The Bank for International Settlements (BIS) has launched an open-ended fund for central bank investments in green bonds. Responding to a growing demand for climate-friendly investments among official institutions, the BIS’s green bond fund initiative helps central banks to incorporate environmental sustainability objectives in the management of their reserves.
With the support of an advisory committee drawn from a global group of central banks, the fund pools BIS client assets to promote green finance through sizeable climate-friendly investments and support the adoption of best market practices to deepen the green bond market.
Minimum rating of A-
The open-ended fund, denominated in US dollars, is structured according to Swiss law and belongs to the BIS Investment Pool (BISIP) family, a format commonly used by BIS Asset Management for its fixed income investment products. It is managed in-house by BIS Asset Management. Eligible bonds have a minimum rating of A- and comply with the International Capital Market Association’s Green Bond Principles and/or the Climate Bond Standard published by the Climate Bonds Initiative.
The initiative is part of the BIS’s broader commitment to supporting environmentally responsible finance and investment practices, in line with the Bank’s participation in the Central Banks and Supervisors Network for Greening the Financial System.
Influence the behaviour of market participants
Commenting on the launch, Peter Zöllner, Head of the BIS Banking Department, said: “We are confident that, by aggregating the investment power of central banks, we can influence the behaviour of market participants and have some impact on how green investment standards develop.”
The BIS offers financial services to a broad client base comprising some 140 central banks, monetary authorities and international organisations worldwide, and has a long-standing experience in managing fixed income portfolios.