Nordea Asset Management has launched a global social bond fund that will invest in social bonds and debt issued by companies that have a positive social and environmental impact despite a hefty drop in issuance of that type of bond this year.
NAM’s Nordea 1-Global Social Bond Fund will primarily invest in debt issued by government-related and supranational agencies, but it will also target debt issued by financial institutions and corporates.
“Debt markets play a crucial role in funding the projects vital for a sustainable and more equitable future,” said Thede Ruest, head of emerging markets debt at Nordea AM, who will manage the new fund with portfolio manager Anton Nykvist.
The two managers also run NAM’s Global Green Bond Fund and work closely with the firm’s 27-strong responsible investments team.
Social bond funds remain relatively rare and are heavily outnumbered by green bond funds. NN Investment Partners launched a social impact bond fund in July and Amundi launched a Social Bond Strategy fund in December 2020. Columbia Threadneedle has been running a social bond fund since 2014.
NNIP in July forecast social bond issuance would be about €250bn in 2022 as it expected spiralling energy costs stemming from the war in Ukraine to accelerate social bond issuance, but issuance has continued at a lower level as an anticipated pickup towards year end did not materialise.
Only US$104.8bn of social bonds have been issued in 2022 so far, according to Refinitiv data. That is 46% lower than US$193.4bn in full-year 2021 when the label was primarily used to fund social projects relating to the pandemic.
NAM’s Global Social Bond Fund qualifies as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation as it has sustainable investment as its main objective and in addition to investing in social bonds, the firm prioritises governance and is committed to SFDR’s principle of ‘do no significant harm’.
The fund manager is expanding its ESG range and the new strategy is NAM’s fifth to address social themes in addition to its Global Green Bond, Global Social Empowerment, Global Climate and Social Impact, and Global Gender Diversity funds.
NAM is part of the Nordea Group and has €237bn of assets under management, according to its website.