A $120 Billion Danish Investor Has Big Plans for Sustainability

(Bloomberg) -- One of Europe’s biggest pension funds is expecting double-digit returns on a new Danish investment vehicle that’s based on the United Nation’s sustainable development goals.

ATP, which has about $120 billion in assets under management and is based north of Copenhagen, predicts it will make about 10-12 percent with its bet on the Danish SDG Investment Fund, which was launched on Thursday. Risks will be limited because of the government’s involvement, according to ATP’s chief executive officer, Christian Hyldahl.

Hyldahl says the logic of investing in assets that track clear ethical and environmental standards hasn’t been dented by the shift in policy from the government of the world’s biggest economy. U.S. President Donald Trump’s exit from the Paris climate accord last year was met by dismay in Europe. Denmark, home to some of the world’s biggest companies in the wind power industry, voiced particular disappointment.

But for investors, “there are plenty of opportunities and the world doesn’t stand still because the U.S. has decided to step back,’’ Hyldahl said in an interview. “This is definitely something we believe in.”

“This is a market in growth and there will be many opportunities, also in emerging markets countries,’’ he said. “So we expect that these investments will make up an increasingly larger part of our portfolio.’’

The Danish SDG fund gives ATP an opportunity to get a sense of how such investments behave and how to incorporate their performance into broader portfolios.

“We’re very eager to measure how this investment maps into our ESG goals,’’ Hyldahl said. “With this investment we can learn some lessons on how to invest in SDG and how that translates into the general ESG analysis.”

Fact Box

The Danish SDG Investment Fund has a current capital commitment of 4.1 billion Danish kroner ($650 million). The idea is for it to invest in projects worth about 30 billion kroner in developing countries. ATP is one of six pension funds that are contributing a total of 2.4 billion kroner. The Danish state and IFU (Investment Fund for Developing Countries) are providing 1.65 billion kroner, while private sector investors are placing 80 million kroner. The goal is to raise an additional 1 billion kroner in a so-called second closing.
Read more about the fund here.
Read more about SDG here.

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