, offering investment opportunities for a well-diversified social bond portfolio.”
The new fund’s investments will be subject to issuer-level ESG screening and a social bond assessment.
NN IP will also actively engage with issuers to prevent ‘social washing’, through an investment process similar to that of NN IP’s flagship green bond strategies.
NN IP currently offers four green bond strategies, including the €683m NN Corporate Green Bond fund and the €1.1bn NN Green Bond fund.