Thematic investments are an ideal way to address specific sustainability topics. On the one hand, we target investments that contribute to the transition to a net-zero emissions economy and climate change mitigation. An effective way to achieve this is through investments in infrastructure renewables, green bonds and real estate.
On the other hand, we contribute to social improvements through investments in social infrastructure as well as sustainability and social bonds. In this context, we measure the real-world impact of our investments and align them to the Sustainable Development Goals (SDGs). We currently focus on the seven SDGs shown in the graph below.
For our green bond investments, we use the Green Bond Principles (GBP) issued by the International Capital Market Association (ICMA) as our guidance. For social bonds we use the Social Bond Principles (SBP) and for sustainability bonds the Sustainability Bond Guidelines (SBG), both issued by the ICMA too.
In total, we held USD 2.6 billion in these bonds at the end of 2020, which is more than 50% of our target of USD 4 billion, to be achieved by the end of 2024.
Infrastructure is an attractive asset class for our investment portfolio given its credit quality and inherent liquidity premium. We set a new target to increase our social and renewable infrastructure portfolio by USD 750 million within the next four years to strengthen our positive environmental and social impact. As of the end of 2020:
- 23% of our infrastructure investments were allocated to renewable energy such as wind farms and solar panels.
- 23% of our infrastructure investments were allocated to social infrastructure such as hospitals, student dorms and affordable housing projects.
In our real estate portfolio, we focus on certified buildings, such as those adhering to the MINERGIE® standard in Switzerland. By the end of 2020, the value of our MINERGIE®-certified buildings reached USD 0.6 billion or 27% of our Swiss portfolio.
Furthermore, through our externally managed portfolio we predominantly invest in the Australian, UK and US real estate markets, reaching a total size of USD 2.0 billion by the end of 2020.
In the US, the investment manager’s approach to sustainability includes ESG considerations and striving for the LEED certification from the US Green Building Council.
In Australia and the UK, the investment managers’ approach to sustainability includes the National Australian Built Environment Rating System (NABERS) and the BREEAM certification framework, respectively.