Danish pension giant ATP makes first investment in social bonds

COPENHAGEN, Feb 11 (Reuters) – Denmark’s ATP, one of the first pension funds globally to buy green bonds, has made its first investments in so-called social bonds as part of its sustainable portfolio, it said on Thursday.

Social bonds, which are debt issued for socially beneficial projects such as eradicating child labour or strengthening workers’ rights, have caught the eye of investors during the COVID-19 pandemic, when ethical investments have surged.

“In 2020, we decided to take it one step further and expand our universe to also be able to invest in social and sustainable bonds,” Chief Executive Bo Foged told journalists at a briefing following the group’s annual results release.

ATP, Europe’s fourth largest pension fund, now aims to have 50 billion Danish crowns ($8.16 billion) invested in sustainable investments by the end of 2021, including its existing investments of 30 billion crowns in green bonds.

Issuance of social bonds – by government agencies, supranational organisations such as the Asian Development Bank, and an increasing number of companies – surged to $164.2 billion last year, up nearly 10-fold on 2019, according to Refinitiv data.

ATP invested 95 million euros in social bonds in 2020, Foged said.

“We have started by dipping our toes into social bonds, gaining experience and working with the issuers,” he said.

With more than $156 billion in assets under management, ATP controls a mandatory pension scheme for around 5.2 million Danish members.

In 2020, the pension fund delivered its second-highest investment return ever of 29.9 billion crowns, behind a record 34 billion in 2019.