Aegon to launch innovative Global Sustainable Sovereign Bond Fund at COP26

New Aegon AM fund will be seeded with £100m from Aegon UK workplace pension fund and launched at the conference

Aegon Asset Management and Aegon UK have partnered with the Global Ethical Finance Initiative (GEFI) to introduce the new Aegon Global Sustainable Sovereign Bond Fund at COP26, the 26th United Nations Climate Change conference, to be held in Glasgow from 31 October to 12 November 2021.

The fund, which takes an innovative approach to incorporating the sustainability characteristics of sovereign bonds into an investment strategy, will launch in October 2021 with a £100m initial investment from Aegon UK. The fund will be available to those saving through their workplace pension as it becomes a component of Aegon UK’s Universal Balanced Collection which is widely used as a scheme default fund. The fund will also be available directly through Aegon AM, subject to completion of registrations.

In January 2021 Aegon UK committed to making its default pension fund carbon net zero by 2050 and to halving it carbon emissions by 2030. It follows recent action that have seen it transition over £10 billion of default assets into carbon optimised strategies.

GEFI is an independent organisation focused on driving positive change in the finance community to deliver more private sector capital into the UN’s Sustainable Development Goals (SDGs). GEFI is based in Scotland but has global reach and is committed to growing the sustainable finance ecosystem through advisory and research projects, strategic campaigns, events and practical products.

GEFI will be launching its SDG Financial Products Platform at COP26. The platform is the result of a long-standing collaboration between GEFI and the United Nations Development Programme (UNDP) to develop innovative financial products aligned to the UN’s Sustainable Development Goals. The platform works with partners throughout the product lifecycle to share learnings and build the ecosystem of SDG aligned financial products across asset classes. The platform only works with financial institutions that demonstrate a genuine commitment to the 2030 SDG agenda. New partners from different asset classes are invited to apply to become platform partners.

The Aegon Global Sustainable Sovereign Bond Fund, managed by Aegon AM, has been selected as a leading and innovative example of sustainability alignment by GEFI and will be a founding partner of the platform. The fund will feature in events during COP26 including a reception on Finance Day, which takes place on 3rd November. GEFI’s exclusive platform launch event on 2nd November will include a presentation from Aegon AM’s Sustainable Sovereign Bond team who will discuss fund’s construction and objectives as well as the role of sovereign bonds in sustainable investment portfolios. The events at COP26 for the platform launch will include high-profile attendees from the international finance community and representatives from the Scottish Government and the UNDP.

The Aegon Global Sustainable Sovereign Bond Fund will be managed by government bond specialists within Aegon AM’s Global Fixed Income Platform, which has 136 fixed income investment professionals across the UK, the US and the Netherlands. They are supported by a 17-strong Global Responsible Investment Team, led by Brunno Maradei. The fund invests in financially strong countries that are making significant progress towards the sustainability targets defined by the SDGs. The introduction of a sovereign bond fund provides additional choice for sustainable investors looking to diversify their portfolios.

Commenting on the new fund, Brunno Maradei head of responsible investing at Aegon Asset Management, said: “We are delighted to be selected by GEFI as a leading example of sustainable investing. We are proud to work with them and our partners at Aegon UK to promote the new fund at COP26. The alignment of sovereign portfolios with the global sustainability agenda facilitates responsible capital allocation, which has positive long-term social and environmental impact.”

Tim Orton, Managing Director, Investment Solutions at Aegon UK said: “As a long-term savings provider, we want to help our customers align their investments with a fair and sustainable future. As such, Aegon is committed to action on mitigating climate risk and progress towards our net zero carbon targets. The fund is a prime example of the industry breaking new ground, allowing this key default fund to invest in sustainable strategies across a broader range of asset classes than most default funds have achieved to date. The fund has been selected as a leading and innovative example of sustainability alignment and will form an important first milestone for customers in the Universal Balanced Collection. Climate finance will be a key discussion point at COP26 and we are pleased to partner with GEFI and Aegon Asset Management to promote the importance of innovation and the launch of the fund.”

Omar Shaikh, co-founder and director at GEFI said: “We are delighted to launch our SDG Financial Products Platform at COP26 which will support our ambition to see the UN Sustainable Development Goals delivered by 2030. Aegon have demonstrated real leadership with this £100m commitment and have shown how private sector investment and innovative products can be delivered for the benefit of people and planet. We are excited to work with Aegon to build out the ecosystem of sovereign bonds and sustainability.”

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