Last week, ICMIF member Folksam (Sweden) invested SEK 2.5 billion (USD 260 million) in a green bond issued by Kommuninvest. This brings the total amount invested in Green Bonds by Folksam Group to SEK 30 billion (USD 3.1 billion), making it one of the leading insurers in terms of green bond investments.
“Society is in the midst of a necessary green transition, which is largely driven by local projects in regions and municipalities. This investment contributes to pension money providing double benefits to savers by allowing the local transition to continue at the same time as pension money is growing” said Michael Kjeller, Deputy CEO and Head of Asset Management and Sustainability.
Kommuninvest issues green bonds that finance climate-friendly investment projects from Swedish municipalities and regions. The number of green projects has grown sharply and was 329 at 2019 year-end. Kommuninvest's total amount of green bonds contributes to 611,000 tonnes of reduced CO2 emissions according to their 2020 impact report.
The term of this bond is 3 years. Folksam will divide the investment across its subsidiaries, with municipal pensions subsidiary KPA Pension taking SEK1.2bn (USD 125 million) of the issue; Folksam Liv, the group’s life insurance arm investing SEK1.1bn (USD 114 million); Folksam Sak, its general insurance division investing SEK200m (USD 21 million).
Impact investing linked to the SDGs
Folksam also recently announced an investment of SEK 350 million (USD 36 million) in the SEB Impact Opportunity Fund. The fund is a microfinance fund that lends capital on market terms and at the same time benefits from lending to individuals and companies that are outside the traditional banking systems. The loans enable investments that contribute to increased economic prosperity in emerging countries.
Many of the microfinance institutions in which the fund invests have a clear focus on female borrowers. Women have less access to financing from the traditional banks, for example, when they are under-represented if you look at the proportion of the population who have a bank account. Microfinance meets several of the UN's Sustainable Development Goals (SDGs). Folksam’s areas of focus are health, gender equality and diversity, efficient use of resources, climate, sustainable cities and communities and decent working conditions.
“The fund offers attractive returns, which benefits our customers, while at the same time expected to contribute to increased financial prosperity, including among women in developing countries. In this way, our customers get a good return on their money while contributing to a better world” said Michael Kjeller.
Social bonds to support the fight against Covid-19
Earlier this year, to support the fight against coronavirus, Folksam invested a total of SEK 1.7 billion (USD 170 million) in social bonds to counteract the social and economic effects of the Covid-19 (coronavirus) pandemic. In March, it invested SEK 700 million (USD 70 million) in a social bond issued by the International Finance Corporation (IFC), part of the World Bank Group, to provide financial support to companies affected by the Covid-19 pandemic; and in April, it invested a further SEK 900 million (USD 90 million) in a bond issued by the Nordic Investment Bank and SEK 100 million (USD 10 million) in a bond issued by the European Investment Bank (EIB).