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Aberdeen to manage AIIB's US$500m ESG portfolio of Asian infrastructure bonds

GLOBAL asset manager Aberdeen Standard Investments (ASI) and the Asian Infrastructure Investment Bank (AIIB) have partnered to develop debt capital markets for infrastructure, drive responsible investing in fixed income, and build a sustainable environmental, social and governance (ESG) ecosystem for investing in Asia’s emerging markets.

On behalf of the development bank, ASI’s Asian fixed income team based in Singapore will manage the US$500 million AIIB Asia ESG Enhanced Credit Managed Portfolio, both parties said in a joint media statement on Friday.

This portfolio is to comprise mainly Asian infrastructure-related bonds, including both green and unlabelled issuances.

ESG factors will be fully integrated in the investment process and portfolio management, to support AIIB’s mission to improve social and economic outcomes in the region. All bonds will be screened, assessed and managed according to both AIIB and ASI’s ESG investing principles.

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The ASI Singapore team has a long-term track record in emerging markets investing, the statement noted.

In addition, ASI and AIIB will launch the “Sustainable Capital Markets Initiative”, to catalyse ESG investing strategies and improve ESG standards.

The initiative will also build capacity around responsible investing with market participants – including corporate bond issuers, rating agencies and index providers – to improve disclosure and expand ESG rating coverage in Asian emerging markets.

AIIB vice-president and chief investment officer DJ Pandian said: “We believe institutional investors are a key part of the solution to finance Asia’s infrastructure investment needs over the coming decades.”

The joint statement also noted that integrating ESG factors into investment decisions is critical, as the region is facing some of the most pressing sustainability challenges.

The US$500 million AIIB Asia ESG Enhanced Credit Managed Portfolio was approved by AIIB’s board of directors in December 2018. ASI was awarded the contract to manage the portfolio through a competitive bidding process.

ASI said it will also leverage its global ESG team’s insights and proprietary thematic research to inform investment decisions and further develop industry knowledge with AIIB.

ASI is the asset management business of London-listed Standard Life Aberdeen, one of the world’s largest investment companies. ASI manages US$676.8 billion of assets worldwide, as at March 31.

Beijing-headquartered AIIB is a multilateral development bank which invests in sustainable infrastructure and other productive sectors in Asia and beyond.